At a quick stop at a store with a friend of mine this afternoon I happened to glance at a Consumer Reports magazine sitting on a magazine rack; one of the smaller little blurbs on the cover read “It Pays to Bundle Web, TV, and Phone!” I started thinking — is it really worth it?

It seemed like a good time to sit down and actually figure out what I spend every month on those separate “utilities” to see if I’m getting fleeced or if I’m getting a bargain.

At the risk of sounding like I’m just gunning to prove Consumer Reports wrong, let me point out, right up front, that I’m not: I used to subscribe to the magazine, and though I let my subscription lapse because I found some of their reporting biased, I do generally respect their opinions and research.

Also, I should point out that in doing my little bit of digging here, I only researched pricing for my area (Central Florida), not national averages. I don’t have any legitimate reason to believe pricing is significantly different anywhere else in the country; anywhere you can get broadband, it’s priced about the same.

What I Use

In putting all my numbers together (see below for details), I pay a total of $131.51 a month (a bit of it has been paid ahead of time, but the monthly cost works out to $131.51) for the services I get. And I don’t even have a cable or satellite TV subscription (heh). However, it sure seems like I can still do a hell of a lot of stuff, though. For that monthly stipend to the corporate beasts that pretend to serve me, here’s what I get:

• Broadband Internet — 10Mbps down, 768kbps up
  • Standard, run-of-the-mill American cable-based broadband here, so not fast compared to the rest of the world, but pretty much as fast as you can get in this city (Melbourne, Florida). I honestly can’t complain about actual speeds not matching claimed speeds — I have on several occasions actually seen individual downloads (from well-equipped servers) and BitTorrent transfers hit right at the theoretical 10Mbps cap, about 1.24MB/sec or so.
• Telephone — Local phone number, unlimited incoming and outgoing local and long distance, voicemail, three-way calling, call screening, caller ID, and effective call-waiting; all available anywhere I have wireless access and my laptop (or any kind of workstation, really), and at home. Bluetooth headset with it works, too.
  • All done through Skype, by the way, which is insanely cheap, very useful, and provides excellent call quality. Obviously this traffic goes over the broadband connection available at home or wherever I can get my laptop attached to. Equipment exists to let regular phones route calls through Skype; I don’t need it since I’m damn near always either at home or near my own laptop.
  • Exception: Call screening is done through Grand Central, which is its own giant bag of spiffiness — give everybody this number, and set it up to automatically call your other numbers (cell, SkypeIn, etc.) depending on who they are. Automatically asks people to identify themselves if they call from unknown numbers wanting to reach me. Very handy. Also free (at least for now; the features I use are supposed to remain free after beta, too).
  • This sounds less cool than it is, so I need to emphasize something here: anywhere I can get a decent network connection (i.e. anything better than a modem), I can receive phone calls from anywhere in the world, and make calls to anywhere in the continental U.S., without paying anything extra
• Cellular — 300 weekday minutes per month, 100 SMS messages (incoming and outgoing) per month, unlimited weekends, unlimited T-mobile-to-T-mobile calls; $0.10 per extra SMS, $0.20 per extra minute (I never hit these limits); unlimited (as in unlimited network usage) web browsing/e-mail/network apps on-device; unlimited network usage tethering device (Bluetooth or USB) to laptop for use as a modem; unlimited HotSpot usage (i.e. thousands of access points available around the U.S. I can access for free)
  • T-Mobile is the provider for this; I’m actually on the cheapest plan they offer for voice/SMS, and their “unlimited internet” option is pricey, though I’ve used the unholy hell out of it.

Fairly “mediocre” sounding so far, right? C’mon, there’s not even any television subscriptions piled into that list!

Still, let’s have a look at pricing if I were to “bundle” services.

Whoops! Looks like the provider I use for broadband (Bright House Networks) doesn’t sell a “bundled” service that doesn’t include cable television — so I can’t just get a “bundled” price for their phone service and broadband service unless I also want to bend over for television (all their combos include broadband and television service). And their cheapest bundle for bundled television, broadband, and phone? $134.94 per month. Also, the broadband option is slower — if I dropped my broadband down to match that speed, I’d only be paying $48.95 a month instead of $59.95.

What I pay ends up being about $3 less per month, but I still get broadband and unlimited local & long distance calling (with a real POTS/PSTN telephone phone number), plus a cell phone + internet modem that functions anywhere in the continental U.S. where it can get a signal (truth be told, the phone understands GSM, so it can officially do this anywhere in the world where it can find a cooperative network, but that might get pricey ).

I don’t watch (paid/subscribed) television, so the point is moot for me. Still, I know a lot of people do, so let’s do some other number crunching too:

What the Masses Want

The “penultimate” setup for most households is undoubtedly going to be broadband, paid television, and unlimited telephony. One thing I should mention about all the offerings I’m working with here in getting quotes from these different providers is that I am intentionally not including the extra “unlimited network access for your computer using your cell phone as a modem” little nugget I’m paying for in my own “custom bundle.” People who want/need it know it, and they’re fine with paying a premium for it. To my knowledge, there are currently no bundles or special offers that include this service for free, or that are affected by paying full price for the service. If you want “works anywhere” internet connectivity, every mobile phone provider in the U.S. will bend you over for it.

Also, we’ll talk about “hardware costs” in a bit, too. Let’s just look at monthly costs for now.

The Cable Company Offering

As we saw, Bright House Networks will give you all that for $134.94. That actually does include “basic” digital cable — the channels are (largely) transmitted in digital. Only on one television, though — it’s “standard cable” for all the rest (and trust me, I’ve seen their “standard cable” offering, and it blows goats). Also, as AT&T taught me back in Colorado several years back, even claims of being “all-digital” are nonsense, since some stations are still transmitted via analog signaling (yes, your cable box may well be receiving an exclusively digital signal, but many of the channels being sent to your box have passed over regular old-fashioned analog (i.e. non-error-corrected, subject to weather conditions) channels on their way to your cable company).

Bright House does not appear to have any partnerships with any cellular providers; it is thus impossible to get bundled pricing for broadband, television, telephone, and cellular services through this local cable company. It may be different where you live, but it’s not incredibly likely.

What About the Phone Company?

The “new AT&T,” currently reabsorbing all the little nuggets it was forced to split off back a couple decades ago, and other “local” phone providers (who are almost always traceable right back to AT&T … sigh, aren’t monopolies fantastic?), does have a go at offering bundles that provide all four chunks of this mythical bundled pie.

Of course, phone companies don’t provide television services, so they contract out to satellite television providers for their offerings. I grabbed AT&T’s little “bundle configurator” tool and picked out what I thought was their most “competitive” plan:

• Fastest broadband, which still doesn’t quite come as close as the cable company’s “middle of the road” broadband.
• Their cheapest unlimited-calling landline phone plan (amusingly, they offer two plans, at the same price, one with more features than the other — I wonder who actually pays for the suckier plan …)
• Their cheapest cell phone plan (450 “whenever/rollover” minutes, unlimited mobile-to-mobile,
• Their cheapest DirecTV plan

The total price per month they offer for all that is $167.92. They also offer $300 cash back for signing up, which essentially reduces the “monthly” price to $142.92 if you take that cash back bonus and use it to pay your bundled bill until the cash back runs out. Let’s give them a fair shot and assume you do this.

How About A La Carte?

Now let’s piece together exactly the same level of service with “piecemeal” offerings from different vendors, matching as closely as possible the combined features of the two above plans (except where the obviously cheaper option provides better service), and see what the final price comes out to, shall we?

Broadband Internet Access

The cable companies win, for the most part, in this comparison. In my own case, Bright House Networks’ middle-of-the-road offering of 7Mbps/512Kbps for $48.95 a month is a superior offering to Bellsouth/AT&T’s DSL offering because, despite its many claims to the contrary, it will not sell you “naked DSL” — your service must include a phone line. As such, they end up actually costing $75 per month or more. Sure, you get basic dial tone and local unlimited outbound local calls (with unlimited inbound calls), but no long distance without paying a fortune, and no features unless you pay more. It’s not cost-effective.

So, we’ll use the $48.95 per month 7Mbps/512Kbps option for broadband.

Telephony

Skype wins here, folks. Keep in mind we’re going to be bundling cellular service into the mix, too, so if you’ve got this nagging voice in your head saying “hey, Skype doesn’t do 911/Emergency calls!” you can help silence that voice by reminding it that your cellular service will include emergency service (in fact, 911 via a cell phone can sometimes be more effective at getting cops to turn up since they can use the network to figure out where you are). Even if your cell phone service has been cut off for non-payment, you can still place emergency calls (to 911) with it.

Incoming and outgoing phone calls over the Skype network costs $60 per year. You buy “Skype Pro” to get unlimited outbound calling, for $36 per year, then add a “SkypeIn” service for $24 per year that gives you a real phone number people can call. Yes, you can get a phone number in your local area code, just like a landline.

Hardware devices exist that let you connect your regular phone (corded or cordless) to your computer, or to your broadband router, and place calls over Skype’s network instead of the regular phone network. They work very well. You can also just use your computer itself — headsets typically cost less than $20, and even Bluetooth headsets are cheap (as well as the little USB Bluetooth adapters for computers without built-in Bluetooth). Again, think “under $20” for both pieces of that setup.

The $60 per year price turns into $5 per month. No phone company comes close, not even Vonage and Packet8, the two next closes competitors. Is E911 service really worth an extra $15 or $20 per month to you, when your cell phone can do the same job?

Regardless of what you choose, Skype, Packet8, Vonage, and all the other telephony providers give you voice service over your existing internet connection (the broadband we’ve been talking about).

Television

The cable companies tend to lose here, very rapidly. They’re just flat-out too expensive to get a fair shot, though I did actually get quotes just to make sure. Here are the numbers I got for Bright House Networks (the cable company here), Dish Network, and DirecTV:

Note: Don’t let FUD (fear, uncertainty, and doubt) from any provider fool you — you’re not going to be dissatisfied by the picture quality of just about any provider anymore. Just don’t let them (any of them) convince you that you’re getting a 100% purely digital feed of all your channels. It’s just not that likely. The transport layer between your television provider and your receiver may well be all-digital (and it probably is), but not every channel is actually transmitted digitally by the broadcaster.

Having said that, on an anecdotal level (just on my own experience), cable tends to be slightly “blurrier” and more subject to local weather conditions (especially on the “local channels”) than satellite (a delicious irony given that all of your channels on satellite television come from the sky, through all those weather conditions, to a little 18” dish on your house). Another con against cable (that sadly impacts broadband as well as cable television) — any idiot with a shovel can screw up your service until they fix it. With satellite television, at least, your service isn’t interrupted every time your neighbor goes nuts with the power tools in his back yard.

I’m not including High Definition service in any of these quotes — everybody charges extra for it, without exception. The pricing isn’t all that much different between providers, either, so assume adding HDTV to your “homemade bundle” will just cost an extra $10 per month. I’m also I’m pricing everything for a single-television home, because each provider essentially charges the same “extra” fee of about $5 per television per month to add extra receivers. Bright House Networks will give you “standard basic cable” on every TV in your home when you bundle their digital cable offering, but only one television gets “digital cable.” If you want them all to have it, you have to pay extra.

Finally, DVRs (digital video recorders) are extra as well (except for DirecTV’s standard-definition offering), and again the pricing is pretty uniform across the board, at $5 or so per DVR per month. They haven’t been included in any of my quotes, because, again, they cost the same no matter who you go through.

The overall winner here is Dish Network, kicking in with a quote of $34.99 if you’ll agree to be their customer for 18 months straight (their cancellation fee is $18.88 per month you haven’t already paid for, so if you’ve only got a few months left, it won’t hurt that bad).

Dish Network

A healthy smattering of channels, including your local market network affiliate channels (CBS, NBC, etc.), is $34.99 per month. That’s more channels than any cable company’s “basic cable” offering. In fact it’s just a bit over 100 channels total, including the local channels. So you still get all your local news channels and local programming, plus a bunch of stuff that isn’t on cable. Everything you’re used to (Discovery Channel, SCI-FI, Comedy Central, QVC, etc.) is still there.

Dish Network charges an extra $49.99 “activation fee” to start a new account, which it will waive if you agree to commit to eighteen (!) months of service. Since you can move your gear with you if you happen to move during those 18 months, just changing addresses (or even service level) doesn’t restart that counter. Still, let’s assume you don’t want to make that commitment, so we’ll add that to the overall cost.

Dish Network does not charge for equipment, shipping, or even installation, so there aren’t any extra gotchas there. The only “catch” is that since you’re “leasing” the gear, it has to go back to them if you cancel. Their fine print says you are responsible for the costs of this return, though I suspect you could coax them into paying for it. Keep an extra $30 in the budget just in case, though (we’ll get to that a bit later).

That makes Dish Network cost a total of $37.76 per month for the first 18 months of service, including all taxes and fees, all equipment, and no commitment to continue their service. If you do commit to 18 months of service (or you’ve paid $37.76 for the first 18 months), it’s back down to $34.99 per month.

DirecTV

DirecTV was actually my provider of choice for a long time, but I haven’t been a customer of theirs (or any provider) in years, and it looks like they’ve definitely gone downhill.

I’m sad to report their best offering (to be compatible, in terms of channel count and content), is $29.99 per month, for the first twelve months of service (after jumping through some rebate-like hoops, too), then jumping up to $49.99 per month. That package does include more channels (150 instead of 100) than the other offerings, but it’s also a bunch more expensive in the long run.

Still, let’s figure out that first-year cost just to see. DirecTV sells their equipment, instead of leasing it, which means there’s no risk of having to deal with paying to return the gear after you cancel your service. They also offer two units (one standard definition, one high-definition) “free after instant online rebate” (meaning they count it as a rebate, though money never leaves your pocket). As an added bonus, the standard definition receiver includes a DVR, too. They’ll hand up you to six receivers (standard def + DVR, or high def w/no DVR) for free, too, though they still charge a per-additional-receiver fee for their services. Again, I’ve priced for one television.

The first-year cost really does just end up being $29.99 per month. Then it goes up to $49.99 per month after the first year, which, frankly, sucks.

Cellular

For this pricing war, I’m assuming you want regular cellular service, not prepaid. Prepaid can actually be a lot cheaper if you don’t really use your phone that much. There are also “local service area only” phones that provide unlimited airtime (no per-minute accounting at all) for a flat monthly fee, but these don’t work outside major metropolitan areas (sometimes not even outside your local service area). The phones I consider for this “bundling” exercise are those that will work anywhere in the nation where a signal is available, where peering agreements between carriers generally permit you to make in-plan phone calls even when your preferred network isn’t available but a competitor’s is.

All cell phone services include voice mail, call waiting, caller ID, and three-way calling (with the charming “feature” of chewing up two minutes of air time per “actual” minute of call time).

AT&T remains a massive rip-off. Their cheapest individual plan is $39.99 per month, and even that doesn’t include unlimited nights & weekend minutes (it’s 450 whenever/rollover minutes, and 5,000 nights & weekends minutes). Think you can’t hit that 5,000 minute cap? There’s 1,440 minutes in a single day, remember, and you’ve got eight of those per month. Then there are the “nights” parts of “nights & weekends,” amounting to 600 minutes a day during the regular week that can be considered “nights”. If you talk a lot on your phone, there’s still plenty of opportunity to go over that limit. Yes, your “whenever” and “rollover” minutes can be used to back this up if you do go over, but also remember if you start a call before the “nights & weekends” period starts, the whole phone call counts against your whenever/rollover bucket. Internet (“phone as a modem”) service adds $20 a month to their offerings. Unlimited mobile-to-mobile calls are automatically included in all plans.

T-Mobile’s offerings are decent, in that for just plain phone use, what you can buy for $29.99 a month isn’t bad, with few “gotchas.” That $30 a month gives you 300 weekday minutes and unlimited weekends, 100 SMS messages (inbound and outbound combined), unlimited T-Mobile to T-Mobile calls (I believe AT&T’s “mobile to mobile” includes call to/from any mobile phone, not just AT&T’s).

Sprint/Nextel (remember when “competition” meant something?) is exactly in line with AT&T — $39.99 a month for 450 on-peak minutes (no rollover), or $29.99 per month for 200 minutes. T-Mobile’s $29.99 service doesn’t include unlimited nights (just weekends), but includes 100 more in-plan minutes.

Verizon Wireless offers plans that “start at $39.99 with 450 Monthly Anytime minutes.” Bleh.

For light phone use where prepaid just barely isn’t cheaper (this math is important to do — if you use fewer minutes per month than the cheapest monthly phone offers and you don’t need internet access or other services that a monthly phone can include, go with the prepaid phone; 300 minutes at $29.99 a month is right at ten cents per minute, if you use them all, on a monthly phone).

The bottom line for cell phones is $29.99 per month is the cheapest you can find.

The A La Carte Bottom Line

Broadband: $48.95 (7Mbps/512Kbps)
Telephone: $5 (Unlimited in/out, unlimited long distance, voicemail, 3-way, caller ID, call waiting)
Satellite: $34.99 (18-month commitment, $37.76/mo the first year without commitment)
Cellular: $29.99 (300 in-network, unlimited weekends, 100 SMS)

$118.93 (or $121.70 with no 18-month commitment to Dish Network).

Equipment Costs

Some of these “new fangled” tricks, especially using Skype for telephony, does require using a bit of extra hardware that tends not to be included with any of the providers’ bundles or individual plans. The good news is this still isn’t going to cost very much.

• Satellite television doesn’t require out-of-pocket expenses anymore to get started — Dish Network just leases the gear to you, and DirecTV “charges” you $99 per receiver but instantly rebates you $99 per receiver, meaning you spend nothing out-of-pocket and you own the gear. Dish Network includes the actual antenna (the dish) in the lease, and DirecTV just gives you one when you install new service. Both companies provide installation free of charge (and it’s disturbingly easy to set up yourself — bolt the dish to your house or stick it on a pole, connect one (or two) cables to it and to the receiver, then aim it; the first time you do it, it takes half an hour to aim it. After that, it takes five minutes.). You can pay extra for a DVR, or for extra receivers, but you don’t have to in order to get basic service.
• Cable companies love to “rent” their gear, and build that into the price for their service. You can buy your own DOCSIS modem and it’ll probably work, but there’s no point — you’re unlikely to get them to drop the monthly rate just for providing your own gear. DSL companies split down the middle whether they rent or sell you the DSL modem, but in most cases when you have to buy the modem, they’ll rebate it instantly (or credit your account) or it’s fairly cheap (under $50). In places where you’re required to buy your own, you can generally buy any modem compatible with their DSL offering (you can ask, and they’ll generally give you a list; from there, you can hit up Pricewatch or PriceGrabber to find the best price on it). The only variants on pricing here are in speed — equipment costs are usually the same.
• Cellular phone companies make major cash on supposedly “subsidized” phones — they offer plenty of free options (“free,” unless you cancel before your contract is up) and if you’ve got cash to spend on a “nicer” phone, they’ve got plenty of ways to let you spend it. But you can get basic service on a basic (free) phone.
• Skype works out-of-the-box on any computer with a full-duplex sound card (i.e. almost any damned machine made in the last ten years, seriously — it’s tough to find a computer these days that can’t play sound and record sound simultaneously) and a decent network connection (any cable or DSL service fits the bill just fine). A $20 headset (microphone and speakers, either USB or just 1/8th inch plugs) will complete that package. Bluetooth headsets can be had for under $20 now (even good/usable ones), and USB-based Bluetooth dongles (to let computers without built-in Bluetooth talk to Bluetooth devices) also go for under $10 now. If you genuinely want to just plug in your regular phone and use Skype on it, you can spend about $40 for a device that plugs into your computer via USB (your computer must be on and Skype must be running), or about $80-$100 for a device that plugs straight into a free ethernet port on your broadband router and doesn’t require your computer to be running. There are also Skype-only handsets (again between $40 and $60) that also just plug into a broadband router and don’t need a computer to work.
• The only other piece to make things work a lot smoothly (and is required if you want to use your own phone with Skype) is a wireless broadband router — these things run between $30 and $100 (I recommend spending about $75 at most, on an Asus-branded router; Linksys’ gear currently sucks, as I’ve watched three of their routers croak in just the past year), and plug into your cable modem (or DSL modem), then share that connection to all wireless devices in range (that you permit, that is) and any device you plug into the physical ethernet ports it provides. It lets any number of machines share a single connection, and is a must-have.

Even if you have to fork over $75 for a new router and $80 for a phone-to-Ethernet-to-Skype device, you’re still only adding $155 to the total price, or $12.92 a month over 12 months (these devices continue working after the 1-year point, and they also work no matter what kind of broadband you connect to them). Note that Packet8 and Vonage also require access to a broadband router; it’s not just Skype.

Declaring a Winner

The very best bundled price for telephony, cellular service, broadband internet, and television was AT&T’s bundled offerings, priced at $142.92 (if you use the “$300 cash back” offer to pay the bill; $167.92 otherwise) per month. After one year, the price goes back up to $167.92.

Since the local cable company doesn’t even offer a bundle that includes cellular service, we have to take their best offer without cell service, and add it ourselves. Bright House Networks’ most competitive bundle is $134.94, so if we add the most competitive cellular service (T-Mobile’s at $29.99), we get $164.93 (very much in line with AT&T’s offer, before their cash rebate).

The “A La Carte” method comes in at $121.70 per month for everything, assuming you’re unwilling to make an 18-month commitment to Dish Network. If you are, it’s $118.93. Either way, it’s a winner.

If you’re genuinely uncomfortable with not having a home phone with 911 service (really, you shouldn’t be since your cell phone will do the job), services like Packet8 or Vonage offer unlimited calling and comparable features & service for $24.95 per month, which just adds an extra $20 to the overall price ($141.70 or $138.93, depending on Dish Network commitment). It still wins.

Finally, building your own bundle gives you all sorts of flexibility: “telephony” will work regardless of which broadband option you go for, so you could drop your cable modem service (or your DSL service) down to the slowest available option, easily shaving $15 or more off your monthly expenses. You could switch to a prepaid cellular phone if you don’t use a cellular phone enough to justify a monthly expense. You could buy an antenna for your television, or just download shows you like from the internet, sparing yourself the expense of subscribing to any kind of television service.

So, I guess Consumer Reports was wrong on this one — bundling isn’t automatically a way to save money. At least, not when you take the time to research all the options and do the math yourself.

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