Parents are giving phones to their kids at younger ages, and wireless companies are benefiting

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A modern childhood rite of passage keeps moving younger.

Cellphones, must-haves first among high-schoolers and then middle-schoolers, are now being adopted by kids in the earliest years of elementary school.

As the technology has evolved and become more commonplace, parents have gradually grown accustomed to giving kids phones at younger ages, but the trend seems to have picked up in recent months, capturing ever greater numbers of even the youngest elementary-school students.

An August survey of some 3,000 parents by Recon Analytics, an independent research and consulting firm focused on telecommunications, found that 15% of 6-year-olds had gotten phones in the previous three months. An additional 15% of kids that age had already owned phones for more than three months.

“Schools almost uniformly prohibit kids from having cellphones, and still the numbers are doubling in six months,” Recon Analytics analyst Roger Entner told MarketWatch. In his view, the acceleration in adoption among the youngest age groups reflects a growing interest on the part of parents in having a way to communicate with their kids at all times.

Also read: First grade, first cellphone. Here’s how families are managing kids’ ever-earlier adoption of devices.

Wireless carriers are judged by Wall Street on their ability to add new connections, and that growth has been supercharged recently. New postpaid phone connections could average more than 8 million for each of the past two years, according to Wolfe Research analyst Peter Supino. Meanwhile, the U.S. population grew by about 2 million over that period, according to estimates from the U.S. Census Bureau.

Carriers are seeing “a lot more growth than the population would imply,” Supino said. Kids aren’t the only source of that growth, but “intuitively,” it makes sense that they’re one of the drivers, he added.

The wireless equation

That children are a source of net additions for the wireless industry isn’t necessarily a new development, Supino noted. But the idea that they’re playing a role in growth seems to be on the minds of wireless executives lately.

“You have families getting phones for kids at younger ages,” AT&T Inc.

Chief Financial Officer Pascal Desroches said at a November Morgan Stanley conference, during a broader discussion of growth drivers and whether they were sustainable.

Verizon Communications Inc.

Chief Revenue Officer Frank Boulben echoed those comments in a conversation with MarketWatch.

“Kids are getting their first smartphone younger and younger,” he said, a trend he attributed in part to peer pressure. “As soon as you have a certain number of kids having a smartphone in their class, it becomes a necessity for the others to have a smartphone as well.”

The age at which this is happening is “getting lower and lower each year,” he added.

Carriers have made it increasingly attractive for families to add new phone lines for their children, in part through pricing strategies. Boulben gave the example of a family that might pay $35 a person for four lines at Verizon but that would only have to pay $15 to add a line for an additional child.

Families often opt to hand down older devices to children, he noted, but in some cases, parents will take advantage of trade-in deals while buying phones for kids outright.

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A spokesperson for Comcast Corp.
which offers wireless plans to home-internet customers through its Xfinity Mobile business, said that mix-and-match plans have also proved appealing. Parents don’t necessarily have to get the same amount of data for every participant on a family plan, meaning they can choose a cheaper plan if they expect a child to mainly use data in limited situations or opt for unlimited if the child will be using the phone often — when riding a bus to and from school, for instance.

The mix-and-match offering has been popular with Verizon customers as well, according to Boulben. “It caters to the needs of different family members and gives an incentive if you take more lines,” he said.

T-Mobile US Inc.
meanwhile, sometimes offers a free phone line to account holders who already pay for at least two lines. Sprint, now part of T-Mobile, lists one such offer on its website.

“It does lower the hurdle for getting a child their first phone and you’ll likely be pitched for exactly that when you go to store to upgrade your own phone,” said Craig Moffett, an analyst with MoffettNathanson, a division of SVB Securities. Customers can then attach the line to an old phone.

In other cases, carriers may offer free phones to customers who add new lines, with cheap incremental service costs.

“Only $10 more for one line when the handset is somewhere between deeply discounted and free makes it a much easier decision to add a line for child than it was a few years ago,” Supino said. “The need for the kid is more marginal, so the family’s willingness to do it should be more sensitive.”

These sorts of deals don’t only appeal to families with young kids. Account holders can also give extra lines to elderly family members, or in some cases, depending on the promotion, to no one at all.

“It’s not unusual to have a retail rep in a store advise the customer by saying, ‘Take this extra line even if you don’t need it,’” Moffett said.

For that reason, he sees buy-one-get-one-free promotions that incentivize customers to take on unneeded lines as a far bigger propeller of subscriber momentum than an influx of children as customers.

Also read: Verizon to give some customers a free year of Netflix if they buy other subscriptions through its new platform, says WSJ

“Market growth has been far above population growth for a long time,” Moffett said. “It’s always been speculated that children getting phones earlier has been an important driver of that. In reality, it’s probably not. It’s too small in effect to really move the industry all that much.”

By his math, he said, you’d “have to see the average age of kids getting smartphones fall by five years in one year to fully explain the excess growth in the U.S. wireless industry.”

Making it easier for families to give phone lines to their children, however, is likely a smart strategy for carriers in the long run, according to Supino, even if they have to lure families with deals.

“The life of the subscriber is very likely to be many years longer than the length of the phone promotion,” he said. What’s more, it becomes logistically more difficult for customers to leave and take promotions from rival carriers when they have to switch over several lines.

The Uvalde effect?

Regardless of how much of an impact young kids have on the broader subscriber narratives for major wireless companies, analysts seem to agree that there’s been more discussion of cellphone adoption among schoolchildren, especially young grade-schoolers, lately.

Entner’s survey didn’t just suggest an incremental 15% of 6-year olds getting phones in the three months leading up to late August combined with the 15% who’d already owned phones before that period — it also found big spikes among 7- and 8-year-olds, each building on yet larger bases.

The magnitude of the uptick could be linked in part to the school shooting in Uvalde, Texas, in late May, some say. Reporting on that massacre, in which 19 students and two teachers were killed, highlighted a failed police response. It also brought out stories of students who contacted dispatchers while waiting for help to arrive.

“Parents have this tension area of, on one hand, do I want to expose my children to the internet and all the well-publicized dangers that exist?” Entner said. “And then there’s the drive for security, especially with the school massacres, and the very poor communications and strategy of public safety.”

The only reason to give a 6-year-old a cellphone, in his view, “is for parents to contact their own kids.”

Moffett agreed that the Uvalde shooting “might have meaningfully accelerated the move to smartphones for significantly younger children in the 5-, 6- and 7-year-old range.”

“You do see evidence of that on chat boards and Reddit and on Facebook in moms’ groups, where they suddenly talk about this feeling of helplessness,” he said.

Keri Rodrigues, a Massachusetts mother who got all five of her kids phones at age 9, said that the Uvalde shooting has stressed the importance of connectivity.

“Three of my children look exactly like the kids who were murdered at Uvalde,” she told MarketWatch. “There are times with lockdowns in school and they get nervous and want to connect, and it’s heartbreaking.”

Also read: Verizon stock gets an upgrade amid ‘overly negative’ sentiment and a strong dividend

And: AT&T has seen ‘sustained outperformance’ this year. Can the stock keep it up?

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