Economy May Lead To Cell Phone Penny Pinching - InformationWeek

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3/20/2009
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Economy May Lead To Cell Phone Penny Pinching

Subscribers are looking to trip their monthly bills by ditching mobile Web and texting, or moving to a prepaid carrier.

With the global economy slumping, consumers are looking to hang up on their high cell phone costs, according to a new survey by the New Millennium Research Council.

The survey found that the vast majority of users aren't willing to give up wireless service entirely, but 60 million U.S. subscribers, or 39%, said they are likely to cut back on their cell phone plans in order to save money. Many of those looking to cut back said they would consider dropping their carrier for a prepaid option. This should bode well for the likes of Cricket Wireless, MetroPCS, and Virgin Mobile, which have all seen strong growth in the last year.

"The era of cell phone penny pinching is officially here," said Allen Hepner, a scholar at the New Millennium Research Council, in a statement. "Thanks to the recession, the U.S. cell phone marketplace is undergoing fundamental changes that will just get bigger as the economic downturn deepens. 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 a less expensive cell phone."

The main cutbacks will be in nonvoice services, such as text messaging, mobile e-mail, and mobile data connectivity. About 19 million subscribers said they have considered reducing or already have cut back on these services. More than two out of five users said it's "very likely" or "somewhat likely" they will cut back on these services if the economy gets worse in the next six months.

The carriers are feeling this pricing pressure and are making moves to retain and attract value-conscious customers. Sprint Nextel has a $100 plan that includes unlimited voice, data, and text services for high-end handsets, and its subsidiary Boost Mobile has a $50 unlimited plan for non-smartphones. T-Mobile is also rewarding some long-term customers with a $50 unlimited voice plan.


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