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Company Proposes Smartphone Leasing Programs

2/01/2012 12:09:00 AM Eastern

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 said.

 Leasing profits would be shared by the handset
supplier, TMNG, and "other companies in the ecosystem who took on risk," Klumb
said.

 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," Klumb said.

 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 tier-one
carriers and their handset suppliers and could put the carriers in the leasing
business in 120 days, Murphy said.

 

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