Budget Breakdown: Cable vs Satellite TV

Cable vs satellite TV: Which costs less in the long run? The answer is, as always, “That depends.” Here’s what it depends on.

As of December 2010, service fees for Comcast Digital Cable and Time Warner typically run between $50 and $65 for a basic package (around 100 channels) and between $100 to $130 for the most expensive premium packages. Both Time Warner Cable and Comcast allow you to add premium channels to the rest of your cable content; expect to pay between $10-15/month extra per premium channel.

Satellite TV tends to cost less per channel than cable. DirectTV, for example, charges $29.99/month for over 50 digital channels--roughly equal in per-channel pricing to a basic cable package. Standard price-per-channel gets better as you move up to bigger satellite packages, averaging between $.25 and $.40 per channel for satellite service, compared to the best cable price of about $.50 per channel.

Both Dish Network and DirectTV, two of the nation’s leading satellite TV providers, offer access to local channels for free with some of their bundle packages--but make sure to check the fine print; in some cases you may be charged a nominal fee, in the neighborhood of $5, for access to local channels through a satellite TV provider. Expect local channels to be included with your basic cable package, at no charge, as a matter of course.

Whether you’re getting cable TV or satellite TV, special equipment is required. For cable television, you’ll need one cable box per television in the household. Expect to pay a small rental fee, usually under $10, for each cable box. The cable company retains ownership of the box, so if you discontinue service you’ll have to return it to avoid extra fees. You usually don’t have to pay any extra fees for cable box installation, and most homes and apartments are already wired for cable which makes installation quick and easy.

Satellite TV equipment is more involved. You need to have a satellite dish mounted on the outside of your building with a clear view of the southern sky, which may not be an option for apartment dwellers or those living in areas with thick trees or mountainous terrain. You’ll also need one receiver per television. Most satellite companies give you the option of leasing or purchasing the satellite equipment. You may pay anywhere from $100 to $400 to purchase satellite receiving equipment; the initial lease fee and subsequent monthly fee varies enormously by provider, but is usually much higher than cable’s $10 or under monthly fees for an individual box. Adding extra receivers for additional television, however, can often be done for as little as $5/month apiece. Expect to pay an extra installation fee when a satellite dish is installed, although this may be waived under special promotional offers.

Both cable and satellite TV companies put their best foot forward, using short-term promotional pricing to draw you into a long-term contract. Always read the fine print and do the math to see what your prices average out to once the promotional period has expired (usually well before the contract period is over). You should also take into effect any contract-termination fees you may incur if you cancel your service before the contract is over.

Satellite TV is usually less expensive per channel, and at first glance a basic satellite package is less expensive than a comparable cable package--if you can get a promotional deal for free installation and waived or reduced equipment fees. The major upside of cable programming is that you put out much less money up front and can usually change plans or stop service at any time. If money might be a long-term problem, it might be worth paying a few dollars extra for cable every month in order to avoid steep contract termination fees from a satellite service.