The majority of Americans who have broadband connections at home are leasing equipment from the Internet service providers (ISPs), even though cable and most fiber-based services are compatible with modems that can be purchased in retail stores, according to a new consumer survey released this week.
The survey, from Parks Associates, found 71 percent of Americans are leasing gateways — equipment that combine broadband modems and wireless local network routers into a single unit — from their ISPs, while less than one-fourth of consumers are hooking into broadband service using their own modems and routers.
Historically, most consumers who had cable-based broadband connections simply purchased their own modems and routers to avoid monthly fees associated with leasing equipment from their ISPs. But this trend reversed between 2022 and 2023, timed to coincide with the launch of newer wireless standards like WiFi 6E and WiFi 7, which are available in ISP-leased modems at a fraction of the cost (or, in some cases, at no cost) compared to expensive wireless routers available in retail stores.
Another reason why customers are gravitating toward leased equipment involves ISP-based incentives.
Over the past several years, Comcast has offered new customers of its Xfinity Internet service complementary access to “XFi Complete,” which includes a leased wireless gateway and unlimited data. Existing customers can sign up for XFi Complete and remove the company’s 1.2 terabyte (TB) monthly data cap for $25 per month. Customers can also sign up for Xfinity Internet service with their own wireless equipment and modem, but they are charged $30 per month to remove the 1.2 TB monthly data cap. For frugal consumers, the choice is somewhat obvious.
Comcast also includes a wireless gateway with Now Internet, a prepaid broadband product that offers speeds between 100 Megabits per second (Mbps) and 200 Mbps, priced between $30 and $45 per month, with no data caps or extra fees. The company requires Now Internet subscribers use the provided gateway.
Charter, which offers broadband service under the Spectrum brand, offers similar broadband perks and equipment to its customers. Subscribers are charged $10 per month to lease a gateway from Spectrum, but they can also bring their own equipment, and some plans, like Spectrum Internet Gig, include equipment at no extra cost. Spectrum Internet service does not have broadband data caps.
Other home broadband products, like those offered by T-Mobile, Verizon and Starlink, require the use of service-provider equipment. Customers who purchase secondhand equipment on websites like eBay and Facebook Marketplace sometimes run into compatibility issues, and providers sometimes refuse to activate equipment that was not specifically issued to a subscriber.
Customers don’t seem to mind, and they appear satisfied with the equipment leased by ISPs like Comcast, Charter and others, according to Parks Associates, which reported net promoter scores (NPS) above the industry average for white-label gateway solutions.
“Customers look to their ISP for their home networking equipment, looking for free product offers, leasing and financing agreements, and product discounts,” Kristen Hanich, the Research Director at Parks Associates, said in a statement. “ISP white-labeled routers are the number one ‘brand’ consumers report purchasing, with satisfaction as measured by NPS above the industry average. Consumers are looking for devices that deliver key features and functionality and increasingly see ISPs as a preferred channel.”
Parks Associates will present more data from its “Home Networking Products” report at its Connections conference from May 13 to May 15.
