Renting vs Buying a Modem and Router: The Pros and Cons

/ March 18, 2022

There’s no question about it. To have an Internet connection, you need a modem and router.

Having reliable Internet access is a necessity. Internet providers know this. And they understand your need for equipment so that you can have good Internet service.

Internet service providers indeed give you the option to rent modems and routers. But, is it cost-effective in the long run? Rental fees don’t add up to much to your monthly Internet bill. Yet, at the end of the year, you’ll have paid close to $150 per year in equipment fees.

Everyone’s living situation is different. But the one thing everybody has in common is their need for an Internet connection.

It doesn’t look like the Internet will go away anytime soon. And rental fees will continue to increase. Now’s the time to consider investing in your own modem and router.

A lot can change on your monthly Internet bill when you buy your equipment. Here’s everything you need to know about buying your own modem/router combo.

Renting Equipment from Internet Service Providers

If you have Internet access, there’s a chance you’re renting a modem and router. Internet service providers include rental fees as part of their package. It’s better for them if the customer continues to rent instead of deciding to buy equipment.

Why Would an Internet Service Provider Rent Equipment?

Internet service providers like to charge for everything. They prefer to rent you the equipment because they get to add a nice rental fee to the monthly bill. There are also a few other reasons why they don’t like customers purchasing their own devices.

Source of revenue

Renting a modem is a source of revenue for any cable company. Every quarter, Comcast Xfinity makes a large sum of money from cable modem rentals. About $300 million is added to their bottom line.

Streamlining the Process

Providers are in the business of connectivity. And renting equipment streamlines this process. Most consumers don’t want to have to deal with setting up their router or modem.

They want to make sure they choose the right Internet plan and that their home network is working. To many consumers, a monthly fee of $8 to $10 per month is reasonable. And not having to do the installation themselves makes the prices worth it.

Rentals Are Roadblocks

A good way to make things difficult for you to switch providers is to tie you with a contract. Rentals work like cellphone contracts.

The more a contract can prevent you from going somewhere else, the better. Even if it means dealing with cable modem service issues or rate increases.

Compatibility

A major deterrent to buying your own cable modem and router is the issue of compatibility. Most ISPs have rules about the kind of equipment they’re looking for. And they’re particular about the compatible modems they use for their Internet connection.

Providers are not interested in you getting your equipment. They prefer it if you rent the equipment through them. That increases the chances of you sticking with them for the long haul.

A way of doing this is by setting up parameters for approved modems. This creates a sense of exclusivity that makes you set the company apart from others.

Even if you buy the equipment, a lot of times providers prefer you buy it through them. There was a time when an Internet service provider could charge you for equipment you owned. This only changed in recent years when congress passed a law preventing them to do so.

pros and cons of renting a modem and router

Pros of Renting a Cable Modem and Router

  • No Setup. Nobody likes to set up equipment. And this is one of the things that pushes customers toward a rented modem and wireless router. Buying a cable modem means that you’ll have to install it yourself. But renting a modem means that your Internet provider will deal with the hassle of setting it up. You don’t have to worry about anything but enjoy your home network.
  • Free Replacement. Wireless devices and systems change all the time. And most ISPs like to upgrade devices every few years to keep up with technology. When you rent equipment, your Internet service provider handles everything. They are in charge of providing replacements when there are upgrades available.
  • Free Tech Support. If something goes wrong, your Internet provider will fix it. They own the cable modem and wireless router you’re using. The tech department supports the equipment. And they will handle all issues about cable Internet and Wi-Fi.

every quarter, comcast xfinity earns about $300 million dollars from modem rentals

Cons of Renting a Cable Modem and Router

  • You’ll end up paying more money in the long run by renting. When you first buy a modem, the upfront cost will seem like a lot of money. But, in the long run, you’ll save money by not paying a monthly fee. That alone makes it worth buying your cable modem.
  • Your provider can raise the fee anytime. Remember, your Internet service provider owns the modems and routers they rent. They can decide at any moment to raise fees you pay per month without warning.
  • The device or devices your Internet service provider installs might not be the best. The main purpose of cable companies is to provide Internet access. But, they also want to make extra money any way they can. One way they do this is by installing middle-of-the-road equipment. This is so that you need a new modem within a short amount of time. Most modems that are on the lower-end last between two to three years. Higher-end cable modems last well over five years.

Is It Better to Buy Your Equipment?

In the long run, yes, it is better to buy your own modem. But before you make the purchase, ask yourself some of the following questions.

Are You Tech-Savvy?

When you own a cable modem, your Internet service provider is not responsible for fixing it or installing it. Compare all the compatible modems and decide which device to purchase. Once you do this, ask yourself whether you think you’d be able to install it yourself. If the answer is yes, then go for it.

Are You Going to Live in the Same Coverage Area for an extended period?

If you are, then you’re in the safe zone for buying a cable modem. If your living situation is going to change within the year, you might want to wait until you are before buying a cable modem.

Remember that compatibility is a big issue with service providers. And there’s a high chance that whatever you end up buying won’t be a compatible cable modem in the next Internet plan. It’s better to make a purchase when you’re sure of where you’ll be staying.

Is It Cheaper?

Yes, in time you’ll realize that you save money by owning your equipment. However, you have to weigh the benefits of the savings against the few hours you’ll spend installing it or troubleshooting it. If you don’t have a problem spending time learning how to work devices properly, then making the purchase is a good option.

chart depicting the annual cost of renting a modem and router

The Correct Way of Buying a Cable Modem

Cable modems are complex. Depending on the requirements you’re looking for, you’ll find that there are plenty of cable modems to choose from in the market.

Your Internet provider will dictate what kind of modem is compatible with their network. To choose the best cable modem for you and the service provider, you should familiarize yourself with the different standards available.

The two main factors you need to focus on when choosing the right cable modem are:

  • DOCSIS Standards
  • ISP Requirements

Data Over Cable Service Interface Specification (DOCSIS)

The long explanation of DOCSIS is complicated. But, in simple terms, DOCSIS refers to a set of standards that are used when transferring data via cable TV.

The specifications of the standards are split into different ratings. For example, DOCSIS 1.0, DOCSIS 2.0, or DOCSIS 3.0.

Each rating classification helps you achieve different Internet speeds. A new modem with DOCSIS 3.1 can support download speeds and upload speeds of 10,000Mbps. This type of cable modem is perfect for gigabit speeds, but that’s not something every ISP requires.

Don’t get caught up in trying to purchase the newest model if you don’t need it to boost speeds. Current standards are backwards-compatible with older specs, which means they’ll be able to support Internet speeds that are not as advanced.

Unless your ISP specifically requires the latest standard, you can get by with an older, cheaper model. The only thing to make sure of is that it’s backwards-compatible so that it can work properly.

To give you a better idea of the kind of Interned speeds each standard can give you, here’s a little rundown of sample download speeds.

  • DOCSIS 1.0 / 1.1 : 38Mbps Download speed / 9Mbps Upload speed
  • DOCSIS 2.0 : 38Mbps Download speed / 27Mbps Upload speed
  • DOCSIS 3.0 : 152Mbps Download speed / 108Mbps Upload speed
  • DOCSIS 3.1 : 10,000Mbps Download speed / 10,000Mbps Upload speed

ISP Requirements

This part is easy. All you have to do is go to your provider’s website check for a list of cable modems compatible with the service plan.

They’ll likely have a list on their site of the modems they recommend based on the model and specs. If you’re unsure of what to look for before buying a cable modem, call them to double-check what the specific requirements are for compatibility with your service plan.

Depending on your Internet plan, you might need a special modem. If you use a home phone service, for example, you’ll have to purchase a specific type of modem for your cable Internet to work.

benefits and disadvantages of purchasing a modem

What Are the Benefits of Buying Your Modem?

Many benefits come with purchasing your modem. From faster speeds to the support of more devices, there’s no question that purchasing has its advantages. But, if you’re going to make an informed decision, you should also be aware of what the negatives are.\

Benefits of Purchasing a Modem

No Speed Caps

A recently purchased modem won’t suffer from speed caps. If you decide to purchase your own cable modem, you can maximize your cable Internet speed.

When your Internet speeds are faster, you’re able to accomplish more and connect more than one device. Customers that rent their modems, and later buy their own, notice a big difference with Internet speeds.

A brand new DOCSIS 3.0 model will strengthen your Wi-Fi signal. Plus, it will improve the overall performance of your service plan.

Cheaper

Eventually, the cost of owning a cable modem will be much cheaper than paying monthly rent for equipment. In most cases, it’ll take you about a year to see the difference. There’s also the added benefit that when you buy your own modem, your ISP cannot throttle your speed or bandwidth.

Update and Upgrade

With your own modem, you can update settings whenever you want without altering the overall configurations of your cable modem. You can also upgrade your old modem to a new one whenever you feel the technology becomes outdated.

Although one of the best things about owning your cable modem is that you don’t have to upgrade it often unless you choose to do so. A modem can last you a lifetime. This is especially true if you stay with the same provider for a long time.

Disadvantages of Purchasing a Modem

Upfront Cost

A regular service plan charges about $10 per month for renting a modem. When you buy your own cable modem, the upfront cost will seem high initially.

A DOCSIS 3.0 modem costs between $50 and $150. You won’t start appreciating your overall savings until after one year.

No Tech Support

When you rent equipment through your Internet provider, tech support is included in the package. When you own a modem, you’re responsible for troubleshooting, installation, and anything else that pertains to the modem.

If you’re not tech-savvy, this might be difficult. Sometimes service providers will help with the initial installation of it since they’re already there. But, in general, you’ll be left to your own devices when it comes to everything else.

Compatibility

There are many types of models for modems these days. Every ISP requires modems to have different features and qualifications to be compatible with their system.

You can’t assume that you’ll simply need a DOCSIS 3.0 modem. Instead, they might require that customers have a DOCSIS 3.1 model that is backward-compatible.

Pay close attention to the number of downstream and upstream channels the modem you want to go with supports. Sometimes ISPs want the modem to support multiple channels to enhance performance.

the average consumer loses over $150 a year renting a router from their ISP

What About the Router?

If you’re planning on using a high-end modem, you’re better off also buying your router. When you rent equipment, most Internet providers offer modems and routers together as a combo.

Since you’re planning on purchasing your Internet equipment, it also makes sense for you to buy both the modem and the router. You’ll be happy to know that routers are much easier to install.

The majority of routers are cross-compatible from company to company. This makes them more flexible than the modem models.

If you want to get extra nerdy with your setup, you can also adjust the settings of a router to your liking. Routers give you more freedom with how you set up your network. It’s easy to adjust Wi-Fi security settings and configure things like remote access.

Is It Cheaper to Buy Modem and Router Separately?

If money is what you’re worried about, it’s cheaper to buy a modem-router combo. And there are a few benefits to buying them together.

Cheaper Than Separate Devices

A modem-router combo is a combination of a router and a modem in one device. Instead of getting two devices, the combo allows you to combine the two into one with a single price tag.

When you buy a router and a modem separately, you end up paying around $100 for each. This totals around $200 for the two devices. Whereas you’ll pay around $150 for a combo.

Easier Setup

Because you don’t have to set up two separate devices, the installation of the combo is much easier. You don’t have to worry about connecting cables that run between the devices. Plus, the setup for the combo is user-friendly for beginners and painless when it comes to changing security settings.

Compact Factor

Because a combo is a single device, it takes up less space in your home. This will, not only make the connection simpler but prevent you from having multiple cables going into separate devices.

Can I Just Have a Modem and Have Internet?

Technically, yes. But, this is not recommended.

Modems are not smart pieces of hardware. If you need to, you can get by with just a modem and connect it to a computer. But, it won’t provide you with any kind of Internet safety.

Routers give you the option to adjust security settings and make your network safer against hackers. This is why it’s recommended for users to get modems and routers as combos.

Does Buying Your Own Modem Increase Internet Speed?

No. Modems can help maximize the speed that your ISP allows. But, modems cannot increase Internet speed.

What modems do is improve whatever speeds you have set up through your service plan. Let’s say you’re supposed to have a speed of 150Mbps.

A rented modem might get overcrowded and only allow you to experience speeds that are around 125Mbps. When you own your equipment, you can remove the bottleneck and allow the connection to improve to its maximum potential.

Things to Consider When Buying a Router and Modem

Let’s recap everything you need to consider so that you can figure out whether you want to rent or buy.

  1. Think about how much you want to spend. You will always save money in the long run. But it’ll be a bigger expense at first. Take a look at the features that the equipment offers and make sure that it can enhance your connection. This will play a big role in helping you decide whether you want to pay more now for purchased equipment.
  2. Make sure the equipment is compatible with your ISP. It wouldn’t make sense to find the perfect router and modem, only to find out that it’s not compatible with your service. Double-check the requirements and then make the purchase.
  3. Ensure that the router you purchase can support the speed you pay for. This goes along with the compatibility. Try to look for a router that offers more speed than your service plan. This will give you the best chances of enjoying the fastest Wi-Fi speeds.

Weigh all your options before you decide if you want to rent or buy. There’s no wrong or right answer. There’s only what’s right for you.

Be patient with the process. Although it’s tedious, it’s worth figuring out if you can save some money in the end.