Renting vs Buying a Modem and Router

If you have broadband, you’re probably renting a modem and router from your provider. But is the money worth the convenience?

With rental fees from big ISPs increasing by as much as 33% in recent years, many consumers are foregoing the monthly fee and buying their own modems. Equipment that costs $150 pays for itself in a little over a year. After that, you stand to save $8–$10 per month for as long as the hardware keeps ticking. [1]

…The catch is that buying a modem and router isn’t always the best decision. Depending on your situation, installing and maintaining your own home network might be more expensive and time-consuming than it’s worth.

In this guide we’ll lay out the facts and help you decide if you’re better off renting or buying the magic box that makes your Internet work.

What is a Modem and WiFi Router?

router on table
Modems and routers are the main Internet equipment items you'll need. They are sometimes sold as single combined units called WiFi gateways.

You need two pieces of equipment to make your home Wi-Fi work: a modem and a router.

The modem connects to the coax or phone jack in your wall and “translates” incoming Internet signal to something your devices can understand.

The router connects to the modem with an ethernet cable, and broadcasts the Internet around your house as WiFi.

Often, these devices will be sold as a single unit called a “wireless gateway.” We recommend purchasing them as separate units, since it makes it easier to switch out one or the other and opens up more home networking possibilities.

Behind the Scenes of the Modem Rental System

Why do Internet Service Providers (ISPs) rent modems in the first place?

First, because it streamlines the process of getting customers connected. To be fair, the majority of consumers don’t want to monkey around with their hardware and network settings; they just want their Internet to work — yesterday. If your goal is saving time, $8–10 per month for installation and tech support can be, if not a winning proposition, at least a workable one.

Secondly, renting modems is a substantial revenue source for ISPs. The modems and technicians cost money, but in the long run renting hardware is a win for their bottom line. (To the tune of $300 million per quarter.) [2]

Thirdly, modem rentals function similarly to cell contracts as a roadblock to consumers contemplating switching to a different provider. The more hassle it becomes to switch providers, the fewer customer will take the plunge — even considering rate increases and service issues.

Before we get into the nitty-gritty of how modems work and what to look for, consider these pros and cons:

Pros and Cons of Renting a Modem or Router

Pros

  • Free tech support
  • Easy setup (they do it for you)
  • Free replacement when it’s outdated

Cons

  • More expensive in long run
  • Lower-quality hardware
  • Rental prices subject to change

Pros and Cons of Buying a Modem or Router

Pros

  • Saves money in the long run
  • Choice of higher-performance modems
  • Easier to switch providers

Cons

  • Steep upfront cost (~$80–150)
  • No tech support
  • Installation can be tricky

…So Should I Rent or Buy?

Whether to rent or buy a modem and router ultimately comes down to two factors: time vs. savings.

Ask yourself these questions:

  1. Am I technically proficient enough to install it?
  2. Am I going to live in the same coverage area for more than a year?
  3. Am I unsatisfied with the performance of the models my ISP rents?
  4. Is it worth spending a few hours of my time to save about $120/year?
  5. Does my ISP allow customers to use their own modems?

If the answer is “yes” across the board, then buy your own modem and router. Even the expensive models required by certain ISPs can be found refurbished on Amazon for significantly lower than list price. Either way, you save money.

Even if you aren’t terribly technical, it’s sometimes possible to get help from your ISP technician, at least with the installation. Just make sure you have the modem and router purchased and ready when you call to get your service hooked up; since they’re coming to your home anyway the technician should be able to double-check that everything is compatible, and will likely set it up for you at no extra cost. Just be polite!

Another important bullet to note in the list above is your service area; if you plan to move, there’s no guarantee that the modem you purchase will be compatible with the requirements of your new ISP. Some providers don’t actually allow you to use your own modem with their service.

Things to Consider When Buying a Modem:

Before you can hook up a new modem you have to decide which to buy. It’s an investment and should ideally last more than a year or two to pay for itself, so you should have a basic idea of how modems work and what the standards to look for are. Important factors here:

  • ISP requirements
  • DOCSIS standards

Figuring out your ISP’s requirements is easy: just check their site for the list of modems compatible with their service. Chances are they’ll have a convenient list of recommended models and specs. If they don’t, call them up and double check before you buy anything.

DOCSIS (Data Over Cable Service Interface Specification) standards are a little more complicated. Long story short, DOCSIS is an international standard for transferring data via cable TV.

The specifications come in ratings (DOCSIS, 1.0, DOCSIS 2.0, etc.). The only part that matters to you, the consumer, is what kind of speeds each specification can handle.

The current cutting-edge specification is DOCSIS 3.1. A DOCSIS 3.1 modem can be a good investment if you plan to upgrade your speed in the next couple years, or simply have been having performance issues with the 3.0 or lower modem provided by your ISP. On the other hand, the current standards are backwards-compatible with older specs, so unless your broadband service delivers speeds of 10gbps, you might be better off with a cheaper, older model. The choice here comes down to your pocketbook, and how much intensive streaming you intend to do.

Here’s a rundown on the up/down speeds the specs currently on the market can handle. Check what speeds you’re paying for, and so long as the spec of your new modem can handle that speed you’re set to jet:

  • DOCSIS 1.0/1.1: 38Mbps Down / 9Mbps Up
  • DOCSIS 2.0: 38Mbps Down / 27Mbps Up
  • DOCSIS 3.0: 152Mbps Down / 108Mbps Up
  • DOCSIS 3.1: 10,000Mbps Down / 1,000Mbps Up
  • [3]

Setup Considerations

The overall process of installing a new modem looks like this:

  1. Unplug old modem
  2. Plug in new modem
  3. Activate MAC (Media Access Control) address
  4. Activate router, if applicable

Unfortunately, the details of each step differ from provider to provider. Some require a particular order with the cables… or explicitly deactivating the old rented modem… or activating online rather than over the phone… among other small considerations.

The important part here is that you pay close attention to the instructions on your provider’s site. Activating the MAC address is the most important step; it’s generally printed in teeny-tiny print on a sticker under the modem.

What About the Router?

Most ISPs that rent modems also want to rent you a router. (Or, more commonly, a combo device.) While there are pros and cons to renting a modem, you’re almost always better off buying your own router, especially if you’re using a high-end modem.

Routers are easy to set up compared to modems and cross-compatible from company to company, so even if you switch providers you’re not going to be stuck with the bill for your pricey hardware.

Using your own router also gives you more control over your network, if you want to indulge your inner nerd and configure goodies like remote access and custom security.

How to Find the Right Router

The specifications behind routers are pretty complex, and wading through the marketing fluff and jargon can be a little intimidating.

On a basic level though, your goal in picking out a modem is simple: to get a router that can handle the same speeds as your modem. (And deliver those speeds to multiple devices; the more devices, the more a high-end router stands to help you.)

Here are the factors that matter for the average user, assuming you want to stream video, play a few video games, and share the network with your roomies or family:

Network type:

Wi-Fi is based on a wireless networking standard. The network type your router supports sets the ceiling on the speed and range of your home wireless network. The latest standard is called 802.11ac (catchy, right?), and allows Gigabit speeds, AKA 5G Wi-Fi.

The catch is that 802.11ac must be supported by your device as well as your router. If your devices are 802.11n or lower, an 802.11ac router won’t do you any good, and you can get a great 802.11n router for much cheaper.

However, then you’re stuck with a 450 Mbps limit if you update your devices. Assuming it’s in your budget to go 802.11ac, it’s a good investment.

Here are the standards, and what speeds they support:

802.11ac: Gigabit speeds

802.11n: 450 Mbps

802.11g/a: 54 Mbps

802.11: 2Mbps

Router Features Worth Paying For

The appearance of routers varies dramatically between manufacturers, but the core functionality is the same: spreading your Internet connection between various devices and allowing sharing between those devices.

802.11AC vs 802.11N

Routers generate Wi-Fi, and the Wi-Fi standard is periodically updated to allow faster speeds and better security. The latest Wi-Fi standard is 802.11ac, but many devices on the market still come with 802.11n, which is almost as good.

For the average user, an 802.11n router will be sufficient when it comes to speed — however, the 802.11ac standard is significantly more secured against USB adaptor hacks, and is fully backwards-compatible with all older devices.

Both types support beamforming, dual-band, and other helpful features that squeeze all the performance possible out of your home network (however, the subject of beamforming is complex and as a rule of thumb works much better on the 802.11ac standard).

The benefit you’ll enjoy day-to-day with a 802.11ac router is higher 1Gbps throughput (vs. 600Mbps limit on 802.11n routers) and the ability to broadcast Wi-Fi over a longer distance on the 5.0GHz wavelength. Overall, 802.11ac should be your first choice if you live in a populated area where hacking is a concern. It is also a good choice for gamers, high-use streamers, and other power users who benefit from the extra speed and lower latency.

Dual-Band Wi-Fi

Wi-Fi makes use of two “bands” of the radio spectrum: 2.4GHz is the old standard, with newer routers supporting additional 5.0GHz networks. The 2.4GHz band is often crowded with other Wi-Fi networks in apartment buildings and urban areas, making the more spacious 5.0GHz band a huge bonus when it comes to optimizing your network.

Dual-band routers are able to create networks using both bands at the same time, splitting your devices between the bands to increase the available bandwidth and boost speeds. By running 802.11ac devices on 5.0GHz and older devices on 2.4GHz, dual-band routers alleviate the “lowest common denominator” effect that old devices can have when sharing the 2.4GHz band with newer 802.11ac devices.

Beamforming

If you’re looking at routers, chances are Wi-Fi performance is first and foremost on your mind. While smart network users will plug in high-use devices like TVs or desktop computers, the fact is that plugging in laptops isn’t terribly practical.

The concept behind Beamforming is simple: rather than radiating Wi-Fi in all directions like a standard “Wifi bubble,” beamforming allows your router to target the devices in your network and broadcast Wi-Fi signal selectively to that device’s location.

Beamforming helps to compensate for the reduced broadcast area of Wi-Fi over the new 5.0GHz band supported by new 802.11ac and 802.11n routers.

External Antenna Compatibility

If you’re having trouble connecting to the network on the outer edges, an external antenna can dramatically boost the network strength. External antennas come in omnidirectional and directional flavors. Omnidirectional antennas boost the range a little in all directions while directional antennas concentrate on a target area — similar to beamforming, but without live tracking.

Gigabit Ethernet Ports

One of the best ways to boost your network speeds and open up bandwidth for more devices is to wire stationary devices like your television or desktop computer directly to your router via an ethernet cable. Wi-Fi is great for mobile devices like laptops and smartphones, but the latency issues inherent in a wireless setup can become very frustrating when it comes to streaming video, games, and file transfers.

Most high-end 802.11ac routers will come with gigabit ethernet ports, and it’s definitely a worthwhile feature for wiring high-use devices. The 100Mb/sec ports that come on cheaper routers will wind up making your wired connection even slower than your wireless one.

Guest Access

Having the ability to segregate guest traffic from internal traffic can do wonders for speeds on a shared network. For a dual-band router, check that you’re able to limit guest traffic to the 2.4GHz network — leaving the supercharged 5.0GHz network free and open for internal use without cutting out the less critical users.

Network Prioritization

You’re likely to see the terms Quality of Service (QoS) and Wireless Multimedia Extension (WMM) kicked around a lot while wading through router specs. Both refer to different ways to manually control the prioritization of devices on your network, but the fact is that gains from implementing WMM and QoS are usually minimal at best.

Rather, what you should be looking for on a new router is network prioritization. Previous generations had difficulty with WMM and QoS playing together, resulting in a move towards an automated system controlled via the admin panel that allows selectively prioritizing devices based on type, ID, and other factors.

The Big Picture

Regardless of whether you view equipment fees as an overpriced add-on or a reasonable service charge, buying a modem (and router) will save money for most consumers.

Besides offering some annual savings, getting your hands dirty installing your own modem demonstrates the basics of how Internet works, making you more independent and informed when considering your broadband options in the future.

  1. https://money.cnn.com/2015/01/02/technology/comcast-time-warner-cable-modem/
  2. https://www.forbes.com/sites/kenkam/2014/09/19/comcast-cable-modem-rentals-contribute-more-than-olympics/
  3. https://apps.cablelabs.com/specification/

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