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Phone Financing Growing Fast

The Huffington Post The Huffington Post 20/05/2014 Michael R. Levin

T-Mobile Has Dominant Share of 8 Million Carrier-Switching Finance Customers

Consumer Intelligence Research Partners (CIRP) released results of its research on mobile phone financing plans. This analysis features findings about consumer trends in financing plans from July 2013-March 2014.

Based on data CIRP has gathered, phone financing programs have grown quickly since their widespread introduction. In the nine month period from July 2013-March 2014, almost one-quarter of new phone buyers in the US financed their phone, rather than buying a subsidized phone (see Chart 1).

Chart 1: Quarterly Participation in Phone Financing



These participation rates include the majority of T-Mobile customers, since T-Mobile ended all phone subsidies, and converted most new phone sales at their stores to a financing model. AT&T increased its phone financing participation steadily from 10% to 18%, while Verizon maintained its participation at an average of 12%. Sprint maintained its participation at around 13% for two quarters, and increased it dramatically to 26% in the most recent quarter.

CIRP estimates that since July 2013, 8 million US phone buyers switched carriers and selected a financing program for their new phone with their new carrier. This is a subset of the 28 million phone financing customers, which includes 20 million who stayed with the same carrier. T-Mobile attracted most of the switching customers, around 5.1 million, with the remaining customers divided among AT&T, Verizon, and Sprint in proportion to their overall market share.

Of the customers that switched carriers and financed a phone, 61% switched to T-Mobile (see Chart 2).

Chart 2: Carrier Share of Customers That Switched Carriers for a Carrier Financed Phone



Mobile phone customers are typically extremely loyal to their mobile carrier. In the past, when customers did switch carriers, their new carrier choice roughly matched the major carriers' existing market shares. With the new phone financing plans, T-Mobile has captured new customers far beyond their historic market share.

CIRP bases its findings on a survey of 1,500 US subjects that activated a new or used phone in the July 2013 - March 2014 period. For additional information, please contact CIRP.

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