Smartphone leasing is on the horizon, shaking up the mobile industry and providing new options for carriers and consumers.
Consulting firm TMNG Global plans to introduce the first mobile device leasing program in the U.S., cutting costs for operators and giving consumers more flexibility.
Under the program, carriers will lease mobile devices for 12 months, charging a monthly fee estimated between $20-30 based on the make and model, plus the cost of a data plan. Insurance is also required on leased devices.
Leasing could prove an attractive option for those who don’t want to remain locked into lengthy two-year contracts designed to recoup the full cost of a new phone. One-year leases would also eliminate costly early termination fees for consumers who want to upgrade to the latest technology.
The move also benefits carriers, eliminating the high cost of device subsidies paid to phone makers for top-tier smartphones. Previously leased phones in good condition could also be resold, creating a profitable second-hand market.
“The economics of the mobile device market are complex and particularly burdensome for carriers, who must offer the latest technology at affordable price points,” says Don Klumb, TMNG Global’s CEO. “We think the market is ready for a viable smartphone leasing option.”
Mobile phone leases, as with automobile leases, aren’t likely to replace longer financing programs completely, but provide an option for consumers to try out different devices before purchasing them outright.
Mobile phone leasing is not uncommon outside the U.S. A successful, proprietary leasing program in the U.K. proved that customers increasingly desire a leasing option, and lower-cost, short-term contracts could benefit startups and small businesses as well.
No carriers have announced a leasing program in the U.S. yet, but TMNG says it’s in talks with top-tier carriers about their new plan, and smartphone leases could debut later this year.
If adapted, mobile device leasing could change the way phone makers market to consumers, the way carriers structure their plans, and the way consumers view new technology, truly offering a plan for everyone.