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Mobile phone financing takes off among consumers

Since last July, about 28 million consumers have opted to finance their phone rather than go the subsidized route.


Mobile phone buyers are increasingly financing their devices in a move away from the standard subsidized model, according to Consumer Intelligence Research Partners.

In a recent survey of 1,500 US consumers, the market research firm found that as of March, around 23 percent had chosen to finance their phones. That number showed an ongoing gain from around 16 percent in December and 15 percent in July 2013.

Based on its survey data, CIRP estimates that since July of last year, around 28 million phone buyers have gone the financing route. Among those, 20 million stuck with their current carrier while the other 8 million switched to a different one.


T-Mobile was the primary beneficiary of the trend to jump ship to a new carrier, luring in around 5.1 million consumers who opted to switch, according to CIRP. Last year, T-Mobile led the way in offering plans that ripped up the usual two-year contract. Instead of paying a lower cost for a subsidized phone that must be kept for two years, people pay the full retail price either all up front or via monthly installment plans for the ability to upgrade at any time.

Among the other three major US carriers, AT&T saw its percentage of phone financers rise from 10 percent to 18 percent from July 2013 through March 2014, according to CIRP's data. Verizon remained flat with a 12 percent level. And Sprint's percentage surged to 26 percent in the most recent quarter from 13 percent during the second half of last year.

"Mobile phone customers are typically extremely loyal to their mobile carrier," CIRP partner Mike Levin said in a statement. "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 derived its data from a poll of 1,500 US consumers who activated a new or used phone at some point from July 2013 through March 2014.