(MONEY Magazine) – In case you haven't noticed, home satellite dishes have a new look--and a newfound popularity. The seven-foot behemoths of yesterday have slimmed down to a mere 18 inches across. In the five years since these small direct broadcast satellite (DBS) dishes have come on the market, the average cost of buying and installing one has dropped from over $1,000 to $260, according to technology research firm the Yankee Group, and more than 9 million people have bought one. Last year alone, the number of DBS subscribers grew by 38%.

Another reason DBS is catching on is that the alternative--newly deregulated cable--has been getting more expensive. Cable rates have risen 20% over the past three years, narrowing the price gap between cable and satellite. For another $8 a month on average, dish owners get access to more than twice the number of channels.

Making the switch from cable to DBS, however, can be both complicated and costly. The first step, before you invest in equipment, is to pick your service provider. Because of industry consolidation, you have two main choices: DirecTV (800-347-3288; www.directv.com) and EchoStar (800-333-3474; www.dishnetwork.com). The two have different programming--and incompatible equipment. (You can still sign up with PrimeStar and USSB, but DirecTV is taking over both; if you pick PrimeStar, you may have to replace equipment in just a few years.)

You'll pay about the same amount for service--both DirecTV and EchoStar charge just under $30 a month for their most popular package--so you'll likely choose based on what you want to watch. DirecTV, the No. 1 DBS provider, specializes in pay-per-view movies and sports. For $159 a year, football fanatics can gorge on 13 games a weekend during the season. EchoStar's Dish Network has greater variety, including foreign-language stations, and more video channels (70 vs. DirecTV's 54) in its most popular package.

Whichever you pick, here's how to save.

BEWARE OF EXTRAS. With both DirecTV and EchoStar, the basic dish and receiver typically cost $149. Sounds good. But as soon as you get tempted by other features, the price skyrockets. If you have more than one TV and want to watch different shows at the same time, you'll have to spend $200 to $250 for a dual-LNB dish and $99 to $125 for a second receiver. Want Dolby digital sound? You'll need a system that lists for $399. Want to surf the Web while you watch TV? EchoStar has just introduced a $499 receiver that allows you to do just that, as well as to pause programming for up to 30 minutes. And later this year, DirecTV is coming out with a receiver that automatically tapes your favorite program. Installation begins at $99 but can double, quadruple or worse if you have several TVs and receivers or mount the dish in a tough-to-reach spot.

SEARCH FOR DISCOUNTS. Unlike DirecTV, EchoStar sells its own equipment, but you should check prices elsewhere. Circuit City, Best Buy and K Mart sell DirecTV products; Sears and Costco carry Echo-Star's system.

We found a great deal online. Web retailer Roxy.com (www.roxy.com) was recently offering DirecTV's basic system and three months of programming for just $74.95--about $300 below the full price of the equipment and service.

SCRUTINIZE FREEBIES. Frequent promotions can cut your costs, but you often have to pay for premium services to qualify. If you sign up for EchoStar's $49.98-a-month deluxe Dish Network package for a year, for example, you'll get free equipment worth $250. Just keep in mind that if you really want only the basic $28.99 service, you're paying $252 a year extra for the freebies. On the other hand, DirecTV's spring promotion--installation and three months of basic programming for free--was a good deal while it lasted.

INSTALL IT YOURSELF. You can save $50 or more by installing the dish yourself. How hard is that? A DirecTV spokesman says the process is about as easy (or difficult) as installing a garage door opener: You drill a hole in the wall, thread the cable through the wall and mount the dish so that it's facing south. The $50 DirecTV and EchoStar installation kits--which K Mart and some others throw in for free--include a compass, cable and instructions.

SCALE BACK CABLE. Unfortunately, having a dish may not let you scrap cable. That's because DBS providers aren't allowed to transmit local network signals. (Congress is considering lifting that ban.) You can buy local programming for about $5 a month from your DBS provider only if you live within certain Federal Communications Commission-designated areas. Otherwise, if you want to watch, say, the local news, you'll need cable, unless you're lucky enough to get good reception with an old-fashioned antenna. If you're tied to cable, investigate the no-frills lifeline package, which gives you access to local channels for about $12 a month. Not every cable company offers that, and those that do seldom promote it.