22 Jun Wireless Phones-as-a-Service: Is this Really a Thing for Businesses?
In the consumer market, wireless carriers have discontinued plans that subsidize the cost of handsets. Instead, they now offer installment plans, which allow customers to rent the handset and return it at the end of term for a new one. T-Mobile has done the same with business accounts and other carriers probably will follow suit. Indeed, Verizon, AT&T and Sprint already offer installment plans for businesses but they have not yet discontinued plans that subsidize phones.
If and when they do, businesses will have two choices: purchase phones at full MSRP with no term contract or do an installment plan for two or three years. This phone-as-a-service model will have implications for businesses that use and manage hundreds of mobile handsets and lines.
In most cases, installment plans are cheaper than 2-year term agreements. They also offer lower up-front costs for the handset (requiring only the tax on the device to be paid at purchase). And installments can be paid off at any time so the user isn’t locked in for two years.
However, with installment plans, early termination fees (ETFs) will be higher on many devices because you are basically paying off the phone.
Additionally, if there is no insurance on a phone and something happens to it, the installments will have to be paid or a new phone will have to be purchased at full retail price.
The above will present some new challenges when managing hundreds or thousands of devices. For example, when managing mobility for enterprises, we frequently do “buddy” upgrades. If a client’s employee loses or breaks a phone and it’s not covered with insurance or eligible for an upgrade, we use another employee’s upgrade so the company doesn’t have to pay full MSRP to replace the phone. This is a handy tool for a client with thousands of lines because there can be hundreds of eligible upgrades at any time.
However, with installment plans it would be a nightmare to do a “buddy upgrade.” You would first need to identify which phone has the lowest payoff balance in the population of corporate devices, pay that balance off, “steal” the new lower installment plan from that line, apply it to the other line where the phone was lost, and carry two installments for one user. Is your head spinning yet?
Imagine on top of that allocating costs back to the proper cost center in that scenario. What if the user loses, breaks or has a phone stolen again. You have a domino effect and up to three installments.
There are only bad options on how to handle this line if the employee is termed:
- Pay off multiple installment balances
- “Suspend” the line while still paying monthly plan costs and installments. Re-purpose for a new employee.
- When a new employee inherits the line, that line will come with multiple installments for one phone.
If this sounds intricate to manage for two users, consider the complexity with hundreds of lines for large corporations.
The TeraNova position on installment plans is that they are great for consumers and small businesses. Not so much for medium-sized and large enterprises.
If carriers discontinue subsidizing equipment in exchange for term contracts and mandate installment plans, mobility management will become considerably more challenging. Nevertheless, Teranova mobility experts will be ready to help clients manage the “new normal” by providing spare pools management offering “as new” devices with 1-year warranties, among other therapies.
If you have any questions about what’s on the horizon or how to plan for effective mobile management, contact our experts at email@example.com or call us at 800 843 2820.