Understanding Internet Contracts
Quick Answer: Internet contracts lock you into 12-24 months of service in exchange for lower promotional rates. Breaking a contract early costs $100-240 in termination fees. Major no-contract providers include Spectrum ($49.99/month), T-Mobile 5G ($50/month), and Verizon Fios ($49.99/month). The industry is trending toward no-contract plans, so you should rarely need to sign one in 2026.
How Internet Contracts Work
An internet service contract (also called a term agreement or service commitment) is a binding agreement to maintain your internet service for a specified period, typically 12 or 24 months. In exchange for this commitment, the provider offers a lower promotional rate than their month-to-month pricing.
The contract typically includes the plan speed, monthly price (guaranteed for the contract term), any equipment fees, and the early termination fee (ETF) you will pay if you cancel before the term ends. Some contracts include a price increase clause that allows the provider to raise rates after the initial promotional period, even if the contract extends beyond that point.
Contract vs No-Contract Comparison
| Feature | Contract Plans | No-Contract Plans |
|---|---|---|
| Monthly price | Lower promotional rate | Standard rate (may be slightly higher) |
| Price guarantee | 12-24 months (then increases) | Can change anytime |
| Cancellation fee | $100-240 ETF | $0 |
| Flexibility | Limited (locked in) | Full (change or cancel anytime) |
| Best for | People who will not move | Renters, flexible users |
Provider Contract Policies
Spectrum: No contracts on any plan. Pricing starts at $49.99/month for 300 Mbps. Spectrum's no-contract policy is one of its biggest competitive advantages, especially for renters and people who move frequently.
T-Mobile 5G Home Internet: No contract, no price increases with T-Mobile's Price Lock guarantee. Cancel anytime with no penalty. The $50/month flat pricing with no hidden fees is the simplest internet offer available.
Verizon Fios: Most current plans are contract-free. Pricing is straightforward with no promotional gimmicks. The 300/300 Mbps plan at $49.99/month is available without any commitment.
AT&T Fiber: Current fiber plans generally do not require contracts. Previous DSL and U-verse plans sometimes included 12-month agreements. New fiber customers typically sign up month-to-month.
Xfinity: Offers both contract and no-contract options. Contract plans are typically $5-10/month cheaper than month-to-month pricing for the same speed tier. The 12-month contract includes a rate guarantee but carries an ETF of up to $10 per remaining month.
Understanding Early Termination Fees
ETFs are the financial penalty for breaking a contract before the term ends. Common ETF structures:
- Flat fee: A fixed amount ($100-200) regardless of when you cancel
- Prorated fee: Decreases each month. Example: $10/month remaining x 8 months left = $80 ETF
- Equipment recovery: Some providers charge separately for unreturned promotional equipment
Before signing a contract, calculate the total potential savings against the ETF risk. If the contract saves $10/month for 12 months ($120 total), but the ETF is $240, a mid-contract cancellation could cost you more than if you had chosen the no-contract option.
When Contracts Make Sense
Contracts can be worthwhile if you own your home and plan to stay for the full term, the promotional savings exceed the ETF risk, and you have already confirmed the service quality meets your needs (perhaps from a neighbor's experience or a prior trial). The savings are most meaningful on higher-tier plans where the promotional discount can be $15-30/month.
When to Avoid Contracts
Avoid contracts if you rent and may move within the term (especially to an area the provider does not serve), if you are trying a new provider or connection type for the first time, or if competitive options may become available (like a fiber buildout in your area). The flexibility of a no-contract plan is worth the modest price premium in uncertain situations.
Learn how to negotiate your bill when a contract expires, or see our switching guide if you want to change providers.
Find no-contract internet plans at your address:
Anatomy of an Internet Service Contract
Internet service contracts contain specific terms that directly affect your costs and options. Understanding each component helps you evaluate offers accurately and avoid costly surprises.
Promotional period and rate: Most contracts specify a promotional rate that lasts 12-24 months. The advertised price is almost always this promotional rate. After the period ends, the standard rate (often $20-40 higher per month) takes effect automatically. When evaluating a contract, calculate the total cost across the full contract term including the rate increase. A $49.99/month plan that jumps to $79.99 after 12 months costs $1,559.88 over 24 months, not the $1,199.76 that the promotional rate suggests.
Early termination fees (ETFs): ETFs typically range from $100-240 depending on the provider and how much time remains on the contract. Some ETFs are flat amounts, while others prorate based on remaining months (for example, $10 per remaining month on a 24-month contract). Prorated ETFs become cheaper over time, so canceling near the end of a contract costs less than canceling near the beginning. Always request the exact ETF amount and whether it prorates before signing.
Equipment provisions: Contracts may include equipment installment plans where the cost of a modem, router, or other hardware is spread across the contract term. Canceling early may require paying the remaining equipment balance on top of the ETF. This effectively increases the cost of early termination. Check whether equipment is rented monthly (can be returned upon cancellation) or being purchased on installment (balance due upon cancellation).
Automatic renewal clauses: Some contracts automatically renew for an additional term when the initial period expires, often at the higher standard rate and with a new ETF period. Check whether your contract auto-renews and what notice is required to prevent renewal (typically 30-60 days before the contract end date). Set a calendar reminder to evaluate your options before auto-renewal takes effect.
Contract vs No-Contract: The Real Math
Whether a contract saves you money depends on the specific offers available and your likely tenure with the provider. Here is how to calculate the true comparison.
Short-term residents (under 12 months): No-contract is almost always cheaper for stays under 12 months. Even if a contract plan is $10/month cheaper, the ETF for canceling a 24-month contract at month 8 typically adds $160-200, wiping out any monthly savings. Renters with uncertain lease terms and people expecting a move should strongly prefer no-contract plans. See our no-contract internet guide for the best month-to-month options.
Medium-term residents (12-24 months): Contract plans may offer modest savings if you stay for the full promotional period. Compare the 12-month total cost of the contract plan (including setup fees) versus the no-contract alternative. If the contract saves more than $50-100 over the full term, it may be worthwhile. If savings are less than that, the flexibility of no-contract is worth more than the marginal cost difference.
Long-term residents (24+ months): Ironically, long-term residents benefit most from no-contract plans. After the promotional period ends, contract customers pay standard rates while no-contract customers can switch to a competitor's promotional rate, negotiate a renewal discount, or take advantage of new offerings that did not exist when the original contract was signed. The ability to continually access the best available deal outweighs the initial promotional savings of a contract over multi-year periods.
Frequently Asked Questions
Can I move my internet contract to a new address?
If the provider serves your new address, most will transfer your contract without an ETF. If they do not serve the new address, some providers waive the ETF (since they cannot fulfill the service). Others charge the full ETF regardless. Check your contract terms specifically regarding relocation before signing.
What happens when my contract expires?
Your service continues at a higher month-to-month rate, typically $10-30 more than your promotional price. Most contracts auto-renew to month-to-month, not to a new contract term. This is the ideal time to call and negotiate a new promotional rate. See our negotiation guide.
Is a 24-month contract better than 12-month?
24-month contracts sometimes offer a slightly better monthly rate but double your commitment period and ETF exposure. In a rapidly changing market where fiber, 5G, and new competitors emerge regularly, we generally recommend 12-month contracts over 24-month, or no contract at all.
Can I get out of a contract without paying the ETF?
Possible but not guaranteed. Legitimate reasons that sometimes waive the ETF include moving to an area without service, military deployment (under the SCRA), the provider failing to deliver advertised speeds consistently, or the provider raising the price above the contracted amount. Document any service issues thoroughly.
Are internet contracts becoming less common?
Yes. The trend in 2025-2026 is strongly toward no-contract plans. Spectrum has never required contracts, T-Mobile 5G has no contracts, and both AT&T Fiber and Verizon Fios now offer most plans contract-free. Xfinity still offers contract options but the no-contract alternatives are competitive. The industry is moving away from lock-in models.
Can I get out of an internet contract without paying an ETF?
Several circumstances allow early termination without fees. If the provider raises your monthly rate beyond the contracted amount, you can cancel without an ETF in most states. If you move to an area where the provider does not offer service, most providers waive the ETF. Active military deployment triggers protections under the Servicemembers Civil Relief Act. Additionally, if the provider consistently fails to deliver advertised speeds (document with repeated speed tests), you may have grounds to terminate for breach of service. Check your contract's specific termination provisions and your state's consumer protection laws.
Should I sign a contract to get a lower internet price?
Only if you are confident you will stay at your current address for the full contract term and the monthly savings are significant ($15+ per month). For savings under $10 per month, the flexibility of no-contract service is generally more valuable. Before signing, calculate the worst-case scenario: total cost if you need to cancel early, including the ETF plus any equipment balance. If the worst-case cost is acceptable to you, the contract may be worthwhile for the guaranteed promotional rate.
What happens to my contract if my internet provider merges or is acquired?
When ISPs merge or are acquired, existing contracts typically transfer to the new entity with the same terms. The new company is generally required to honor existing contract rates and terms until the contract expires. However, post-merger service changes, plan restructuring, and equipment transitions sometimes occur. If the merger results in a material change to your service terms that you did not agree to, you may have grounds for penalty-free cancellation. Watch for communications from both the old and new provider during any transition period and review any new terms carefully before accepting.
Ready to get connected? Call now for exclusive deals:
1-855-981-6281Disclosure: Some links on this page are affiliate links. We may earn a commission if you sign up through them. This does not affect our editorial independence or recommendations.