As cord-cutting prices rise, here's what you can do to keep costs down

Rob Pegoraro | Special for USA Today

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For the growing ranks of cord-cutters who fled cable- and satellite-TV services for cheaper streaming options, recent weeks have brought an unsettling run: rate increases that look too much like the price hikes that plagued traditional pay TV for years.

First, the Dish Network-owned Sling TV announced at the end of June that its entry-level Sling Orange service would increase by $5 to $25. Days later, AT&T was notifying subscribers to its DirecTV Now that its three tiers of service would also go up by $5 a month, raising its starter rate to $40. And Sony PlayStation Vue said it, too, would increase rates by $5 a month to bring its cheapest plan to $40.

Google’s YouTube TV, in turn, had led off this mini-trend in March with a $5 increase that brought its standard rate to, yup, $40.

It’s true that online streaming operations face the same underlying inflation from studios and networks as cable and satellite.

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“Costs for content producers and networks continue to rise faster than the general inflation rate,” said Brett Sappington, senior director of research, Parks Associates, in an e-mail interview. “As long as that happens, they will face pressure to increase the amounts that they need from their distributors to cover those costs.”

He noted that online services--often called “over-the-top” services because of how they arrive on another company’s broadband connection--themselves contribute to some of this inflation with motion picture-level budgets for some exclusive series.

“Netflix and other OTT video services are spending big on original series,” he said. “As a result, the bar has been raised for broadcasters and networks in spending and quality.”

But subscribers to online services remain better-positioned to resist this rate creep than those with cable- or satellite-TV bills.

First of all, they have more options to replace almost all of a traditional pay-TV bundle: DirecTV Now, PlayStation Vue, YouTube TV, Sling TV, fuboTV and Hulu’s live-TV option.

They may now all charge about $40 a month -- if you factor in Sling’s combination of the Orange bundle and the Blue bundle that adds some regional sports networks and other channels that match the entry-level offerings at the other three. But that still leaves you with multiple options if any one decides to push through another hike.

If you stick with cable and can’t get satellite, you probably have no other choices. And you’re probably also stuck in a contract that will punish you for switching service early. With online video, you can switch at will--so you should make a habit of seeing which service offers the best deal.

(Please ignore commentary suggesting your true cost of online viewing involves paying for more than one of these core services. If you really watch that much TV, you should stick with cable or satellite.)

Second, you can look past them to cheaper online services that omit some of the most expensive sports channels that have long ranked among the top drivers of pay-TV rates. Philo, for instance, starts at just $16 a month if you can live without ESPN, while fuboTV offers an extensive array of more than 105 channels, including many non-ESPN sports channels, for $44.99.

Third, if you have good over-the-air reception of local stations, you can buy an antenna and drop online options for broadcast TV. That could let you stick with Sling’s $25 Orange plan instead of upgrading to its $40 Orange + Blue bundle, for instance. It might also eliminate the need to pay for single-network online feeds such as CBS’s $5.99-with-ads All Access.

Finally, whatever else happens, the online services don’t make you pay $5, $10 or more a month to rent a box just to tune in channels. That’s money you’ll keep saving every month.

Rob Pegoraro is a tech writer based out of Washington, D.C. To submit a tech question, e-mail Rob at rob@robpegoraro.com. Follow him on Twitter at twitter.com/robpegoraro.

