TMCnews Featured Article
October 20, 2009
What Happens for Service Providers Now that the Economy is Mending?
By Gary Kim, Contributing Editor
For service providers in the United States, Europe and some part of the Asia Pacific regions, the economic recovery might not lead to a return to older habits, the Nielsen Company suggests. On the other hand, one might argue that massive change in communications buying habits would have made changes inevitable, irrespective of the economy.
The good news is that some products, such as entertainment video, broadband access and mobility, showed their normal resiliency during a recession. Even fixed voice, which has been under pressure for several reasons over the past decade, did not seem to break with its underlying trend.
But there were noticeable changes in some areas. Perhaps the most visible was growth of prepaid plans compared to postpaid, steps many consumers apparently took to reduce the cost of their mobile services. Use of smartphones and data plans, though, continued to grow, rather robustly.
Still, as Nielsen researchers note, the recession might have brought about a change in consumer values, spending habits and lifestyle choices that will lead buyers to refrain from excessive or unnecessary spending across all aspects of their lifestyles. And that could affect future communications spending in some ways.
Some 48 percent of Americans say they will continue to save on gas and electricity bills, 22 percent of Australians will continue to cut down on take-away meals and 23 percent of French say they will continue to use their car less, Nielsen's research suggests.
One in six global consumers will continue to purchase cheaper grocery products, spend less on new clothes, cut down on out-of-home entertainment and one in seven will reduce telephone expenses.
It is that last factoid that is of greatest concern for telecom service providers, of course, though a greater proportion of those reductions will come in some markets such as Latin America (except for Brazil), Turkey and South Africa, Nielsen suggests.
Also, other surveys, such one taken by GfK Roper Reports, suggests spending on phone and video entertainment is the safest of a broad range of services and products U.S. consumers say they might cut back on.
Where 82 percent of respondents say they might cut back on "dining out," for example, just 25 percent say they might cut back on phone expenses and 24 percent say they might cut back on entertainment video. Those responses for voice and video are the lowest for any products.
More consumers globally say they will continue to cut back on out-of-home entertainment while only six percent will cut back on at-home entertainment, according to Nielsen.
That suggests demand for video entertainment, for example, will continue to hold its own. The Roper Reports survey also confirms that trend, as half of respondents indicated they would buy an HDTV or flat-panel display in the next 12 months.
Strong sales of smart phones also likely will continue. In 2010, for example, it is highly likely that sales of smart phones will surpass sales of other phones for the first time. The direct implication is that consumers will pay for value, as they also did in past recessions when PC sales rose despite tough economic conditions, and for similar reasons: value made the spending justifiable.
The good news is that some products, such as entertainment video, broadband access and mobility, showed their normal resiliency during a recession. Even fixed voice, which has been under pressure for several reasons over the past decade, did not seem to break with its underlying trend.
But there were noticeable changes in some areas. Perhaps the most visible was growth of prepaid plans compared to postpaid, steps many consumers apparently took to reduce the cost of their mobile services. Use of smartphones and data plans, though, continued to grow, rather robustly.
Still, as Nielsen researchers note, the recession might have brought about a change in consumer values, spending habits and lifestyle choices that will lead buyers to refrain from excessive or unnecessary spending across all aspects of their lifestyles. And that could affect future communications spending in some ways.
Some 48 percent of Americans say they will continue to save on gas and electricity bills, 22 percent of Australians will continue to cut down on take-away meals and 23 percent of French say they will continue to use their car less, Nielsen's research suggests.
One in six global consumers will continue to purchase cheaper grocery products, spend less on new clothes, cut down on out-of-home entertainment and one in seven will reduce telephone expenses.
It is that last factoid that is of greatest concern for telecom service providers, of course, though a greater proportion of those reductions will come in some markets such as Latin America (except for Brazil), Turkey and South Africa, Nielsen suggests.
Also, other surveys, such one taken by GfK Roper Reports, suggests spending on phone and video entertainment is the safest of a broad range of services and products U.S. consumers say they might cut back on.
Where 82 percent of respondents say they might cut back on "dining out," for example, just 25 percent say they might cut back on phone expenses and 24 percent say they might cut back on entertainment video. Those responses for voice and video are the lowest for any products.
More consumers globally say they will continue to cut back on out-of-home entertainment while only six percent will cut back on at-home entertainment, according to Nielsen.
That suggests demand for video entertainment, for example, will continue to hold its own. The Roper Reports survey also confirms that trend, as half of respondents indicated they would buy an HDTV or flat-panel display in the next 12 months.
Strong sales of smart phones also likely will continue. In 2010, for example, it is highly likely that sales of smart phones will surpass sales of other phones for the first time. The direct implication is that consumers will pay for value, as they also did in past recessions when PC sales rose despite tough economic conditions, and for similar reasons: value made the spending justifiable.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Edited by Patrick Barnard
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