Telecom and Video Cutbacks: What Happens When Economy Turns?

The hard thing about managing or forecasting in turbulent times is, as Cisco management likes to say, "managing the transitions." It is not news that media, entertainment and communication spending has been sluggish, at best, for many segments of those businesses over the past couple of years.

According to Harris Interactive, about 20 percent of U.S. adults say they have cancelled or cut back on cable television service (22 percent), mobile phone service (17 percent) or cancelled their landline service and are only using their cell phone (17 percent).

The hard part is trying to figure out when cutbacks triggered by a tough economy will abate, and whether behavior returns to its older pattern, or not. In past recessions, consumer behavior has resumed its "pre-recession" pattern once the recovery was firmly under way.

This time around, of course, nobody is too confident. There is much concern that a new "age of austerity" has begun, so that even when the economy does improve, behavior will not be as it was, in terms of spending. At the same time, most of us would agree that user preferences and tastes are changing. Aside from the economic effects, people might be deciding they want to spend their money in different ways than they have in the past.

Aside from those largely incremental changes, though, some of us believe the danger of "black swan events," unpredictable and unforeseen events with large magnitude effects, is higher than used to be the case in the past, though at all times "black swan events" have occurred.

Uncertainty? You betcha. 

Harris Interactive: Americans Still Cutting Back on the Small Things to Save Money