You already know the scenario. You open the cable or phone bill to see the long list of charges and any surprise price increases that may or may not have been attached this month.
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Although you’ve read how to save money by leaving your cable company in the dust, you might not have the bandwidth to do the cost-benefit analysis and subscribe to multiple streaming services.
What is a modem and a router and why do you need both?
Modems offer similar and different features than routers, which is why most consumers buy both. Most cable companies and ISPs offer connections from their networks to your home via a modem.
For example, if you pay for the Internet through a cable company, you connect the cable directly to a modem, and then use Ethernet cables to connect your devices, such as computers and laptops, to the modem.
Routers are usually sold separately because they are not strictly necessary to get internet. However, you must connect the modem to a router to use more ports than a modem could allow, and more importantly, routers enable Wi-Fi technology.
The router connects to the modem via Ethernet, and you can then connect your Wi-Fi devices, such as cell phones and tablets, to the Internet without having to connect them to the modem via Ethernet cables.
Below is a more in-depth examination of the pros and cons of a modem-router combo.
Stop renting a high-speed modem
A simple, often-overlooked, way to reduce your internet bill can be as simple as buying your own gear. According to analysis by New America (a think tank), most Americans paid on average up to $10 or more to rent a modem from their ISP in 2020.
While not all providers allow you to purchase and use your own gear, some do. By purchasing your own modem and WLAN router, you can not only save money in the long term, but also benefit in several ways.
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Why should you buy your modem and router?
Of course, it’s easier if the cable provider’s technician comes to your home with all the equipment to get you online. Taking the extra step of finding out if you can buy and use your own might be worth the effort. Not only can you save money, here are some additional hidden benefits of buying your own gear:
- set price. What you paid to buy the equipment is the price you pay. There are no surprises as your ISP can increase the device fee at will, much like your service fee.
- Save taxes. Depending on your state, while you may not be taxed on the cost of paying for internet service, you may be taxed on the equipment you rent each month. So not only do you pay a monthly fee, you also pay a monthly tax on the equipment.
- keep your gear. If you’re lucky enough to live in an area with a lot of competition for internet service providers, if you buy your own modem or router (if the technology is compatible), you can keep your devices after you cancel your contract with them old provider and take it with another to use. If you rent your equipment, you must send it back or drop it off. Worse still, you can charge hefty fees if something goes wrong and your gear is deemed broken, damaged or not returned.
- Better Technology. Cable companies and many other ISPs don’t necessarily provide you with the latest and greatest modem or router. And it is doubtful that they will give you the best price. If you end up buying your own gear, not only can you figure out which features are most important to you, but you can also look for the best price. Just make sure the modem or router you buy is compatible with the internet service provider you use.
- Save installation fees. While there is some opportunity cost to setting up your own gear, once you’ve set it up you’re generally good for the long haul. When you rent your modem or router, your provider usually covers the installation fees. If you use your own equipment, you usually have to pay an activation fee, but you may save paying an installation fee.
- More control. While ISPs mean well, many of the modems and routers they sell to their customers are often limited in the settings and features they mandate. If you’re relatively knowledgeable, or just want the ability to tinker with all of the settings and not just those deemed accessible by your ISP, you may want to buy your own modem and router.
Which modems and routers should you buy?
You checked with your internet service provider and know that you are allowed to buy and use your own equipment with their service. Now the question: what to buy?
Depending on the type of service you’re purchasing, you’ll likely need to purchase two pieces of equipment: a modem and likely a Wi-Fi router.
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How to choose the best modem
The modem is crucial to your Internet service. It brings the internet connection from your internet service provider to your home.
Key features in your next modem
- Compatibility. Double check which providers are serving your specific location and see if a) they allow you to purchase and use your own equipment and if so what type of technology is required to optimize the service for that you pay.
- connection type.
Cable – DOCSIS enables data transmission over coaxial cable. Fiber Optic – Like its namesake, it uses fiber optic cables to transmit data. DSL – uses the existing telephone jack for data transmission
- Cable – DOCSIS allows data transmission over coaxial cable
- Fiber Optic – Like its namesake, it uses fiber optic cables to transmit data
- DSL – uses the existing telephone jack for data transmission
- Speed. Usually measured in megabits per second (Mbps), the higher the Mbps, the faster your internet connection.
- bandwidth. Commonly measured in megabits per second (Mbps), this is a measure of the maximum amount of data that can be transmitted at any given time. Example: With a 25 Mbit/s connection you usually get a maximum bandwidth of 100 Mbit/s.
I was just renting a DOCSIS 2.0 modem from my cable company when I realized that while paying for my own DOCSIS 3.0 modem is more expensive up front, it would save me on monthly recurring fees and taxes. Even better, my new modem is helping me maximize the internet speeds I paid for.
For a list of my top 6 modem tips, click here.
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