Millions expected to cut back cell phone costs in recession

Many have already stopped service due to recession fears, survey shows

By Matt Hamblen
A new survey says millions of Americans expect to cut back on their cell phone costs to save money if the recession continues as expected.

The New Millennium Research Council (NMRC), a Washington think tank, today released results of a survey of 2,005 Americans that was conducted March 5-9.

Thirty-nine percent of those customers with monthly contracts said they are likely to cut back. That percentage represents more than 60 million consumers who are expected to cut back on monthly service or extras such as texting, according to the Opinion Research Corp., a polling company that performed the survey for NMRC. The margin of error in the survey is plus or minus 2 percentage points.

Opinion Research, which conducts polls for CNN and other organizations, also found that many users have already cut back. "The change in thinking and purchases is clearly already taking place and has been for months," said Graham Hueber, senior researcher for Opinion Research, in a call with reporters.

Hueber said that 19% of those surveyed reported that they had discontinued cell phone service in the past six months because of job loss, fear of job loss, the recession or other related financial concerns. He said that percentage represents 35 million Americans.

The findings suggest that a "recession-related shift in attitudes and purchasing habits is already under way," Hueber said.

Allen Hepner, a scholar at the NMRC, said the survey also shows that consumers will move from monthly cell phone plans to prepaid plans as a result of the downturn. He described four prepaid plans that were far less costly than monthly plans, putting them more in the reach of lower-income Americans. "Consumers are looking for savings," he said.

Hepner would not say whether the NMRC receives funding from prepaid carriers, saying that the group's donors are kept anonymous. He did say that some of the donors are telecommunications companies. Many carriers offer both prepaid and monthly subscription plans.

Citing the cellular phone industry group CTIA, Hepner said that monthly phone service costs the average consumer $60 per month, while several prepay plans can bring the costs down to $20 per month or even $20 for three months, with a wide range of maximum minutes. Still, he acknowledged that "prepay is not for everyone" and urged consumers to "get the plan that's right for them."

Even though Hepner cited several reasons consumers might consider prepaid phone usage, he said the NMRC is not planning to use the survey data to support a political agenda or marketing campaign. "It's phenomenally neutral," Hepner said, "showing just how the American people feel today." He said that the NMRC will use this survey as the first in a series of annual surveys on cell phone usage.

"There always will be people who use statistics to buoy a position or use it to damage an opponent, but that's not the intent," Hepner said.

He noted that users who move to prepay plans are not getting rid of cell phones altogether. "The good news is there are options," Hepner said. However, he added, a new era of "penny-pinching is here."

Other data in the survey shows that of those who have discontinued cell phone service in the past six months, 28% live in households earning $35,000 or less. Of those likely to cut back if the economy gets worse, 44% are age 18-34, 54% live in households earning $35,000 annually or less, and 55% are African-American.

Overall, 80% of those surveyed still own a cell phone, while 84% of the 18-to-34-year-olds have at least one. Just 68% of those age 65 or older have a cell phone.

The survey found that 91% of households earning $100,000 or more have cell phones, while 65% of households earning $35,000 or less have them.

About 17% have a prepaid cell phone plan, while 84% have a contract-based cell phone. The overlap is due to individuals with both types of plan.