According to findings from revenue and device security specialist Trustonic, there is widespread confusion among consumers in the UK around whether or not they have taken out financing on their mobile phones. In the survey, only 27 per cent of respondents stated they had taken device financing as part of an operator package. In contrast, when asked what kind of mobile plan they were on, 36 per cent of respondents indicated that they were on a contract for their device and tariff suggesting many are unaware that a contract is in fact a finance agreement. Thirty-two per cent indicated that they owned their device outright and had a sim-only tariff.
The survey results also show a third (33 per cent) would purchase a more expensive device with a higher specification if financing was available. Affordability is still a huge barrier to worldwide smartphone access, as highlighted in a recent GSMA report. Access to the Internet and digital services enabled by smartphones is a critical element in providing ubiquitous internet access and tackling the digital divide. As the price of smartphones with higher specifications and features including 5G continues to rise, financing options have never been more important.
“Operators are missing an opportunity,” asserts Dion Price, CEO, Trustonic. “There is clearly appetite amongst consumers to have the highest spec mobile devices and they are willing to take financing deals to obtain them. The fact is, increasingly customers are turning away from traditional mobile contracts as new competitors offer more attractive financing deals.”
“Operators need to be able to offer competitive financing deals without increasing their commercial risks if they are to remain relevant. In this context, device financing technology solutions benefit operators by helping them to secure new customers and increase revenues by lowering the risk threshold associated with offering credit to consumers,” he suggests.
In addition, the survey found that nearly two in five (37 per cent) of UK consumers would consider spreading the cost of purchasing a mobile phone if this option was available at the point of purchase. Twenty—one per cent would use the option to upgrade to a higher spec smartphone or to move from a featurephone to a smartphone.
While spreading the costs of a smartphone purchase over time is not a new concept, consumers are looking at alternative options to taking finance with a mobile operator.
“The mobile phone industry has been built on financing expensive phones and making the cost more affordable and manageable for consumers,” notes Ben Woods, Chief Analyst & CMO, CCS Insights. “Success depends on having a robust platform to manage the process in a customer friendly way.”
Further findings from the study across the UK, Mexico and South Africa, where similar surveys were undertaken, include:
“There is a clear opportunity for operators to remove the confusion surrounding device financing and offer more options to their customers,” concludes Price. Especially with the younger generations being so willing to switch operators for a good deal, operators need to offer a finance model that works for them. Only when everyone has access to device financing can we start to bridge the digital divide across the UK, and worldwide.”