Editor's note: This is part of a series of stories about the recession's effect on the tech industry.
A year before the U.S. economic crisis came to a head, Debra James of Oakland said she saw the writing on the wall and decided to trim the household budget. Topping the list were things like satellite television.
"I could tell the economy was getting sluggish in the summer of 2007," she said. "So I decided we needed to make some cuts, so that if things got worse, it wouldn't be so painful."
Indeed, things did get worse. The U.S. economy has technically been in a recession since December 2007, according to a recent report from the National Bureau of Economic Research, a nonpartisan group that officially tracks recessions.
Workers in the U.S. have steadily been losing their jobs all year as companies slash headcount to cut costs. The worst month so far has been November, when U.S. companies shed a whopping 533,000 jobs, according to the Bureau of Labor Statistics. This was the worst single month of job losses in the U.S. since 1974, when the economy was coming out of another severe recession, a recent New York Times article reported.
The big difference this time around is that the current recession seems to be picking up steam, with even more companies announcing layoffs in early December.
While Debra James, 45, and her husband Mervin James, 40, have kept their jobs so far, Mervin, a heating and air conditioning technician for new construction in the Bay Area, has had his salary cut by 20 percent in the past year. And his company has stopped paying for vacation time.
James said the pay decrease has taken a toll on the family finances. She and her husband are putting less money into their savings every month. But because they've been able to eliminate a significant chunk of their monthly expenses, they've had more wiggle room than they would have had if they hadn't started cutting back.
"If we were living the lifestyle we had been living before we made some changes, the salary cut would have definitely had a negative impact on us," she said. "But we were ready for it."
Top on the list of services to cut was the satellite TV package. James said she and her husband were spending $115 a month for their Dish satellite service, which gave them about 250 channels of programming. But when she sat down and listed what she and her husband actually watched, she discovered that they only viewed about 25 of those channels.
"I just couldn't justify watching only 10 percent of the channels I was paying for," she said. "I would have felt a lot better about keeping the satellite service if I could have thrown out the extra channels and only paid for the channels we watched. It's just like buying a whole loaf of bread and only eating two slices--such a waste."
This idea of a la carte pricing for TV channels or allowing people to pick and choose which channels they want to get has had strong support for several years from Federal Communications Commission Chairman Kevin Martin, as well as from many parent and consumer advocacy groups. But the cable TV industry has long.
After a few Google searches, James said she found a wealth of legitimate sources for TV programming online. Sites such as Hulu, Fancast, Joost, YouTube, and most major TV networks' Web sites offer TV shows and other video content for free. Using an existing rooftop antenna, James plugged her TV into the hook-up to get more than 50. The cost for these HD channels: zero.
And instead of spending an extra $20 a month for HBO or any other premium movie channels, James subscribed to a $17-a-month Netflix service, which allows her to rent three movies at a time and download some movies right to her computer.
In order to view the online programming on her TV, James spent about $600 on a new computer, an HP Pavilion Slimline. The Windows Vista computer came with an integrated TV tuner, a High Definition Multimedia Interface cable for carrying high-definition video, and an embedded Blu-Ray/DVD player. The PC, which is only about the size of an old VCR, hooks directly to her TV and can be programmed to act as a DVR recording over-the-air programming that is received from the rooftop antenna. And because most of the Web content is on-demand anyway, James said she can watch whatever she wants, whenever she wants it.
She invested another $50 for a wireless mouse and keyboard, which she uses to search for programming on her hard drive and on the Net. To make finding the shows she likes easier, James said she simply bookmarks her favorite Web sites like the Discovery Channel, which offers full-length documentaries online.
Because she and her husband are watching more video online, James upgraded their DSL service from the $25 deal, which gave them 1.5 Mbps downloads and 384 Kbps uploads, to the $30-per-month service, which offers up to 3 Mbps downloads and 512 Kbps uploads. All told, she is saving about $93 a month after the $17-a-month Netflix subscription and the $5-a-month extra for higher-speed broadband. The cost of the new computer was paid off in about six months.
Instead of feeling deprived, James said getting rid of the satellite TV service has been a huge improvement.
"We definitely watch more TV now than we did with Dish," she said. "And because most of the shows online through services like Hulu.com don't have commercials, I can watch them much quicker too."
And because some TV channels actually offer additional video content online than they do on regular TV, James said she and her husband are able to get more variety and choice than they were getting with their Dish package. For example, AT&T, her broadband provider, offers a special broadband channel called ESPN360.com.The site offers a wide variety of sports programming from college football to international soccer matches to Nascar, which aren't always shown on the cable or satellite ESPN channels. The events are often aired live and replayed at a later time. And it's all free.
Setting up the new entertainment system wasn't difficult either, she explained.
"I would say I am a proficient computer and Internet user," she said. "I can follow directions when it comes to plugging cables into something. But I don't know anything about programming or uploading or streaming movies or music."
But James did say that searching for TV shows using a mouse instead of a remote control means she and her husband have to make a few more clicks to find what they're looking for. And she admitted older TV viewers might not like the new interface. But she added it didn't take long for her and her husband to adjust to the change. Besides, she said the amount of money they save every month is worth it.
"I enjoy my extra $93 a month," she said. "In fact, we just came back from a vacation where we spent a good deal of money, but it was nice to know we were spending money that we had saved from cutting back."