Comcast (NASDAQ: CMCSA ) and Time Warner Cable (NYSE: TWC ) love to find ways to inflate customers' cable and Internet bills without increasing their advertised prices.
The companies, which are seeking federal approval for a $45 billion merger, have been especially clever in adding mandatory fees and surcharges in ways that could at best be considered sneaky. While most of the charges tacked on to the basic price of cable service can't be avoided, customers do have the option of eliminating a significant broadband fee.
It is not well publicized that Comcast and Time Warner Cable customers do not have to rent a modem from their Internet service provider. Most people simply assume modem rental is a necessary evil -- the same as having to rent a cable box -- but it's not. Buying and using your own modem is not only allowed, it's relatively easy to do.
This will save you money over time, and the savings will grow now that both Comcast and Time Warner Cable are very quietly raising modem rental prices.
What the ISPs are doing
Modem rentals have long been a profit center for ISPs. Time Warner has now raised its monthly fee from $5.99 to $8, while Comcast's charge has spiked from $8 per month to $10, according to CNN Money.
So, TWC subscribers will pay $96 a year and Comcast customers will spend $120.
That's a high price to pay when modems are easily accessible on the retail market. For example, Amazon.com sells the Motorola SB6121 for $69.99. You can spend more or less depending on the features, but buying generally pays for itself in less than a year for a device that is likely to last more than two years.
You can see why the ISPs want people to rent modems -- it's not only free cash, but in many cases, they charge you an installation fee on top of the rental charge.
The Motorola SB6121 Source: Amazon.
How you can avoid paying
Most people rent a modem because they don't know buying is an option, or the installation process seems daunting. Though neither company makes any effort to publicize it, both TWC and Comcast have Web pages that list which modems are compatible with their service.
Still, knowing what to buy and installing it yourself can seem like trouble if you are the non-techy type who considers setting the clock on the microwave an accomplishment. But TechCrunch broke down the steps for Comcast users, and it's simpler than you might think.
Step 1: Plug it in.
Step 2: Call Comcast, say "I bought my own modem," and read the company representative the serial numbers on the back of the modem. You're done.
That makes it sound a little easier than it is but not by much. If you can insert an Ethernet cable into its slot and twist on a cable connection, then you can likely do it.
It just makes sense
The ISPs want customers to believe that renting makes sense, because it removes the fear of having to pay for a replacement if something goes wrong. That, however, is the same logic that gets people to buy extended warranties for electronics -- a practice Consumer Reports pretty much universally finds to be a waste of money.
Yes, peace of mind has some value, but when was the last time your cable modem broke? This isn't a phone or another item that is exposed to being dropped or other mishaps. It's a small box that sits in the same place day after day, year after year.
Fee hikes are good for ISPs (for now)
These price increases make sense for Comcast and Time Warner Cable, because most customers don't realize they have the option to buy a modem or how simple that option really is to install. The rising fees should further bump up revenue for both companies, but every time they raise customers' bills, they risk pushing customers to seek alternatives.
Of course, in many markets, the alternatives are as poor and fee-riddled as Comcast and Time Warner, so switching is not really an option. This is a clear case in which consumers are paying more than they have to and are likely to continue to do so even as rates climb.
Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.
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