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Survey: Cellphone Installment Plans Keep Growing

Chicago – Cellphone financing programs have taken off, accounting for almost a fourth of new cellphones purchased during the July 2013 through March 2014 period, Consumer Intelligence Research Partners (CIRP) found in surveying consumers.

For the quarter ending March, about 23 percent of people purchasing a new phone opted to finance an unsubsidized phone rather than pay for a less-expensive subsidized models and commit to a two-year contract, CIRP found.

Among the top four national carriers, T-Mobile accounted for the highest percentage of people opting for an installment plan, given that T-Mobile ended all phone subsidies “and converted most new phone sales at their stores to a financing model,” CIRP said. Nonetheless, take rates also rose among the other three national carriers, said Josh Lowitz, CIRP partner and cofounder. “AT&T increased its phone financing participation steadily from 10 percent to 18 percent, while Verizon maintained its participation at an average of 12 percent,” he said. Sprint maintained its participation at around 13 percent for two quarters and drove it up to 26 percent in the most recent quarter.

All told, since July 2013, 28 million people financed a phone, and, of those, 20 million stayed with their current carrier to do so and 8 million switched carriers, CIRP said. T-Mobile accounted for 5.1 million of those 8 million, with the remaining divided among AT&T, Verizon and Sprint in proportion to their overall market share, CIRP said. Of the customers who switched carriers and financed a phone, 61 percent switched to T-Mobile.

T-Mobile’s aggressive promotions appear to be playing a role in the statistics. “Mobile phone customers are typically extremely loyal to their mobile carrier,” said Mike Levin, a CIRP partner and cofounder. “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 based its most recent findings on a survey of 1,500 people who activated a new or used phone in the July 2013 to March 2014 period.