Company Proposes Smartphone Leasing Programs
By Joseph Palenchar On Feb 13 2012 - 6:01am
OVERLAND PARK, KAN. —
A company that provides
consulting services and software solutions in the communications
industry wants to put cellular carriers, handset
suppliers, and retailers into the cellphone-leasing business.
TMNG Global has developed what it calls the industry’s
first lease administration and accounting system, which
carriers and MVNOs can integrate into their billing systems
to make smartphone leasing practical.
Leasing programs enabled by TMNG’s Mobile Device
LeaseXchange (MDLx) system would benefit carriers that
want to reduce their smartphone subsidy costs, consumers
who want to replace their smartphones more frequently
to keep up with accelerating technology advances, and
handset suppliers who want to sell more products, said
TMNG CEO Don Klumb.
Carriers’ handset subsidies have risen from about $125
for feature phones to more than $300 per smartphone,
Klumb noted. The high subsidies force postpaid carriers
to sell smartphones with two-year contracts to recoup their
investment, but high-end subscribers want to replace their
smartphones more often than that without penalty to step
up to new technologies that now come out every six to 12
months, he said. Leasing would also enable handset suppliers
to sell more phones and develop new technology “with
less concern for carrier subsidy constraints,” he
Under the program, smartphones could be
leased for a minimum of $20/month for 12
months, excluding required insurance that
high-end users already likely have, he said. A
total cost of $25 to $35/month with insurance
is “amenable” to premier subscribers interested
in “technology assurance,” added MDLx chief
marketing officer Tom Murphy.
Carriers could also offer to replace a leased
phone in less than 12 months.
When the phones come off lease, they would
be refurbished and sold into secondary markets
overseas or in the U.S. to step up feature-phone
users to low-cost smartphones. The refurbished
phones could also be used by U.S. carriers to
target prepaid customers and credit-challenged
consumers, Murphy said.
“The rapidly advancing sophistication of
smartphones gives them attractive residual values,”
Handsets leased for a year could be worth as
much as 50 percent of their original retail price in the U.S. if minimal refurbishment is
needed, Murphy said. Carriers could
also offer to replace a leased phone before
a year is up.
During the lease, the phone’s title
would be held by a finance company.
Leasing profits after paying financing
and refurbishment costs would be
shared by the handset supplier, TMNG,
and “other companies in the ecosystem
who took on risk,” said Klumb.
For retailers, participation in a carrier’s
leasing program would increase
store traffic, Murphy said. TMNG proactively
reaches out to a carrier’s subscribers
to give them leased-phone options,
and current leased-phone users would
be guided back to the store that sold
them the device, he explained.
Murphy said he expects carriers
would offer participating retailers the
same profit levels that they get now.
For carriers, TMNG would manage
the program, which includes administration,
finance, insurance, handset recovery
and handset redeployment. The
company’s platform also monitors the
going rate for refurbished resales.
The company is initially targeting tierone
carriers, Murphy said.