Monday, April 20, 2009

$5 Billion Less Consumer Spending on Mobile, Broadband, TV?

Though first quarter financial results are not yet available to confirm the possible existence of the trend, about 15 percent of respondents say they will cut back spending on subscription-TV, broadband, and mobile services in response to economic pressures, an In-Stat survey finds. Precisely what that means is the question.

If any significant trend of that sort emerges, U.S. consumers could cut spending on mobile, broadband and pay TV services by nearly $5 billion due to economic turmoil, In-Stat says.

Will consumers drop mobile, broadband or multi-channel video subscriptions completely, or simply shift consumption to more-affordable subscriptions? The former would cause a greater hit to revenue and a risk that customers do not return later, the latter might "simply" pressure on average revenue per user.

In the fourth quarter of 2008, a slowing rate of growth could be seen for at least some services, but it was hard to separate purely-economic effects from product maturation. So far, mobile service providers have seen a shift to prepaid services from postpaid.

It wouldn't be unusual to see consumers dropping some premium services or postponing upgrades in the face of a tough recession. What would make news is negative growth for subscription services other than wired voice, which has been declining, at least for some providers, for years.

We'll find out soon enough what is going on.

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