Subscribers to Trim Wireless Spending?

Posted by: Olga Kharif on October 28, 2008

Wireless services were the one bright spot during the last economic downturn. Americans cut down on cable TV, cars, house purchases. But they’d kept their cell-phone spending in tact. This time around could prove to be different.

Poll results from mobile applications portal GetJar show that 78% of respondents globally plan to delay buying a new phone. And 76% of users are actively trying to reduce their wireless bills.

Why are consumers reacting to this economic downturn differently? In one word: data. Around the year 2001, most Americans, and many users abroad only used cell phones for voice. You couldn’t yet download ringtones, music or video. People used cell phones for emergencies, and to talk to family and friends — for the types of things you simply can’t cut out, even at times of financial distress.

Since then, wireless service bills have fattened out, however. Lots of people began paying $5 to $30 a month to surf the Web. Others pay a few bucks here and there for mobile applications. These expenditures are frivolous and by no means necessary. And they will be cut as the global economic downturn deepens.

That's bad news for wireless service providers, which have come to depend on wireless services for growth. So far, U.S. carriers haven't really seen customers cutting back: Verizon Wireless, in fact, just reported that its data revenues in the third quarter rose by more than 40%. But that may change, as Americans lose their jobs -- and start tightening their belts.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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