Mobile Week in Review

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Week In Review

Spectrum Mobile extends EIP to 36-Months

Spectrum Mobile, which now has over 5 million wireless subscribers, recently extended its Equipment Installment Plan (EIP) period from 24-months to 36-months. New and existing customers purchasing a smartphone through Spectrum Mobile’s retail and online channels will now be able to pay for their new phone in 36-month interest-free installments.

36-Month financing was introduced by USCellular back in mid-2017. We then saw T-Mobile extending its EIP period from 24-month to 36-month on the latest Apple iPhone models and Samsung Galaxy S and Note series phones in late 2018 and early 2019. The Un-carrier used the same tactic when the new iPhone 13 series were launched in Q4 2021. But since then, 36-month financing has only been an option for the expensive Samsung Galaxy Z Fold series phones. AT&T, on the other hand, switched from 30-month financing to 36-month financing in June 2021. Verizon, which briefly offered 36-month financing on a single Galaxy Note device in 2019, followed AT&T’s footsteps to make 36-month financing its base EIP offer in February 2022.

The NPD Take:

  • 36-Month EIP helps carriers lock the customer in for a longer period of time as most consumers do not begin shopping for a new device until they are done with their device payments. On the other hand, the rising cost of financing in today’s inflationary environment puts additional pressure on carrier’s bottom lines; going from 24-month financing to 36-month financing on a $1000 device has a rough cost of $60, which is slightly higher than the monthly postpaid ARPU.
  • Spectrum’s decision to wait on the sidelines and not offer 36-month financing until now was sensible as close to half of their customers do BYOD during the switch. The company used its capital ammunition to lower its rate plans rates instead of competing with the postpaid giants on device subsidies. The timing of the 36-month EIP switch is also right on as Spectrum’s early adopter base who joined Spectrum 2+ years ago is now ready for a device upgrade, and the cable MVNO needed to get slightly more aggressive with device offer to prevent possible churn.
  • The 36-month EIP option, coupled with the affordable bundle plans like the Spectrum One (Home Internet and unlimited mobile data for $49/month), should help Spectrum to maintain the impressive subscriber growth momentum it’s been enjoying for the last two years.
  • T-Mobile and Comcast’s Xfinity Mobile are now the only standing postpaid carriers without a 36-month EIP program. T-Mobile has proven that it can still grow its base at an immense rate while keeping the device upgrade rates low with a 24-month EIP program. If and when T-Mobile follows suit and join the 36-month EIP party, device upgrade rates could be even further impacted.

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