AT&T's Stephenson indicates interest in handset financing
AT&T (NYSE:T) CEO Randall Stephenson said he liked the approach T-Mobile USA is taking by removing handset subsidies from its plans, and said he would watch the development with interest.
Stephenson made the comments Thursday on AT&T's fourth-quarter earnings conference call, and while he did not commit to any specific action or endorse any specific idea, his remarks indicate that AT&T is considering whether to follow its erstwhile acquisition target in changing how it sells phones.
In discussing T-Mobile's proposed merger with MetroPCS (NYSE:PCS), he said, "we expect there to be some dynamics in the marketplace that--and we'll have to respond to some of it, we find interesting like the handset financing that they're doing."
"That's something we've looked at on several occasions," Stephenson said, according to a Seeking Alpha transcript. "I kind of like the idea, commend them for trying it. It will be something we're going to [be] watching, how it is received in the market place. And in terms of other players, it's just--it's hard to say what the dynamic will be. But I think it will be just a little bit of open field running this year."
Under T-Mobile's Value postpaid plans, which it is moving to exclusively in 2013, customers can pay the full cost of a device upfront in exchange for a lower monthly rate. Alternatively, customers can pay off the cost of their device in monthly installments over the course of 20 months. T-Mobile's move is a striking change for the industry, as all Tier 1 operators for many years have subsidized the cost of devices in exchange for customers agreeing to two-year contracts. Many handset makers have expressed support for T-Mobile's decision, which essentially uncouples the cost of devices from the cost of a rate plan.
Other carriers have launched or are testing handset financing plans. Leap Wireless' (NASDAQ:LEAP) Cricket and MetroPCS (NYSE:PCS) both late last year launched handset financing options that will allow eligible customers to make a down payment on a smartphone and pay off the remainder in the future.
Additionally, Sprint Nextel's (NYSE:S) prepaid brand Virgin Mobile and regional wireless carrier C Spire Wireless have been quietly testing handset financing programs. Both operators are using the startup BillFloat to support their pilot programs, which are ongoing but expected to end within the next few weeks.
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