RealTime IT News

Cell Phone Users Cutting Back in Harsh Economy

Recession-weary cell phone users are bucking the bullish smartphone market trend by abandoning "extras," such as Internet connectivity, e-mail and texting, according to a recent report by a Washington, D.C.-based telecomm think-tank.

Fifteen percent of those surveyed have cut back on Internet, e-mail and texting plans in the last six months because of "actual job loss, fear of job loss, or the recession," according to the study conducted by Opinion Research Corporation (ORC) for the New Millennium Research Council (NMRC).

And, the downturn is expected to continue throughout the year. More than two out of five cell phone users with e-mail, texting and Internet access on their phones, or 41 percent, say it is likely that they'll stop using these features "if the economy gets worse in the next six months," the study says.

"The era of cell phone penny-pinching is officially here," Allen Hepner, of the NMRC, said in a statement.

"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."

Can smartphones carry the day?

The news of diminished cell phone use means the mobile market will have to rely even more on higher margin smartphones to carry sales. The NMRC report's findings come at a time when the growing popularity of smartphones continue to boost mobile Internet use, which is having a widespread impact on the mobile industry in terms of advertising, service offerings and sales.

Despite projected dips in sales growth, the overall smartphone market is still in the black, and Juniper Research predicts that smartphones will account for 23 percent of all new mobile phones by 2013.

The findings from the study are even worse for those companies that depend on contract-based services. Nearly one in five Americans who now have prepaid cell phone service (17 percent) say they switched in the last six months from a contract-based cell phone service due to job or recession-related concerns, according to the survey. This figure includes 23 percent of 18-34 year olds and 29 percent of African Americans with prepaid phones.

"The change in thinking and purchases is clearly already taking place and has been for months.

For example, we see that 8,740,000 Americans -- that is 19 percent of consumers with 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.'" said Graham Hueber, senior researcher, Opinion Research Corporation in a statement.

"This strongly suggests that a recession-related shift in attitudes and purchasing habits is already underway."