How Much Should I Be Paying for Internet Service?
Internet bills are one more monthly investment that you have to worry about if you want to stay connected and perform digital tasks like surfing the web or streaming Netflix. Besides the monthly cost, there are fees to keep an eye on, especially if you’ve rented equipment or signed a contract with your internet service provider (ISP). Our guide breaks down all the internet costs you need to know, including how to reduce your monthly internet bill and avoid falling into the pit hole of endless fees.
The Average Internet Bill
It’s rare to find an internet provider whose bills match the prices it advertises. Internet contracts — what most providers call “service level agreements”— typically include the following fees and taxes:
- Equipment rental fees: Modem and router rental fees typically run between $9-$15 per month. However, some providers include equipment rental at no cost, especially with higher-tiered plans. You can avoid this fee with most providers by buying your own equipment. But if you’re not tech-savvy, the rental fee might be worth paying.
- Installation and activation fees: Although they’re one-time costs, installation and activation fees can add $100 or more to your first bill. The good news is providers often waive these fees for new customers and those who choose self-installation.
- Network maintenance fee: The Federal Communications Commission (FCC) requires a quarterly Universal Service Fund fee from ISPs to help fund broadband expansion. It’s rare to see this fee on your bill (especially under that name), but don’t be surprised if you see a Wi-Fi or network maintenance fee. Providers don’t always pass this fee to their subscribers, but the ones that do typically do so at a rate of $5 or less per month.
- Late payment fee: Late payment penalties vary, but these fees show up on your bill either as a percentage of your bill or as a set fee — usually $20 or more. There may also be a restoration or reconnection fee if your service is disconnected for late payments.
- Cancellation fee: If you enter into a contract or sign up for promotional pricing, your provider might hit you with a cancellation or early termination fee (ETF) if you terminate service before the end of the contract. Although the fee amount depends on the number of months remaining in the contract, ending service earlier than expected can lead to charges of hundreds of dollars.
- Data overage fee: Plans with data caps charge a data overage fee when you exceed your monthly data allowance. Usually, the overage fee is around $10 for every 50 GB of data used over the plan amount.
In short, the typical internet bill is about $60 per month when you include taxes and recurring fees.
How Much Should I Pay for Internet?
The price for internet service greatly varies depending on how much speed and data you need, the provider you choose, connection type (i.e., cable, fiber, etc.), and where you live. Most internet providers offer plans with prices starting at around $40-$50 for download speeds of about 100-300 Mbps, and plans can cost $100 or more for gigabit speeds.
The issue is that most ISPs don’t advertise the real monthly cost of their plans. What you see is just the base price, which typically increases between $5 and $25 per month. ISPs often increase monthly rates after the first 12 months. For example, AT&T Internet plans start at $55 per month for the first 12 months before increasing to $65 per month as the regular rate. On top of that monthly rate, AT&T Internet charges an installation fee of up to $99, a $10 per month equipment rental fee, and an ETF of up to $180 or $15 per month left on the contract.
These numbers change according to the provider, but it’s obvious that no matter who you choose, your monthly rate for internet service won’t be the only thing listed on your internet bill.
What You Need Will Determine How Much You’ll Pay
There isn’t much worse than a slow internet connection. Knowing how much speed you need will heavily influence how much you’ll spend on internet service each month. Say you need up to 100 Mbps and unlimited data. Knowing that allows you to compare plans in detail rather than just comparing providers overall. There are often smaller, local providers that offer lower prices than nationwide providers.
It’s easy to get swayed by promotional deals, but you could save money by sticking to a plan that offers enough speed and data for your home. You can remove the guesswork by using our bandwidth calculator tool, which tells you how much speed you need based on your household’s typical usage and how many devices are connected to your network.
Pro tip: Your average Wi-Fi speeds will likely be anywhere between 20-50 percent slower than the advertised download speed because of wireless interference and fade as your distance from the router increases.
Use our speed test tool to see what your current plan offers, and use that as a baseline to decide whether or not you need more speed.
Internet Cost Basics
A number of factors play into the price providers ultimately charge subscribers. Outside of speed and data, an ISP’s monthly rate and additional fees vary based on the type of connection you choose. Most people will have access to only one or two internet connections, with cable and DSL internet being the most available connection types nationwide. (Satellite is the most available internet connection overall, but its speeds can’t compete with wired connection types like cable, DSL, and fiber.)
Choosing the Right Connection Type
If you get the chance to get fiber-optic internet, take it. Fiber often costs the same as cable when you break down the price by speed (per Mbps). Also, only fiber can offer upload speeds as fast as download speeds, giving you a better value than a cable or DSL internet plan.
Take a look at our DSL vs cable vs fiber guide to help determine the right connection for your needs. In a nutshell:
- Fiber internet connections are the gold standard of connections. Not only is fiber considered the most reliable type of connection, but it also boasts speeds up to 1 Gbps for both download and upload speeds. Download speeds fall in the range of 25-500 Mbps for both cable and DSL, staying competitive with fiber lines. Upload speeds, however, are typically much slower, usually between 5-30 Mbps.
- Cable internet often has a speed advantage over DSL through its faster coaxial lines versus DSL’s telephone lines. While DSL speeds often max out at 25-100 Mbps, coaxial cable lines can usually deliver speeds twice as fast.
- At the same time, DSL internet relies on the telephone lines already available. In rural communities, if you compare satellite internet with DSL, the latter ranks as the fastest available connection and allows for consumer choice beyond slower and less reliable satellite connections.
If you live in a rural area, satellite and fixed wireless internet might be your only options. It’s hard to say how much you should pay for satellite or fixed wireless internet, as their prices are almost twice as much as DSL or cable. However, T-Mobile is changing the game for rural broadband with T-Mobile 5G Home Internet, a fixed wireless service that costs $50 per month for speeds up to 115 Mbps. Plus, there are no additional fees with T-Mobile 5G Home Internet.
Watch Out for Additional Fees
Like we stated above, the advertised price for most plans may not be what you pay. Promotional pricing usually includes a condition that you enroll in paperless billing and autopay, or you’ll be charged an extra $5 per month. On top of that, your rate will increase after your promotional period ends. Providers often advertise there are no contracts required for their plans, but you will be required to agree to one if you want the promotional pricing.