Nearly one-third of consumers use phones more than 2 years: Cowen

Apps on a smartphone screen
Cowen expects users to continue to hold onto their phones longer as adoption of equipment installment plans ramps up.

The percentage of users holding onto their phones for more than two years continues to rise, according to fresh data from Cowen Equity Research.

The firm polled more than 1,100 U.S. wireless users for its latest quarterly report and found that 32.2% of respondents reported using their phones for more than two years, up from just 23.7% two years ago. The trend was “particularly strong across all carriers except T-Mobile,” Cowen analysts said, which is likely due to that carrier’s continued ability to poach customers from Verizon and AT&T.

“Similar to prior surveys, the >2 year growth continues to come from subs labeled ‘Other,’ which include subsidy/BYOD subs as well as those previously on an EIP (equipment installment plan) who have since paid off their phones,” Colby Synesael of Cowen wrote in the report. “Holding phones longer is a trend we expect to continue to grow as a result of EIP adoption.”

Analysts generally agree that ever-extending handset upgrade cycles have been a significant factor in driving down churn at major U.S. carriers, and Cowen found that adoption of installment plans continues to ramp up. Nearly 45% of respondents said they pay for their phones through an EIP, up from the previous record of 41.7% each of the two prior quarters. AT&T has been most effective at pushing EIPs, with half its customers paying in monthly installments; Verizon was the second-most effective with 44.2% of its customer base paying through EIPs.

But Cowen said an increase in churn may be on the horizon nonetheless. Nearly 12% of respondents said they plan to switch service providers, marking an increase over the second quarter “and at the high end of the recent range,” Cowen reported.

“While we are already expecting a seasonal increase in sequential churn across all the carriers this quarter, churn could be even greater in the fourth quarter of 2017 as a result of the November launch of the iPhone X that seems to have delayed many iPhone subscribers from upgrading to the already-released iPhone8/8 Plus until they can do a comparison,” Synesael wrote. “Upgrading phones is a key event when subscribers consider switching carriers.”