Money

Report: Telecom Spending Has Become Recession Proof

A new telecom spending report from Recon Analytics says that, as the U.S. experiences high inflation rates, consumers would rather reduce expenditures for electricity, heating or car payments than home internet or mobile service.

Only 8% of respondents in the Recon Analytics survey said they are planning to cut back on their home internet and mobile service expenditures as a result of higher costs. That puts home internet and mobile service just above health insurance and housing as expenditures that consumers are unwilling to reduce due to inflationary pressures.

One area where respondents are more likely to cut expenses is streaming video and audio, which represent the expenditure category that consumers are fourth most likely to reduce. This is in line with similar research from TiVo, which found that consumers are switching from paid video services to free streaming options.

One area where respondents are more likely to cut expenses is streaming video and audio.

The research also found that there is little difference of opinion between subscribers of different internet providers — only 7% of AT&T customers at the low end and 9% of Verizon customers at the high end are looking to reduce their spending on home internet services.

Results were similar for mobile services, with only 7% of T-Mobile customers and 8% of AT&T customers looking to reduce their mobile costs.

Among those seeking to cut their mobile service expenses, the favored option is to change to a new provider that offers a plan similar to what they’re currently receiving but at a lower price point. The second choice is downgrading to a more affordable plan with their current provider.

According to the report, consumers also look at potential discounts, with more than half willing to switch to a new provider to obtain the best deal on a new device or to find further cost savings.

In contrast to the reluctance to cut back on home internet and mobile service expenditures, half of the consumers said they were expecting to reduce spending at restaurants by eating at home more.

“It’s the easiest way to cut back as consumers, now trained in the art of cooking due to the pandemic, can easily replace an expensive meal with home cooking. At the same time McDonalds is at an all-time high stock price based on cutting their regional sales structure,” Recon Analytics noted in a blog post about the telecom spending research.

Researchers cautioned service providers, though, that “You can’t cut yourself to growth. Verizon is a cautionary tale of what happens when you cut your regional sales structure and take away the ability to build a deep and wide management bench by having a large number of P&Ls where people can learn the business.”

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