Ethernet switch isolated and router modem connect Lan on the white background
Do you own your cable modem?

If you answered "no" or "I don't know," there's a good chance that your Internet bill is far higher than it needs to be. By purchasing their modem outright, rather than paying monthly rental charges, consumers who get their Internet service from their cable company could save themselves hundreds of dollars over time.

And even if you do own your own modem, there's still a chance you're getting overcharged.

You've Been Set Up

Let's start at the beginning: getting onto the Internet. To do that, you can't simply attach your computer to a cable outlet. Instead, you need some equipment to transform the signal -- a cable modem, and if you have multiple computers or want wireless access, a router.

When you first call your cable company and ask them to set up service, they'll generally install their own equipment -- and you pay for that privilege in the form of a monthly equipment fee.

The fee varies depending on your Internet provider and what devices you happen to be renting from them. Comcast (CMCSA) charges $7 a month for a modem, while Time Warner Cable (TWC) bills its subscribers $6 a month. Cox will add $7 to $10 to your monthly bill to use one of their modem/router two-in-one combo devices.

Over time, those fees really add up. If you're paying an extra $7 per month, that's $168 after two years. After five years, it's $420 -- and that's assuming no fee increases.

Last year, Time Warner Cable was only charging its subscribers $4 a month to rent its modem, but bumped that fee up to $6 earlier this year (in the process, adding an estimated $150 million to its annual revenue). Another $1 or $2 increase at some point in the near future doesn't seem unlikely.

Even if you own your modem, take a close look at your bill anyway. So few subscribers own their own equipment that cable companies will often just assume that you're renting one of their devices (and charge you for it). I've been overcharged this way in the past myself, and I don't appear to be alone.

Don't Be Boxed In

No one is forcing you to pay these equipment fees -- in most instances, you can get out of them by buying your own hardware. It will require a little up-front investment, but you'll quickly make your money back.

(Unfortunately, this trick doesn't apply to everyone -- it will depend on your individual Internet provider. For example, if you happen to be a subscriber to AT&T (T) U-verse, you're simply out of luck, since AT&T's system requires you to use their proprietary modem.)

To start, you'll need to figure out which modems are compatible with your service -- most cable companies provide a list of compatible devices on their website.

Don't worry -- it's not as complex as it sounds. This Motorola SB6121 works with nearly every major cable provider. You can order it from Amazon (AMZN) for about $68, or pick up a similar one at your local Best Buy (BBY) for $100. Even if you pay the full $100 for it, a Comcast subscriber would make their money back after just 15 months -- or just 10 months if you get it from Amazon.

If you happen to be using one of those two-in-one modem/router combo devices, then you'll also need to purchase a separate router. Those can be had for as little as $20, or as much as $200. Ultimately, you get what you pay for -- cheaper routers will generally provide slower Internet speeds at a shorter range; more expensive ones can handle faster Internet speeds and are better suited for larger homes.

At any rate, choosing your own equipment gives you the flexibility to suit your needs -- the cable company-provided router probably won't work as well as Apple's (AAPL) top-of-line AirPort Extreme.

When You Shouldn't Buy

Of course, buying the equipment outright might not be for everyone. If you're thinking about switching Internet providers in the near future, particularly to one (like AT&T) that doesn't let you bring your own equipment, you might want to wait. Or, if you rent a home with multiple roommates, it might make more sense to split a monthly fee rather than have one person buy all the gear.

But for the majority of consumers, buying the hardware that connects them to the online universe often makes the best sense financially. Those rental fees really start to add up over time, compared to an initial investment that can be recouped in just a few short months.

Motley Fool contributor Sam Mattera owns shares of Best Buy. The Motley Fool recommends and owns shares of and Apple. Try any of our Foolish newsletter services free for 30 days.

Increase your money and finance knowledge from home

What is Inflation?

Why do prices go up?

View Course »

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Gee....all this complaining on here! I would just love to be able to get any cable service! It ends about 3 miles from me with no plan on extending the service. I have to use very slow dial up service through my phone company. Oh they offer internet service through them, but that service ends 1 1/2 miles from my house and when I talk to them they say they have no plans on extending their service either! Not only that but our State government is planning on allowing the phone company's to stop house phones and force us to all use cell phones. Only problem with that is where I live it is considered a dead zone and to use my cell phone I have to drive about one mile in any direction. If I have an emergency, such as a broken leg or maybe even a heart attack, just how am I going to be able to drive myself that distance to use my cell phone. The only time I am able to use my cell phone is when I am in my car, which is why I bought it in the first place. Gotta Love It All!

December 24 2013 at 12:57 PM Report abuse rate up rate down Reply

Hundreds of dollars? How is that possible? My modem rental fee is $5 a month. The cheapest cable modem I can find of any decent quality is $70. It will take 1 year to make up the rental fee then I'm saving $60 per year (!?) after that? Where is the "hundreds of dollars" they're referring to?

December 24 2013 at 9:28 AM Report abuse rate up rate down Reply
1 reply to Velocity105's comment

I assume they mean over a couple of years. After 5 years you would save $300.

December 24 2013 at 9:56 AM Report abuse rate up rate down Reply

i didthiswith comcast and it lasted 4 months untill comcast decided to turn my internet speed way down and tell me i needed a new router. i had called them and had them send me a list of wich ones to buy and bought the correct one and hooked it up my self called them and had them recognize my router all was well im saving 12 dollars a month . then one day i noticed it slowed way dow so i cleaned out my comp and was ok for a few more days then each day after it got slower so icalled comcast and they said my router was out dated and no longer on their list.of routers that is compatibl and asked me if i wanted to update my speed and get a new router from them so that was when i switched to verizon. 125.00 down the drain

December 24 2013 at 7:08 AM Report abuse rate up rate down Reply

My cable company--Comcast__allows us to buy our own but in has to be one they permit that will work well with their service. The other down side is that Comcast does not and will not help you with internet problems after you buy your own equipment. This is the really big pain because you have to repurchase a new router/modem before they will check into problems and will often tell you it is your computer or router anyway.

December 24 2013 at 7:05 AM Report abuse +1 rate up rate down Reply

what gives with huff_poop and this bS! on verifying a facebook/fed_book acct and LINKING THEM ?
uuuuuuh whaaaaaaaaaaaazup with this ?

millions are NOT on facebOOk / never even signed on and for good reason as well.

December 21 2013 at 12:46 PM Report abuse rate up rate down Reply
1 reply to setanta54s_back's comment
T Rock

I dont do farcebook either- I guess now millions have dumped the HUFF in protest -me included. I had used my real name to post for 2 years but that wasn't good enough.AOL even gave me problems posting for a few days

December 24 2013 at 12:35 PM Report abuse rate up rate down Reply

I rent it for $3 a month but to me that is like a lifetime warranty. If the modem breaks and I own it, I have to buy a new one. My rental means if anything happens, my cable company comes and replaces it or mails me a new one and I mail the old one back. Also my cable company recently upgraded all their systems. I not sure if I owned the modem, it would have worked with the new system. When they upgraded, I simply was mailed a new one.

December 19 2013 at 2:10 PM Report abuse +1 rate up rate down Reply

David, here I purchased a Router, and Modem from Charter and I am still paying $55.00 a mth. To much.

December 17 2013 at 11:03 AM Report abuse rate up rate down Reply

i bought my equipment from att u verse

December 17 2013 at 3:17 AM Report abuse rate up rate down Reply
1 reply to KARENS CMPUTER's comment
T Rock

I still lease mine, Have had it replaced twice due to problems and when I need an upgrade it won't cost $70 - they just send me a new one

December 24 2013 at 12:37 PM Report abuse rate up rate down Reply
el duque

I need a new provider, cheap? Full time student and I can't afford 30 dollars a month, please help?

I live in Orange County California.

December 17 2013 at 2:16 AM Report abuse rate up rate down Reply
1 reply to el duque's comment

can't pull in wireless from anywhere ?

December 21 2013 at 12:44 PM Report abuse rate up rate down Reply

All true BUT if you have your home phone line on cable it WONT WORK.

December 17 2013 at 1:30 AM Report abuse rate up rate down Reply