Consumers Could Save $3.4B while Wireless Industry Could Lose $2.3B Thanks to Kill Switch Bill

July 30, 2014 - Written By Ray Greer


There are many benefits to making kill switches standard for all smartphones for the US consumer. Not only could it prevent smartphone theft, but according to a new study done by a researcher at Creighton University, kill switches could save consumers $3.4 billion. However, that money saved would be taken from insurance companies who consumers turn to when they need to replace that stolen device.

A kill switch would allow consumers to essentially render a device useless after its been stolen by locking the device remotely. The idea is that by making this a standard feature on all smartphones, those who may be thinking about stealing said smartphones may figure its not worth it anymore. Any device stolen would become an expensive paperweight- that is if the kill switch is implemented properly. While some states are already passing a bill in favor of the kill switch, others are still debating.

California’s state senate approved a bill in regards to the kill switch that was sponsored by San Francisco District Attorney George Gascon. Last May, Minnesota was the first ever US state to pass a kill switch bill. Still, there are plenty of states that are debating the issue, or that haven’t even come around to talking about it just yet. New York is still in debate, though Attorney General Eric Schneiderman is leading the front in favor of a kill switch bill. Since a kill switch bill hasn’t been implemented everywhere, studies are still being to prove the benefits such a bill would have for consumers. At Creighton University, a researcher has been studying such benefits, and has released his findings. In his study he found that with a kill switch bill in place, consumers could save a total of $3.4 billion/ year.

The researcher at Creighton is William Duckworth, who is a business professor. In his study he found that Americans are spending $1.1 billion a year just on replacing stolen devices. Duckworth also looked at how much consumers are spending on premium insurance per year and found that number to be $5.5 billion. This premium insurance is considered such since it insures stolen devices, but if that aspect of insurance was taken away, that number would drop. Allowing consumers to purchase insurance that was basic (covering only damages and taking out the theft) would save consumers $2.3 billion. Giving the US consumer a total savings of $3.4 billion each year in insurance, and stolen smartphone replacement costs. However, insurance companies and carriers hear that report differently. Where we see a $2.3 billion per year saving, they see a $2.3 billion a year loss.

While a kill switch bill seems like there are no negative aspects, wireless carriers suggest that a kill switch could be hacked. Once hacked, any device could be rendered useless-even if it hasn’t been stolen. However, those who support the bill feel that carriers are letting money cloud their judgement when it comes to what’s right for their consumers. “As the epidemic of smartphone theft continues to grow, so do the profits insurance companies and carriers reap off the victimization of their own customers,” Gascon said this past Tuesday. “The common sense theft deterrent features we have been advocating for will not only save millions of people from violent victimization, it will also save consumers billions of dollars.”

The group representing wireless carriers in the US, the CTIA has spoken out in response to Gascon’s remarks. Though in not as many words, instead they only said that the remarks were “misplaced, unfortunate and misinformed.” Though in a response to CNET, Jamie Hastings, the vice president of external and state affairs for CTIA said, “The wireless industry has already provided numerous anti-theft solutions, many for free, to consumers and they will continue to do so.” Continuing to say, “This is being done because the wireless industry is committed to providing tools to law enforcement to safeguard its consumers, their devices and their personal information.”

Hastings was referring to things like “activation lock” by Apple, which is a feature that requires an Apple ID and password in order to turn off the devices tracking feature. Samsung has also integrated a feature called “reactivation lock,” which allows a consumer to lock their device, but almost impossible to unlock- even with a factory reset.

Still, the debates continue since it’s not just  a few dollars we’re talking about here. California lawmakers cited a study done that showed replacing a lost or stolen smartphone has become a $30 billion business- and that was in 2012.