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Americans cutting cell costs, plan to reduce further

Once it became clear that America was in the throes of recession, public opinion began to shift regarding prepaid wireless. Once the black sheep of calling options, usually reserved for the very young or the credit challenged, people are now viewing it as a way to cut back on cell phone costs. Since many companies offer unlimited calling for far less than contract carriers and others offer pay-per-minute plans, consumers can find value in these prepaid options. According to a survey by the New Millennium Research Council, the shift is already beginning. They found that 19 percent of consumers with a cell phone have cut service in the last six month. This includes switching from their contract to prepaid.

The more telling finding, though, is that 40 percent said that they planned to cut their cell phone if (read: when) the recession gets deeper. This is the natural progression of events during a financial downturn. People look for areas where they can save money. One is to cut back on the amount of time spent on the phone, or at least find a better value for doing so. Consumers can turn to prepaid to reduce their overall phone costs.

“The U.S. cell phone marketplace is undergoing fundamental changes that will just get bigger as the economic downturn deepens,” Allen Hepner, a scholar at the New Millennium Research Council, said in a telephone news conference Thursday. “What we see in this survey is clear evidence that most consumers will keep a cell phone during this recession, but only after shifting to less expensive cell phone plans.”

The latest available figures have prepaid covering 17 percent of the U.S. cell phone market. That could change big time once the Q1 2009 numbers are released. Seventeen percent of contract cell phone users have switched to prepaid within the past six months, and given the grave state of affairs to start the new year, we could see another 10 percent switch in the first quarter alone. As I discussed with Boost Mobile VP Neil Lindsay on the Prepaid Podcast, this could cause an eventual paradigm shift in the U.S. Once people are on prepaid and realize the benefits, perhaps the U.S. will join the world in celebrating the value of prepaid wireless.