Mobile Phone Users Pay Less For Handsets, Keep Them Longer - InformationWeek

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Mobile Phone Users Pay Less For Handsets, Keep Them Longer

Customers are keeping handsets for 17.5 months, an increase over the 16.6-month ownership term reported in November. They're also paying less for their handsets -- $103 in 2002 versus $93 in 2007.

Cell phone term contracts are influencing mobile phone users to keep their handsets longer, according to a survey released Wednesday by J. D. Power and Associates. The market research firm said the average time of users are keeping their cell phones has increased 5% since last fall.

The survey found that customers are keeping handsets for 17.5 months, an increase over the 16.6-month ownership term reported in November. It's the first increase since 2002, when handset owners were reported to be keeping their mobile phones for 18.4 months.

"One possible reason for this significant increase in the length of handset ownership is that more customers are initiating or renewing their service contracts for a longer period -- typically for two years," said Kirk Parsons, senior director of wireless services at the market research firm, in a statement.

The survey also found that mobile phone users are paying less for their handsets -- $103 in 2002 versus $93 in 2007.

Handset providers and wireless service carriers are helping create the decline in average price by providing handset discounts to promote sales, the market research firm said. Free mobile phones currently constitute 36% of new customer service sign-ups compared with 28% in the 2002 study.

"It's clear that wireless service carriers are using mobile phones as bait to increase consumer traffic," said Parsons. "The problem with this strategy is that, in most cases, the discounted handsets being offered are older models, which typically lack the latest technological advancements or desired design features."

While the ownership term is roughly equal across major handset manufacturers, the customer satisfaction figures for other factors varies among wireless handset brands. Motorola and Sanyo rank highest in overall customer satisfaction. J. D. Power and Associates said Motorola ranks high in physical design, operation, and features. Sanyo scored high in operation factors and battery functionality.

Others ranking above the industry average in customer satisfaction were Samsung and LG, with Sony Ericsson, Nokia, UTStarcom, and Kycera falling below the industry average.

The surveys also looked at feature usage patterns among cell phone users. For instance, speakerphone functions were used the most (51 %) followed by camera features (35%), short messaging (22 %), and gaming (16%.)

The market research firm said its 2007 U.S. Wireless Mobile Phone Evaluation Study is based on a survey of more than 21,000 mobile phone users.

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