Do Consumers Really Want Multi-Network Devices?

By Gary Kim May 03, 2011

A survey commissioned by the Consumers Union shows that 73 percent of respondents would support legislation forcing mobile phones to be compatible with all wireless networks, allowing them to use any device on any network.

This view was supported most strongly by smart phone owners (81 percent). Virtually all respondents (96 percent) felt that consumers should be able to keep their existing handsets when changing carriers. An overwhelming majority (88 percent) said that their handset should work on any cellular network they choose.

Oddly enough, consumers are going to get something about as close to universal network access as the surveys claim they desire, as Long Term Evolution networks become the de facto U.S. standard.

There will still be some period of transition where a reasonable selection of devices will not be available with full compatibility. In part, that is because there will be a significant period where incompatible networks will still have to be supported, meaning additional cost and complexity suppliers will not want to support universally.

There still will be issues, most of them of a marketing sort, though. Handset suppliers might not want to build such cross-network functionality into every device, for example. Mobile network operators are unlikely to prefer that capability as it reduces the value of handset uniqueness as a marketing platform.

Finally, consumers are rational, too. If given choices, it is unclear that most would prefer to buy devices that are capable of cross network performance if that means using a single device more than a couple of years. The reason is simply that new models arrive at a robust pace, and even a usable device might not be preferred when some other more-valued device can be obtained at reasonable price.

Of course, all that assumes the distinctive U.S. practice of subsidizing devices continues to be the most-popular practice. At the end of a two-year period, many users are ready to try something new, in any case, and could switch providers at that point.

It is unclear what their behavior might be if full-price phones, working across all the major networks, were available in some selection of devices. Much would depend on retail pricing arrangements. Perhaps behavior would mimic what is seen in European markets where a greater percentage of consumers buy full price devices. But that evidence is instructive. As it turns out, in 2006, 60 percent of European users replaced their devices about every two years.

The 2006 study by Telephia found 27 percent of European mobile users replace their cell phones every year. This rate increases by more than twofold after 24 months, with roughly 60 percent of Europeans buying new phones by the two year mark..

Telephia found that "new phone purchases take place most often during the end of contracts, with heavy purchase rates occurring during the 12, 24 and 36 month periods." .

Telephia also noted that "mobile consumers in Spain and Italy demonstrate a faster rate of cell phone replacement as compared to other European countries; with new phone purchases occurring after 23 months." According to Telephia, "wireless users in the U.K. buy new phones on average after 24.2 months, while Swedish consumers replace their devices after 24.9 months. French and German mobile users make new phone purchases around 26.5 and 26.7 months, respectively. Across Europe, the average replacement cycle falls at the 25.1 month mark."

"With the average lifespan of a phone lasting just two years before users want to upgrade, it puts pressure on the whole wireless industry ecosystem to continuously innovate their products and services portfolio to renew the 'wow' factor for consumers," said Bernard Brenner, Telephia analyst.

Table 1: European Cell Phone Replacement Cycle Rate by Country

Countries      Number of Months

----------------------------------

Spain                      23.2

Italy                        23.6

UK                          24.2

Sweden                   24.9

France                     26.5

Germany                 26.7

Pan Europe(a)          25.1

----------------------------------

Source: Telephia 

Telphia also found that teens age 15 to 17 purchase a new phone on average every 20 months, the fastest among all age groups, with 39 percent of teens purchasing at the one year mark.

European young adults age 18-24 follow closely, buying new devices after 21 months. Thirty-five percent of 18-24 year olds buy at the one year timeframe. On the other end of the spectrum, older mobile users age 55 and over keep their cell phones an average of two and half years, with new purchases usually occurring around 31 months."

Table 2: European Cell Phone Replacement Cycle Rate by Age Demographic

Age Group     Number of Months

-----------------------------------

15-17                         20.3

18-24                         21.6

25-34                         23.5

35-44                         25.8

45-54                         27.1

55+                           30.8

-----------------------------------

Source: Telephia 

The point here is that a majority of devices get replaced at end of contract period, which likely matches the U.S. pattern fairly closely. The perhaps likely question is whether cross-network capability is really as important as many seem to believe. 

Whether users can easily switch from one provider to another, in other words, might not be as big a device feature as some assume. One might argue that Europeans buy new phones when their contracts expire. If that is the case, cross-network compatibility is not as important as it seems. 

It is not unreasonable to assume that if users are replacing devices every two years or so, when contracts expire, that there is little upside for most consumers when buying cross-platform devices, either in Europe, where all networks use one air interface, or in the U.S. market, where several air interfaces are used at the moment. 


Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Rich Steeves

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Bloomberg BETA: Models Are Key to Machine Intelligence

By: Paula Bernier    4/19/2018

James Cham, partner at seed fund Bloomberg BETA, was at Cisco Collaboration Summit today talking about the importance of models to the future of machi…

Read More

Get Smart About Influencer Attribution in a Blockchain World

By: Maurice Nagle    4/16/2018

The retail value chain is in for a blockchain-enabled overhaul, with smarter relationships, delivering enhanced transparency across an environment of …

Read More

Facebook Flip-Flopping on GDPR

By: Maurice Nagle    4/12/2018

With GDPR on the horizon, Zuckerberg in Congress testifying and Facebook users questioning loyalty, change is coming. What that change will look like,…

Read More

The Next Phase of Flash Storage and the Mid-Sized Business

By: Joanna Fanuko    4/11/2018

Organizations amass profuse amounts of data these days, ranging from website traffic metrics to online customer surveys. Collectively, AI, IoT and eve…

Read More

Satellite Imaging - Petabytes of Developer, Business Opportunities

By: Doug Mohney    4/11/2018

Hollywood has programmed society into believing satellite imaging as a magic, all-seeing tool, but the real trick is in analysis. Numerous firms are f…

Read More