USA - the recession and the cellphone

Recession leads callers to hang up on cell phone contracts
see also New Millennium Research Council

As economic worries grow in America, many consumers are ready to disconnect their expensive cell phone plans and seek cheaper alternatives for wireless communication, according to a survey released Thursday.

The study, conducted by Opinion Research Corporation (ORC) for the New Millennium Research Council (NMRC), reports that 19 percent of cell phone users polled have already canceled their cell phone contracts in reaction to the financial crisis.

The survey, which earlier this month polled 2,005 adults ages 18 and older via their landline phones, found that two in five Americans are likely to cut back on their contract-based cell phones if the economy worsens.

The NMRC, a Washington, D.C.-based organization that conducts surveys largely for telecommunications companies, suggests that as a result, consumers will turn to alternatives such as prepaid cell phones, or cut back on "extras" such as text messaging and Internet access.

Some may even ditch their cell phones altogether and stick with their landlines (of course, the very fact that the survey was conducted via landline excludes those who already lead landline-free lives).

During a live conference call Thursday morning, representatives of the ORC and NMRC went over the survey's findings and said the poll suggests that "millions" of consumers could end up altering their cell phone services.

Currently, prepaid cell phones are commonly suggested for emergencies, light usage, or avoiding long contracts. However, the NMRC suggests that as consumers continue to disconnect or cut back on their contract-based cell phones, wireless companies such as AT&T and Sprint will offer more less expensive prepaid plans.

Though less expensive prepaid plans offer financial advantages, there are downsides. Handsets purchased with prepaid plans generally have little in the way of advanced features, and that could discourage consumers who keep up with the latest gadget trends.

But like the NMRC suggests, the dramatic changes in cell phone behavior may encourage wireless companies to revise their plans. For example, companies may go the way of MetroPCS, a no-contract company whose customers get "unlimited" plans and cheaper monthly rates in exchange for purchasing more expensive handsets.

NMRC would not disclose details on who funded the survey, although it did say that some telecommunications companies provide financial support.