Cell phone customers’ habits and service preferences are changing as they cut back on spending, an emergent trend that doesn’t bode well for service providers, according to a broad-based U.S. survey conducted by the Opinion Research Corporation for the New Millennium Research Council.
According to this research, the recession and resulting concerns about job security and the economy is prompting millions of Americans to opt out of higher priced cell phone service plans and cut back on using high-end services such as Web browsing, email and texting. Things are likely to get worse for wireless telcos before they get better, according to the survey results.
“The era of cell phone penny pinching is officially here. Thanks to the recession, the U.S. cell phone marketplace is undergoing fundamental changes that will just get bigger as the economic downturn deepens, Allen Hepner, an NMRC scholar stated.
“What we see in these survey findings is clear evidence that most consumers will keep a cell phone during this recession, but only after shifting to less expensive cell phone plans, such as prepaid, and also by scaling back on cell phone extras including Internet connectivity and texting.”
Four out of five Americans currently own cell phones and more than 80 percent of them have already reduced their spending “quite a bit” (39%) or “somewhat” (45%). Seventeen percent of Americans with cell phones have prepaid plans while 84 percent have service contracts—the overlap due to individuals with both types of phones. Nearly 20% of Americans with prepaid cell phone service say they switched from contract-based plans in the last six months due to concerns about their jobs or the recession. This includes 23 percent of respondents with prepaid cell phones 18-34 years old and 29 percent of African-American respondents.
Forty-four percent of respondents 18-34, 54 percent in households making $35,000 a year or less, and 55 percent of African-Americans are among those who said they were likely to cut back on cell phone spending if the economy gets worse in the next six months as expected. On balance, cell phone users aren’t too thrilled about higher priced, “value-added” services either. Less than half (48%) said that phone extras such as Internet connectivity, email and texting are a “great deal” (29%) or of “some” value (19%).
Most prepaid customers—two-thirds–do believe they’re saving money “compared to a landline phone or contract-based cell phones,” however. Fewer 3 in 10 said they weren’t. Added Opinion Research Center researcher Graham Hueber, “It is important to note that these findings do not just point to a potential shift in consumer attitudes and habits about cell phones. The change in thinking and purchases is clearly already taking place and has been for months.
“For example that, we see that 8,740,000 Americans – that is 19 percent of consumers without a cell phone — report that they already have ‘discontinued cell phone service in the last six months because of actual job loss, fear of job loss, the recession, or any other related financial concerns.’ This strongly suggests that a recession-related shift in attitudes and purchasing habits is already underway.”