Buying vs. Renting Modem: Easy Way to Trim Internet Bill

Published: Wednesday, November 06, 2019 @ 10:00 AM

Do you rent your modem from your internet service provider? Did you know that you may be missing out on savings on your monthly internet bill as a result?

Some internet providers would like you to believe that you need to rent a modem or a gateway (modem and router combination) from them each month in order to receive quality service. That’s not necessarily true.

In many cases, these companies are merely implying you need their modem in hopes you’ll blindly pay their rental fees. Truthfully, you’re capable of breaking this cycle with the purchase of your own modem.

I tried this for myself several years ago and have never turned back. My internet bill is lower as a result, and I’m able to enjoy an upgrade to my modem whenever I feel it’s necessary.

In this article, I’ll try to explain why purchasing your own modem is a good idea and how you may be able to lower your monthly internet bill in the process.

Why Rent an Internet Modem When You Can Buy One?

In some minor ways, there are parallels to the home buying vs. renting debate in the modem decision. No, you’re not putting hundreds of thousands of dollars on the line with the biggest decision of your life. But you are weighing some similar factors on a much smaller and less consequential scale.

Before I persuade you to consider purchasing your own modem or gateway, I want to acknowledge that — just like in housing — sometimes the right answer is to rent instead of buying.

Ask yourself some of these questions before deciding to rent or purchase a modem:

Are You Going to Be Using the Same Internet Provider for a Long Period of Time?

If you’re in a short-term living situation, it could make sense to rent the modem from your internet service provider. Modem compatibility is a big component of the buying decision. You run the risk of purchasing a modem that is compatible now, but may not be compatible with your next internet service provider.

Are You Tech Savvy Enough to Fix Your Own Modem If Issues Arise?

I’m not talking about knowing how to engineer the next piece of technology here, but can you get your modem back up and running after a bad storm takes out power?

If you’re not able or willing to invest a bit of time familiarizing yourself with troubleshooting potential issues with your modem, renting may be the best solution for you. Renting a modem usually provides you with customer support. You’ll be able to let the experts fix your issues, much like a landlord on a home rental.

Are You Prepared to Pay for a Replacement If Your Modem Breaks Tomorrow?

You’re taking a calculated gamble when you purchase your own modem. You hope it lasts from the day you take it out of the package until you no longer need it. But the reality of electronics is things don’t always work as intended. There likely is some limited warranty protection against certain issues with new modems, but that varies greatly. We have to assume that a busted modem means an out-of-pocket expense for a new one.

The advantage to renting a modem is that your internet service provider will replace it if it malfunctions, often at little or no cost for the customer. If your budget is tight and you can’t risk this type of hiccup, perhaps renting the modem is an option.

But will that actually save you money in the long run? That’s the topic I want to cover next.

Cost Analysis: Renting vs. Buying Your Internet Modem

It’s time to break out our calculators. Now that we’ve covered some of the instances that could point to renting your modem, I want to talk math.

While renting could provide some short-term perks, it probably isn’t the friendliest on your bank account. With many major internet service providers, we’re going to see a big savings from purchasing a modem of our own.

First, let’s identify a solid, affordable sample modem that most internet users could purchase: The ARRIS SURFboard SBG6400 is $64.99 at Walmart.com.

Next, for the purposes of this exercise, let’s look at the approximate monthly equipment rental cost from some popular internet service providers. Since many providers offer bundles in 12 and 24-month increments, I have charted estimated costs for two years of renting a modem:

Approximate Monthly Equipment Rental Fees

Months Comcast Xfinity Verizon Charter Spectrum Cox
1 $13 $12 $5 $10.99
2 $26 $24 $10 $21.98
3 $39 $36 $15 $32.97
4 $52 $48 $20 $43.96
5 $65 $60 $25 $54.95
6 $78 $72 $30 $65.94
7 $91 $84 $35 $76.93
8 $104 $96 $40 $87.92
9 $117 $108 $45 $98.91
10 $130 $120 $50 $109.90
11 $143 $132 $55 $120.89
12 $156 $144 $60 $131.88
13 $169 $156 $65 $142.87
14 $182 $168 $70 $153.86
15 $195 $180 $75 $164.85
16 $208 $192 $80 $175.84
17 $221 $204 $85 $186.83
18 $234 $216 $90 $197.82
19 $247 $228 $95 $208.81
20 $260 $240 $100 $219.80
21 $273 $252 $105 $230.79
22 $286 $264 $110 $241.78
23 $299 $276 $115 $252.77
24 $312 $288 $120 $263.76

In the most simple form of this cost analysis, we’re looking for the break even point for the cost of the purchased modem vs. the monthly charge from the internet service provider.

Rounding up for tax and potential shipping charges for our purchase of a $65 modem, let’s call the final cost $75. As you can see on the chart, that number will be approached and in some cases surpassed by the six-month mark of the rental process. From that point forward, you are losing money each month that you rent instead of purchasing.

Let’s take Comcast Xfinity, for example. If they are charging $13 per month for their modem equipment fees, you will be charged $312 by the end of a two-year agreement. You could have saved roughly $250 of that by purchasing your own modem instead. That’s significant savings!

And if you’re able to get three, four or even five years out of the modem you purchase that’s even better.

What About My Wireless Router?

With all of this talk about savings through modems, you may be wondering how wireless routers fit into this discussion. The router is a device that provides a Wi-Fi connection for wireless devices such as laptops, tablets and smartphones.

A router can either be connected to a modem to provide internet access to wireless devices, or it can be built into a two-in-one device that has both modem and router capabilities. These are commonly referred to as gateways.

Many internet service providers now rent gateway devices that have both the modem and router built into one device. So, if you are considering purchasing a modem in place of renting one of these devices, you will need to make sure the new modem you are purchasing also has router capabilities. If you do not purchase a gateway, you’ll need to purchase the modem and router separately and then connect the two to provide Wi-Fi in your home.

If you already have a modem purchased and are looking to add on a router for wireless access, there are plenty of cost-effective options. As of October 2019, a NETGEAR N600 Router can be purchased for $49.99 through Target.com.

If you are looking to purchase a new modem, I have spotted a couple of gateway devices that will provide the desired Wi-Fi connection with a single purchase.

Best Values Among Approved Modems

The three most important thing to remember when looking to purchase your own modem:

  1. Make sure that your modem is compatible with and approved by your internet service provider.
  2. Your modem’s download and upload speeds need to either match or be greater than the speeds you’re paying for through your internet service provider. If they aren’t capable of performing at the top speed, you won’t be able to enjoy the speed for which you’re paying.
  3. You will need router capabilities to have Wi-Fi in your home. This can be accomplished by purchasing a gateway, which is a router and modem combo, or by purchasing a standalone router to accompany your new modem.

Here’s a look at a couple of good values on the modem market, both of which are gateways with built-in routers:

ARRIS SURFboard SBG6400

  • Price: Available at Walmart.com for $64.99
  • Approved: Comcast Xfinity, Cox, Charter Spectrum, Bright House Networks
  • Download Speed: Download: 343 Mbps

NETGEAR CM700

  • Price: Available at Amazon.com for  $96.30
  • Approved: Comcast Xfinity, Cox, Charter Spectrum
  • Download Speed: 500 Mbps

Again, you’ll want to make sure these gateway devices are compatible with your internet service provider. Next, let’s take a look at the approved list for modems and gateways from some of the major service providers.

Approved Modems for Major Internet Service Providers

Comcast Xfinity

Comcast Xfinity has a handy website to help you determine which modems are compatible with its service. It requires that you enter your zip code and internet speed to give best results.

If you are looking for internet speeds of up to 1000 Mbps, there are only 11 compatible modems. If ratchet it all the way down to a speed of 25 Mbps, there are 87 compatible modems. Use the above link to verify, but that opens your options up quite a bit.

Cox

Cox provides a list of “certified” modem options for personal internet use.

Charter Spectrum

Charter Spectrum has a list of approved options on its website.

AT&T

I went through the signup process on AT&T, and it appears a $10 Wi-Fi Gateway equipment fee is required. If your internet provider is going to require that you pay a monthly fee for their modem, it likely doesn’t make sense to purchase your own.

Renting vs. Buying Modem: Which Is The Right Choice For Your Home?

So, do you think you’re ready to make the buy vs. rent decision?

If you’re at a spot in life where you feel comfortable making a 24-month commitment to an internet decision, it’s really hard to argue against buying a modem.

As we found in the cost analysis, you’re likely to recoup your money spent on the purchase in year one monthly rental savings. That leaves year two as pure savings, with the potential for more savings in year three and beyond.

If I’ve talked you into considering a modem purchase, make sure that you check with your internet service provider for a list of compatible modems.

Also, be sure that you understand the amount of Mbps you will be receiving each month. You’ll want your new modem to be able to process speeds on par with your top possible speed, at minimum.

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