What Is The Difference Between a Modem and a Router

5 minutes read

I’m sure you must have heard about the terms ‘Modem’ and ‘Router’ but have you ever wondered what is the difference between a Modem and a Router? If not, don’t worry as we are going to unravel the mystery in this knowledgebase article.

A very simple explanation would be this. A router is a device that is used to create a network between your computer and other wireless-enabled devices in your home, whereas a modem is used to connect that network, along with your computer and the other devices on it – to the internet. Makes sense?

Router negotiates the traffic between your computer and the internet. So, when you connect to Wi-Fi, you are actually connecting to your router. A lot of internet service providers (ISP’s) provide you with a device that has both router and modem capabilities. So, in short, these devices perform both functions simultaneously.

Why do you need to Understand the Difference Between a Modem and a Router?

It is because a lot of internet service providers, provide their customers with a modem and charge a monthly rental for it. This monthly rental can typically be anything between $5 to $20, depending on your ISP. You can actually buy your own modem so that you can stop paying this rent to your ISP and can save up to $200 a year!

Modem Vs Router

How Does a Router Function?

The function of a router is to connect multiple networks together and negotiate the traffic between them. Let’s take an example of your home network. In this case, your router is connected to two networks. One to the Internet and the other to your local network.

Along with these two network connections, you can also connect to other wireless devices using your router. A built-in switch in your router enables this functionality. In addition to this, your router lets you connect to other Wi-Fi devices thanks to the built-in wireless radio. 

Here is a very simple example that will help you understand how the router functions.

Between your local network and the internet connection, sits your router. Using one physical internet connection, the router lets you connect multiple devices simultaneously. Along with this, the router also enables communication between these devices over the local network. This way, the router also offers protection to your devices and avoids direct exposure to the internet.

If you check from the internet’s perspective, it sees all the traffic coming from your house as traffic coming from a single device. Now, you must be wondering who keeps track of what traffic goes to which device on the network? Well, you guessed it right. It is the router’s job. 

But can you connect to the internet directly using your router? The answer is no. You need another device that the router must connect to in order to transmit your digital traffic over the internet connection you have. And that device is known as a modem.

How does a Modem Function?

There is a bridge between the internet and your local network this bridge is known as a modem. The term modem is the short form of modulator-demodulator. The telephone works on this concept of modulation and demodulation.

A modem essentially modulates the signals on telephone lines. This helps in encoding and transmitting digital information through it. On the other end, it is then modulated and decoded. The thing to note here is, when we talk about today’s broadband connections like satellites and cables, they work in a different way. Still, the Modem was retained as the name because people were familiar with it and it is understood to be a device that allows you to connect to the internet. 

There are different ways in which a modem would attach to your network as it depends on the type of internet connection you have. You might be using a cable, telephone or fiber-optic network to connect to the internet and a modem would plug into it. This is the input that the model would receive and the output would be in the form of a standard ethernet cable that you can plug into the router or directly to your PC or laptop in order to get access to the internet. Different internet service providers have different infrastructures so, you need to buy a modem that is supported by your internet service provider.

Modem Router Combo

Some of the internet service providers provide you with a device that has both the functionalities of a modem and a router. The modem feature of the device will allow you to connect to the Internet and the router feature would allow you to create local networks. Few of the ISPs provide you with a VOIP interface on this device so that you can make phone calls as well. 

Now, you might think that having a single device as opposed to two different devices would be beneficial as it would remove the clutter from your desk and serve a dual purpose. However, there are also a few disadvantages. A single device also means a single point of failure. Also, if you are using a separate modem and router, it offers you more flexibility in terms of the things that you do with your network. You can also purchase the best product in its own category rather than renting it from your ISP and save some money in the long-run.

Buy your Own Modem and Save Money

Nearly all of the ISPs provide a modem on rent and if you see your internet bill you should see something like a ‘modem rental’ or ‘equipment rental’ on it. The rent or the fees that the ISP charge for this service can be anywhere between $5 and $15 per month. So, rather than renting the modem from your ISP you can buy your own and set it up with your router.

This will be a one-time investment for you and it will save you from all those recurring charges that you pay every month as a rental to your ISP. You can then remove the ISP provided modem and return it back to them. Yes, buying a new modem will cost you some money upfront, which is almost equivalent to six to seven months of your rental, however, if you are plan to use the internet connection for a lengthy time-frame, it will be a bargain for you in the long-run.

And if you have a single device that serves the purpose of both the router and the modem, then you would also need to buy a new router for yourself, which again is not a big deal. Why? Because the ISPs usually will not provide you with a modern, state-of-the-art router. So, you can definitely invest some money in doing your own research to buy the best available routers and make full use of the latest technology.

So, open up your Internet bill and see if you are actually paying rental for a modem. If yes, you can consider buying the Netgear CM500 which is the best Modem available today. It is also fairly cheap at around $70!

An important point to note here is, you can use any kind of wireless router that you want or like but the modem needs to be approved by your ISP in order to work with their network. So, before buying a modem, always check with your ISP it is supported.

Well, that was our take on the difference between a modem and a router. We hope that you learned something new and you will definitely be able to save some money on your modem rentals. If you have any thoughts to add to this, do let us know in the comment section below.

Ian Stok

Hi, I’m Ian. I’m a Cisco Certified Network Professional and I’m in love with networking. On this blog, I write how-to guides and review Wireless Routers and other network devices. You can check out my website below.

www.wifirouterreviews.com