Comcast earns an estimated $300 million per quarter from cable modem rental fees

[Shawn Knight]

Broadband modem rental fees are usually around $8 per month regardless of provider. Although it is cheaper in the long run to buy your own modem, most people would rather simply pay the fee each month to not have to fool with it which is exactly what ISPs like Comcast want you to do.

As it turns out, modem rental fees are an absolute cash cow for ISPs. A recent Forbes article estimates that a staggering 90 percent of Comcast's broadband customers rent their modems.

Doing a bit more math, the publication surmises that cable modem rental fees contribute between $275 million and $300 million per quarter to Comcast’s bottom line. And if recent rumors in the DSL Reports forum are accurate, the monthly fee could be increasing by $2 in the not-too distant future.

The good news is that you can avoid this monthly rental feel altogether simply by supplying your own modem (if you haven’t already). They’re readily available at retail stores like Best Buy, Target and Wal-Mart or online at any number of sites. A basic modem will set you back around $80-90 which, while more expensive up front, will certainly save you money after the first nine months.

If you’re really curious as to the potential cost savings, just do the math based on how many years you’ve been paying the rental fee.

And if you do decide to go the DIY route, be sure to check your bill each month thereafter to make sure your ISP doesn't try to sneak the fee back in.

Image credit: CNET

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https://www.techspot.com/news/58202-comcast-earns-an-estimated-300-million-per-quarter-from-cable-modem-rental-fees.html

 

[p51d007]

Just like staying under a 2 year cell phone contract, because they think it's cheaper to buy a "299 dollar" phone under contract, than just buy it full price, and switch to an MVNO.

 

[MilwaukeeMike]

As it turns out, modem rental fees are an absolute cash cow for ISPs

As it turns out, there are entire businesses that survive on nothing but rental fees. It's a perfectly normal thing to do. Think of the alternative... you want internet and the first thing you have to do is buy a modem, either yourself or from the ISP. If ISP made us buy our modem for $90 each (and that's in 2014, what would they have cost 6-8 years ago? $250?) If that were the case, we'd have a story about what a cash cow modem sales were for the ISP.

The internet requires a modem, a modem requires money. This is just the way it is... I don't think ISPs are crooks because of it.

 

[mctommy]

As it turns out, modem rental fees are an absolute cash cow for ISPs

As it turns out, there are entire businesses that survive on nothing but rental fees. It's a perfectly normal thing to do. Think of the alternative... you want internet and the first thing you have to do is buy a modem, either yourself or from the ISP. If ISP made us buy our modem for $90 each (and that's in 2014, what would they have cost 6-8 years ago? $250?) If that were the case, we'd have a story about what a cash cow modem sales were for the ISP.

The internet requires a modem, a modem requires money. This is just the way it is... I don't think ISPs are crooks because of it.

They are crooks when they increased these modem rental fees from $2-4 to $8+. Modem prices didn't increase 100-400% for them... rental fees shouldn't either.

At $10/month for rental fee, you may as well buy one since you'll be recouping it within 8 months. And those $80 modem are pretty good docsis 3.0 which would be adequate for current broadband connections.

 

[tonylukac]

Att usually supplies the uverse router/gateway free if you keep the service for 1 year. They did it for my brother and I. Mine even went out and they replaced it under the guarantee, hand delivered and installed free.

 

[BlueDrake]

As it turns out, modem rental fees are an absolute cash cow for ISPs

As it turns out, there are entire businesses that survive on nothing but rental fees. It's a perfectly normal thing to do. Think of the alternative... you want internet and the first thing you have to do is buy a modem, either yourself or from the ISP. If ISP made us buy our modem for $90 each (and that's in 2014, what would they have cost 6-8 years ago? $250?) If that were the case, we'd have a story about what a cash cow modem sales were for the ISP.

The internet requires a modem, a modem requires money. This is just the way it is... I don't think ISPs are crooks because of it.

Actually it will vary what the modem has included. I think mine was supposed to be, around $100-150 but it was waved or something. I upgraded from a 'grandfather' plan at 8/1 unlimited to a 15/10 capped, so I guess they figured it'd be easier to make up the cost?

It's suited for obviously internet (4 ethernet connections) along with wifi. I'd have to actually bother checking, but it comes with upgraded encryption to my previous one. Downside I notice is that, it'll take a good minute or two to connect once it's lost power. My prior router was I think around $5-10 per month (have to check), and I had that for at least a good 4-5 years? That's a lot in the grand scheme of things, and some providers are picky about things too.

Switching providers is going to be costly, but it'll net me a lower bill once I can actually afford switching. Due to it's an up front cost, once you make the switch over. Instead of a bill coming in the mail, which is a little bit painful with a small budget. Basically pay off one ISP, and then have to pay another up front. Since it's connection costs and such, that I find really annoying but I'm going dry loop instead.

This phone I barely use, is costing me a good $40-50 for the little I use it. Going to likely use Skype to land, or get a basic smartphone since I don't bother with the extras. That's what I have a PC for, and I don't go out enough to make the extras worth it.

 

[gamoniac]

As it turns out, modem rental fees are an absolute cash cow for ISPs

As it turns out, there are entire businesses that survive on nothing but rental fees. It's a perfectly normal thing to do. Think of the alternative... you want internet and the first thing you have to do is buy a modem, either yourself or from the ISP. If ISP made us buy our modem for $90 each (and that's in 2014, what would they have cost 6-8 years ago? $250?) If that were the case, we'd have a story about what a cash cow modem sales were for the ISP.

The internet requires a modem, a modem requires money. This is just the way it is... I don't think ISPs are crooks because of it.

Agreed. Besides, if the modem breaks, they will replace it at no cost, and not everyone knows how to set it up. Recently, my new, unused SB6120 that I bought years ago broke on its first use. I ended up having to rent the modem from Comcast for a month. I then got another (unused, new one from Craigslist) to replace it a few weeks later. All worked out for me.

 

[yRaz]

My comcast modem needs to be replaced about once a year and comcast replaces it for free. It might be cheaper to just buy one, but it is much easier to have them replace it then have to buy a new one constantly

 

[davislane1]

Anyone else annoyed by articles that use "profit" to get clicks and never include the more important figure, profit margin? $300 million per quarter means squat w/o knowing how much of it they keep.

 

[seefizzle]

I moved and didn't tell Comcast. I took my modem to my new house across the city and plugged it in and everything worked. Months later I changed my address with Comcast. They tried to charge me installation fees. I called them and promptly explained to them that no one had ever been to my house to install anything and they couldn't provide any documents that showed a particular date where anything had been done at all. I got them to drop the install fees. Somewhere in this whole mess Comcast forgot that I had the modem. I've been on the phone with them and they think I have my own modem. They don't charge me this modem rental fee. I've also cut cable service and only pay for internet. I've whittled down to the lowest level the amount of money I give to Comcast.

 

[Guest]

Well I'll bet you feel good now that you are a thief and for raising costs for those that pay for their rental modems.

 

[Guest]

My issue is that I get internet and phone so the selection of those modems is less and they cost more. I was thinking about buy one but I'm glad I didn't as a few months later Comcast upgraded the network making the unit I was interested in obsolete.

 

[DDG4005]

Well I'll bet you feel good now that you are a thief and for raising costs for those that pay for their rental modems.

Comcast doesn't need a reason to raise their fees; they'll do it if the execs feel it's "necessary".

 

[Skidmarksdeluxe]

My comcast modem needs to be replaced about once a year and comcast replaces it for free. It might be cheaper to just buy one, but it is much easier to have them replace it then have to buy a new one constantly

Why the heck does it have to be replaced annually? It's not as though it's obsolete after a years useage like some hi tech gadgets.

 

[wiyosaya]

Fiddle with the modem? WTF? Buy it, take the MAC address off it and call the provider to give them the MAC address, plug the modem in to the power outlet, connect the coaxial cable to it, connect Ethernet to it. Done.

IMHO, the article should have said most people are too lazy to bother with it.

As far as them breaking goes, look at the rental fee as an extended warranty. However, MOST, if not all, extended warranties are a complete waste of money, and firms like Consumer Reports recommend NOT buying them. Any modern cable modem will likely become outdated before it breaks.

 

[wiyosaya]

Anyone else annoyed by articles that use "profit" to get clicks and never include the more important figure, profit margin? $300 million per quarter means squat w/o knowing how much of it they keep.

Bottom line is usually considered profit after expenses.

 

[davislane1]

Anyone else annoyed by articles that use "profit" to get clicks and never include the more important figure, profit margin? $300 million per quarter means squat w/o knowing how much of it they keep.

Bottom line is usually considered profit after expenses.

Net profit isn't profit margin. Net profit gives you the company's income after expenses, profit margin provides the appropriate context. For instance, there's a significant difference between an est. $300 million net income on a 2% profit margin and the same income on a 40% profit margin.

 

[yRaz]

Why the heck does it have to be replaced annually? It's not as though it's obsolete after a years useage like some hi tech gadgets.

I agree, but I have not had much luck with comcast modems. I swear everyone they give me is refurbished

 

[Guest]

You shouldn't have to get it replaced every year still. ISP provided modems are usually the cheapest they can get. This is why they don't last long and often have less power than the ones you can buy. If you go and buy one, yes you pay more but it's one shot and will last your 5+ years. You save astronomous amounts of money and you get a modem that performs better on top of lasting much longer.

 

[Guest]

This goes the same with routers. I always bypassed the ISP routers. Well that's for ISPs that provide both the modem and router separately (with both having their own fees). Routers we can get are often more powerful than ISP provided routers not only the modems. Just replaced my 7 year old D-Link router with a Linksys wrt1900ac and it's night and day, although the linksys is more powerful by quite a lot. The only think I don't like about that linksys router is their dns issues with the dhcp wich they say they'd fix in another firmware. I just have added a dhcp server to the old computer I run as a media server.

 

[cmbjive]

As it turns out, modem rental fees are an absolute cash cow for ISPs

As it turns out, there are entire businesses that survive on nothing but rental fees.

Yep, just Hertz and U-Haul have made a business out of renting stuff, there is a gold mine in renting stuff.

 

[cmbjive]

I moved and didn't tell Comcast. I took my modem to my new house across the city and plugged it in and everything worked. Months later I changed my address with Comcast. They tried to charge me installation fees. I called them and promptly explained to them that no one had ever been to my house to install anything and they couldn't provide any documents that showed a particular date where anything had been done at all. I got them to drop the install fees. Somewhere in this whole mess Comcast forgot that I had the modem. I've been on the phone with them and they think I have my own modem. They don't charge me this modem rental fee. I've also cut cable service and only pay for internet. I've whittled down to the lowest level the amount of money I give to Comcast.

That isn't unique to Comcast. Qwest (now Centurylink) tried doing the same thing and I told them that I have never allowed any Qwest employee in my home to setup my DSL service. Sometimes an honest mistake is an honest mistake.

 

[Camikazi]

Why the heck does it have to be replaced annually? It's not as though it's obsolete after a years useage like some hi tech gadgets.

I agree, but I have not had much luck with comcast modems. I swear everyone they give me is refurbished

They usually are since when you cancel service you are supposed to give it back, so they clean it up check it and then rent it out to the next customer. Very few people ever get a new modem from cable companies. Check the cable boxes and you will see they are probably refurbished as well.

 

[Vrmithrax]

I own my own modem and use Comcast, but they have some interesting ways to nudge you towards renting their hardware. Like, for example, I was having issues with all of my ports being closed (needed to open a few for some software testing). Struggled with it for hours, nothing would work. Went through another hour of rather pathetic customer service, at which time they repeatedly denied blocking all but the "commonly used for bad things" ports. Finally got someone that knew anything, and was getting somewhere until he had to check my modem. Since it wasn't an "official" Comcast modem, they won't touch it. And quite frankly they can't, since there is zero tech ability in the tech support department, if the issues go off of the scripted decision tree support documents they use. So, it appears my modem is set upon the initial online configuration with Comcast to block ports, but no way to fix that after that point. But, I was assured if I got one of THEIR modems, the problem would go away.

 

[Camikazi]

I own my own modem and use Comcast, but they have some interesting ways to nudge you towards renting their hardware. Like, for example, I was having issues with all of my ports being closed (needed to open a few for some software testing). Struggled with it for hours, nothing would work. Went through another hour of rather pathetic customer service, at which time they repeatedly denied blocking all but the "commonly used for bad things" ports. Finally got someone that knew anything, and was getting somewhere until he had to check my modem. Since it wasn't an "official" Comcast modem, they won't touch it. And quite frankly they can't, since there is zero tech ability in the tech support department, if the issues go off of the scripted decision tree support documents they use. So, it appears my modem is set upon the initial online configuration with Comcast to block ports, but no way to fix that after that point. But, I was assured if I got one of THEIR modems, the problem would go away.

I am curious to know what ports are the ones you had problems with?