Internet Contracts and Fees: what you need to know
The bottom line: 1–2 year contracts can be good for homeowners and cable TV subscribers, but renters should consider paying extra for contract-free plans. This will help them avoid early termination fees. Don't forget to return leased equipment when your service ends.
The price you see advertised is rarely the price you actually pay. It’s true of most consumer services, and it’s certainly true of Internet and cable service.
Some of these fees and “gotchas” are legitimate parts of a service contract. Others are fluff you can get rid of by arguing on the phone.
Here’s a rundown on the most common fees and contract issues you’re likely to run into with Internet service.
Contract vs No Contract Internet
When you sign up for Internet service, many providers will offer you a cheaper price if you sign a 1–2 year contract. If you live in the country, they might not be willing to give you service without a contract at all.
Contract service can sometimes be a better deal in the long run. This is particularly true for TV bundle customers, since the best TV pricing usually comes with a contract.
Contracts are worth considering if you plan to live at your address for at least two years. The pricing is often dramatically lower, and some providers will “lock in” the price so you don’t have to worry about it raising suddenly, as it sometimes does with month-to-month plans.
However, you need to be aware that breaking a contract can cost hundreds of dollars in early termination fees. Most providers let you cancel for free in the first 15 days or so, but after that you have to pay to switch, even if you’re switching because the provider fails to deliver the speeds promised.
Month-to-month service is better for renters and short-term residents, and is more flexible overall.
If you think you might need to move before the contract is over, consider no-contract service. Some providers offer this as a default these days, especially for Internet-only plans.
Be aware that no-contract plans often cost $10/month or so extra for the flexibility. This can add up quickly if you plan to stay with the same provider for multiple years.
Early Termination Fees (ETFs)
Early termination fees are a common practice among Internet providers that have minimum contract lengths. Here’s the deal: agree to stay with the same company for at least one year, and you get a discount. If you break the contract, you have to pay a fee for every month remaining in the contract.
Can I Get Away With Not Paying the Early Termination Fee?
Early termination fees are included in the contract you agreed to in order to get Internet service. Unfortunately, these are enforceable by law just like any other contract clause. If you fail to pay the fee after breaking a contract, the Internet provider is within their right to submit the claim to a debt collector, and/or damage your credit score.
Most Internet users rent a modem and/or router as part of their service. TV customers also lease DVRs, set-top boxes, and other hardware from the cable company. Each of these items comes with a monthly leasing fee (usually around $5–15).
These fees sometimes show up on your bill as “technology fees,” “modem fees,” and “equipment fees,” among other names.
How Do I Get Rid of the Equipment Fee?
The only way to get around these fees is to purchase your own equipment. Most providers allow this, and even include guides on their site explaining how to do it. See this article about the pros and cons of renting Internet equipment for more information.
Don’t Forget To Return Leased Equipment
If you do lease equipment from the provider, be sure to return it either in person or by mail when you cancel service. If not, you will be responsible for paying the full retail price of the item. You may also be responsible for continuing to pay the monthly fee. Most large providers have retail locations where you can easily return equipment in person.
Depending on your provider and the wiring already in your house, it may be necessary to have a technician or “cable guy” install your Internet and TV or phone service.
How to Get Rid of Installation Fees
The easiest way to get rid of installation fees is to see if the provider has self-install kits available. If your house is already wired for their service, they will usually mail you a box with the router and modem so you can plug it in and set up the network yourself.
This is a good option for Internet-only customers, and it’s not as hard as it sounds. If you’re using your own modem and router, the provider might even be able to set up service for you on the spot without mailing anything. You just need to hook up the equipment and tell them the MAC address on the modem so they can find your device and get the Internet activated.
TV, phone, and misc fees
The fees outlined above are by no means the only fees you might see on your Internet or cable bill. These are simply the most common, and the ones that are most important for the average customer to understand.
For more information, see our exhaustive list of every single cable fee you’ll ever find on a cable TV, Internet, and phone bill.