How Much Will Verizon's New Package Cut Your Cable Bill?
By Kelli B. Grant
Cutting back on cable TV is getting easier, but not necessarily cheaper.
Verizon (VZ) is the latest provider to introduce a slim TV bundle, offering more than 150 digital TV channels starting at $55 a month. It joins Cox Communications' $39 TV Economy bundle of 100-plus channels and Time Warner Cable's (TWC) $30 Starter TV with HBO, which (hence the name) offers 20-plus channels and HBO Go access.
Such packages are a far cry from the average $106.26 a month paid for a 300-channel package, according to utility comparison site WhiteFence.com. Most consumers could, theoretically, scale back. The average home receives 189 TV channels, up from 129 in 2008, according to a 2014 Nielsen study. But the average number we actually watch has held steady -- at just 17 channels. "They [cable providers] are providing consumers more flexibility, and options they haven't had before," said John Buffone, executive director of connected intelligence for The NPD Group.
Get to the Bottom Line
But how much you'll save by scaling back to a cheaper TV package -- or cutting the cord altogether -- depends on what you watch and how you watch it.
Slim bundles often don't include services such as DVR or video on demand. You may need to pay extra to have favorite channels included, too -- either by trading up to a bigger package through the provider or adding a separate subscription to a streaming service.
Watching ESPN, for example, would require going with Cox's $50-a-month Advanced TV package instead of the $39-a-month TV Economy. With Verizon's Custom TV, subscribers get two free themed channel packages from offerings including kids, lifestyle, entertainment and sports. But additional channel packs have a monthly charge of $10 apiece.
USA Today tech columnist Jefferson Graham, a Verizon FiOS customer, estimated that trading down from 1,000 channels to the Custom TV's 150, plus two extra themed packages, saved just $6.44 a month on his bill.
Verizon FiOS president Tami Erwin said on CNBC's "Squawk on the Street" that the new plans aren't targeted to the company's current customers. "My expectation is that there will be some percentage of our customers that migrate to these new plans, but I think increasingly we will have new customers that are attracted to these plans," she said.
New Customers and Bundling
The option is more of an enticement to draw in some of the 10 million consumers nationwide who don't currently have cable, or those who get their TV service through another provider, said Dan Rayburn, principal analyst at Frost & Sullivan. "[Verizon] wouldn't roll out something that forces them to lose a lot of revenue," he said.
Providers typically offer their best rates for bundled services, enticing customers to scale up rather than down, he said. Comcast (CMCSK) -- which owns CNBC parent NBCUniversal -- charges $67 a month for a 25 Mbps Internet connection. Adding 140 TV channels and phone service through its X1 Starter Triple Plan package is $23 more a month with a two-year contract.
Verizon's bundle of Custom TV, phone and 25 Mbps Internet runs $75 a month under a two-year contract, just $20 more than the Internet alone.
Rayburn said the best bet for consumers angling to cut their bill is still to bundle services with one provider. But look for ways to cut costs within each, for example by scaling down the number of TV channels or the Internet speed. He recently helped his mother save $15 a month by eliminating the sports channels she never watches. Providers also typically offer price breaks for new and existing customers willing to sign a one- or two-year contract. "Just call and ask," he said. "Say, 'My bill is kind of high. Where can I save?' "