Consumers Cut Back On Cell Phone Extras
Consumers may not be willing to give up their cell phones entirely during the recession, but they may be looking to cut back, either by changing from contract plans to cheaper pay-as-you-go options or by cutting back on extra services like text and data.
According to a survey of more than 2,000 Americans contracted by the New Millennium Research Council, 19% of consumers with a cell phone have cut service in the last six months for recession-related reasons. Nearly 40% of the respondents who are on contract plans are likely to cut back on their cell phone plans and services if the recession gets deeper, according to the survey.
"The U.S. cell phone marketplace is undergoing fundamental changes that will just get bigger as the economic downturn deepens," Allen Hepner, a scholar at the New Millennium Research Council, said in a telephone news conference Thursday. "What we see in this survey is clear evidence that most consumers will keep a cell phone during this recession, but only after shifting to less expensive cell phone plans."
Some of those cutbacks may come in the form of extra services, such as texting or Internet connectivity. According to the survey, nearly 20% of cell phone users have either cut back or considered cutting back such services as a direct result of the recession, with reasons including job loss, fear of job loss or other recession-related concerns. In addition, 19% said it is very likely and 21% said its somewhat likely they will have to cut back further on such extras if the economy gets worse, according to the survey.
"As the recession deepens, consumers have and will continue to shift away from expensive plans," said Graham Hueber, a senior researcher at the Opinion Research Center, which conducted the survey. "As consumers look for savings, there's clearly a lot of movement that could take place."
According to the survey, about 80% of Americans own a cell phone. The majority of them--84%--have a contract plan, while 17% are on prepaid plans. (Some people own more than one cell phone, accounting for a number that is higher than 100%, Hueber said.) According to the survey, 17% of owners with contract plans switched to a prepaid plan within the past six months in a bid to save money because of the recession.
"There is demonstrable evidence that people have turned off [cell phones and services] and are looking to save money," Hepner said.
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We have made a corporate decision to cancel all contracts for employees and buy prepaid cell phones instead. This is a very aggressive move to reduce overspending on the side of our employees and to cut on unnecessary (hidden) costs from the carrier. We have also decided that it is not necessary for employees to own a smart handset but we acknowledge the need for them to be in contact at all times. The prepaid carrier has not yet been decided on but Net10 is our number one choice at the moment.