Do you want to spend unnecessary extra money on something? Of course not! Better read this if you are going to to purchase internet service and do not have a modem or router already. Once you’ve decided what internet provider to use, you will need to buy a modem and router, a combined modem router (also called a gateway), or rent one of the first two options. The internet provider will most likely let you rent the modem and router for a rental fee of around $8-$13, though some service packages may come with free rental.
What is a Modem
A modem is the first connection between you and the internet service provider in your home. It processes the signals from the cable/line coming from outside. Service providers usually have models they approve, so you need to check!
What is a Router
A router then lets you connect to the internet that the modem has processed. You can connect to the router with a ethernet cable or use WiFi. Any router should work with any modem.
What is a Gateway (aka Modem Router)
This combines the functionality of both a modem and a router.
Modem and Router Standards/Specs
All of these have standards and specs that determine the maximum supported speed. The modem is the one to watch out for as far as compatibility with your service provider. Other standards/specs are mostly interchangeable and backward/forward compatible.
Now, how to decide?
If you need to pay a rental fee or buy your own, then most likely you should buy your own equipment! I will list some pros and cons. If you receive a free rental, and don’t have specific performance requirements, then go with the rental since it’s free! However, you might want to search around for other service packages that don’t come with a free rental which will most likely be cheaper!
Buying your own modem and router
| Pros | Cons |
|---|---|
| Can choose specific ones for desired performance (ie you need 1+Gbps for your your entire family/housemates who all game/stream HD videos?) | Larger upfront cost |
| You own it, so there will be no extra recurring rental fees. Save $150/year in the future! (analysis below) | Will need to pack and move equipment or sell when moving homes |
| Need to research instead of just accepting service provider's equipment | |
Analysis: Buying a Modem and Router to save $150/Year
In my case, I ended up buying a modem and router, though I did rent a gateway for 4 months for $11/month, with a $19/month 25Mbps internet service. $30/month total was very reasonable, and I had just moved across the country and didn’t want to deal with buying equipment myself. However, 4 months in, the service provider increase the rental price to $13/month! I have a 12-month contract but that only means my internet service cost of $19/month won’t change.
Initially, rental cost was $11/month * 12months = $131/year. I might move after 12 months to a different apartment, and use a different provider that would require a different modem. Most importantly, I was quite oblivious to personal finances, and only started paying attention and learning about all of this after starting my first job. With the rental price increase, I had $13/month * 8 months = $104 left to pay. This was still a good chunk of money! I decided to look for a router and modem. In future years, $13/month * 12 months = $159/year!
I found a Netgear modem and a Netgear router for $60 each on Amazon.com, both had a $10 coupon as well. Also, I used Amazon gift cards I had bought with my new Discover it Cash Back credit card, so I essentially get another 10% off. This comes from a 5% Cashback (revolving categories: Oct-Dec 2018 and Oct-Dec 2019 is Amazon) and 100% Cashback match your first year for a total of 10%! As a side note, if you sign up for the card, use my referral link http://refer.discover.com/s/3dzi5i. You don’t have to use mine if you don’t want to. You can also ask your friends. Both people get $50 and you can refer up to 10 people a year.
In the end, it cost me $96 for my modem and router. The modem’s speed is 200Mbps, the router is up to 1200Mbps. Both are PLENTY fast for my 25Mbps internet plan for streaming HD content and browsing the web.
At $11/month, It would have paid itself off in 9 months. At the increased price of $13/month, it would pay itself off in 8 months. Thus at the end of my 12-month contract that has 8 months left, I will have just paid off the modem and router, and saved an extra $8. Moving forward, I would save $13/month if I stay with a internet provider that is compatible with my modem. Even if I need to get rid of these for whatever reason, I could sell them and make back more money. If I had bought my own equipment at the beginning, I would have saved even more! However, with my new Discover credit card and the amazon coupons, I saved $30, partially offsetting the $44 I paid for the first 4 months of rental.
Netgear AC12000 Router: https://www.amazon.com/gp/product/B0756QFLXP
Netgear CM500 Modem: https://www.amazon.com/gp/product/B06XH46MWW
For most people, buying is the way to go. These electronics can last around 5 years, and save you hundreds of dollars in the end! If you want higher end modems and routers, those can cost about $100-$300 more. They will still most likely pay themselves off after a few years. However they will also most likely be much better than the rental equipment anyways, so a simple cost analysis wouldn’t be fair good comparison.
Why a Separate Modem and Router is better than a Gateway (Combined Modem Router)
Choosing a separate modem and router instead of a combined gateway is a good idea because if either breaks, or you need to change modems to match a new service provider, you are not stuck replacing everything. Also, if you want to upgrade one or the other for speed purposes, it will be easier. A gateway may look a little neater, but with a few minutes of planning and organizing, a separate modem and router will mostly integrate into your house without a hitch.
When to Rent
The two main reason I could think of where renting makes sense is if
1. You might move in less than 6 months and cannot bring your router/modem with you when moving.
2. You don’t care to save ~$150 a year in the future and don’t care about having a super fast modem/router
Setup
As far as setup went, it took me about 30 minutes to get my own modem and router all setup. It felt much faster then setting up the gateway that I was renting. I followed the quickstart guides, but used the router’s default network ID and password to connect to my laptop to setup the modem, instead of connecting to the modem with an ethernet cable since my laptop has no ethernet port. Let me know in the comments if you have any questions or what you think about renting vs buying!
