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Smartphone Kill Switch Promises Potential Consumer Savings Of $2.6 Billion Per Year

April 1, 2014

Enid Burns for redOrbit.com – Your Universe Online

If implemented, a universal “kill switch” on smartphones would have the potential to save consumers $2.6 billion a year, finds a new report which was released by Dr. William Duckworth, associate professor of statistics, data science and analytics at Heider College of Business at Creighton University. The total savings comes from a combined cost of insuring and replacing stolen handsets.

Stolen cell phones can mean big dollars. Over 145 million Americans have smartphones, according to a recent comScore report cited in the report. Approximately 1.6 million cell phones were reported stolen in 2012, according to a Consumer Reports study, though the number has likely increased since the reported statistic. Incentive is high, as the resale value on certain smartphone models can bring in good money.

“A stolen smartphone – such as the iPhone 5S – could sell for $800 or more in the United States and overseas. For criminals, a stolen phone could be worth more than a stolen wallet, a tablet, or even a laptop,” wrote Dr. Duckworth.

The professor argues that if kill switch technology that could disable stolen smartphones was enabled, it “could be an effective theft deterrent if it was installed on every phone. If all stolen phones could easily be disabled, criminals would have virtually no incentive to steal a phone in the first place.”

Based on the number of consumers with smartphones, professor Duckworth estimates that the total savings for consumers could reach $2.6 billion per year. He reports that American consumers spend roughly $580 million a year replacing stolen phones. Consumers also spend $4.8 billion per year paying for premium cell phone insurance, which wireless carriers charge to offer cell phone replacements in the event a smartphone is stolen.

“If the Kill Switch significantly reduced cell phone theft, consumers could save about $580 million a year from not needing to replace stolen phones and another $2 billion a year by switching from premium cell phone insurance (offered by the wireless carriers) to more basic coverage offered by third parties such as Apple and SquareTrade,” Dr. Duckworth stated.

In a survey conducted by Dr. Duckworth with 1,200 smartphone owners, 99 percent said they feel wireless carriers should give all consumers the option to disable a cell phone if it is stolen. As many as 83 percent of smartphone owners believe that a kill switch would reduce cell phone theft, and 93 percent of smartphone owners believe that Americans should not be expected to pay extra fees for the ability to disable a stolen phone.

State and federal government agents are behind kill switch implementation. To date, California is ahead of most states in enacting such legislation. Last fall carriers turned down proposed kill switch technology developed by Samsung. Such technology would allow consumers to disable, or have the carrier disable, their smartphone if stolen. This would render the handset inoperable, and make the handset unsalable in the black market. Such technology would deter theft by removing the monetary incentive.

The proposed Samsung kill switch is not the only time cell phone carriers have rejected the technology. There is some belief that carriers don’t want a kill switch because they profit from consumers who purchase insurance and pay to replace their phones, ZDNet reports.

“When CNN previously pressed the matter to US carriers, they declined to comment, instead citing comment from CTIA The Wireless Association, which said: ‘CTIA and its member companies worked hard over the last year to help law enforcement with its stolen phone problem’.” wrote ZDNet’s Zack Whittaker.

The CTIA has also argued that a kill switch could pose risks to consumers such as leaving smartphones vulnerable to hackers. Consumers would be put at risk, but the organization also believes that smartphones used by government agencies such as the Department of Defense, Homeland Security and law enforcement agencies would be at great risk if a kill switch was built into all smartphones.

The report also places dollar figures on the cost of not having a kill switch, which has not been previously calculated.


Source: Enid Burns for redOrbit.com - Your Universe Online



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