Will consumers slash spending on wireless, TV, and broadband?

As large employers, such as Citigroup, prepare for massive layoffs, the bad economic news is starting to hit home for consumers afraid of losing their jobs and already looking for ways to tighten their belts.

The recent spate of poor earnings from all kinds of consumer companies, like coffee giant Starbucks, tell us that consumers are nervous about the economy. And it looks like consumers will continue to be skittish about spending over the next several months. Last week Nokia, the largest maker of mobile phones in the world, announced it's already seen sales slip, and it projected that sales will likely continue to be weak in the fourth quarter and into 2009.

While it's obvious that consumers are cutting back spending on certain luxuries like lattes and new cell phones, I wonder if they are also looking to cut spending on monthly services, like wireless, broadband, and cable TV. I recently looked at my stack of monthly bills to find where I could trim some fat from my budget, and I realized that aside from my electric bill, my cable/broadband and wireless phone bills are my top money suckers every month.

Executives from some of the nation's largest wireless and broadband companies have said publicly they don't expect to see huge numbers of people canceling service. For one, wireless, cable TV, and broadband services have become staples in American culture. And second, most people are under some kind of contract for one, if not all, of these services. So canceling their service outright could end up costing them more.

I know I couldn't do without my cell phone, cable TV, or broadband services. But maybe I could manage with less.

That's exactly what CEOs from Sprint Nextel and Verizon Communications have said they expect people to do over the next few months. They expect to see consumers curtail their spending somewhat by cutting back on services. This might mean reducing the number of voice minutes on a voice plan or cutting down the number of channels received as part of a cable TV service. Or maybe people will downgrade from a higher-speed broadband connection to a slower connection for a better price. Perhaps it means getting rid of a traditional voice landline or even a second voice over IP line.

I'm working on a story on how the financial crunch is affecting consumers' decisions about these services, and I'd love to hear from CNET News readers. If you are thinking about cutting back on your cell phone or cable TV/broadband service or if you've contacted any of your providers to try to work out a better deal, please e-mail me. I really want to get firsthand accounts from consumers about how they plan to save money during these turbulent times. Feel free to e-mail me at [e-mail].

[nfrengle]

The answer to your headline's question is 'yes'. Using myself as an examply, I recently consolidated my Sky Television, Zen Internet (a small premium ISP in the UK), and BT connections, which I pay a total of £68/mo. for all over to Sky (minus the movies pack I had previously had with them) for only £22/mo. Working for the world's largest mobile company by revenue, I can also extrapolate such behaviour to our customers (though I get very good deals as an employee, so that won't be an area that I personally will be cutting back on). All one has to do is to look at where the money is going, and switiching to lower-cost providers of fixed-cost services is an absolute necessity. Things like fitness memberships, satellite TV, even car insuarnce or auto club memberships, are all areas where there are lots of money-saving opportunities. The doom and gloom have made people look at the cost-basis of their personal lives and decide to downsize that, cutting out any fat, fat they may well have known about for some time, but where the imperative to cut it has really been felt only in the last few months. Carriers such as my employer are already starting to tap in to this with special tariffs, for example, which reward people who bring their own phone rather than getting a subsidised one from our company. Phone subsidies are a huge cost to us, so having a special tariff of £20/mo. where one might normally have to pay £35 is actually cost-effective: It allows the consumer to reduce their monthly payment significantly simply by foregoing a new phone and keeping one that they already have, while it allows us to get out of the business of enticing customers into contracts with flash new phones, where we pass on the cost of providing the phone subsidies back to the customers.

[gerrrg]

During these times, one can't cut back on access to the internet or cell phone service. As someone that was just laid off, these are my lifelines to access clients that want to communicate with me, either by phone calls, emails or chat.

Cable TV however, IS a luxury that I've done without, and I don't miss it that much. And it was years ago when I cut off my land line. No one needs duplication of services, particularly when a cell phone can do much more than a land line. If WiMax comes in cheap enough - matching the value of 3G network pricing - then even broadband might be worth cutting off, since you can't take it (broadband) with you on the road.

When people are really hurting on income, you have to believe that they will cut back on at least expanded basic cable services. But we're nowhere near that much hurt.

Wait until next Spring.

[DrollTroll]

"Hurt" is subjective and peculiar to each individual. IMHO we're in a lot of hurt, and well past just slashing wireless, etc. I know one person-- not fired or laid off-- but who had her medical benefits reduced, half-paid for now with her own funds. You don't know hurt until you've been socked with a big medical bill, reimbursed at a minimal PPO rate, with a big co-pay and for which you already shell out a bundle just to keep family coverage and for the times a hospital or major disease/illness might loom. I, myself. would drop everything but the most important necessities and keep my medical. It is absolutely nonnegotiable.

[tenc21]

I'd have to agree; can't watch TV or talk on the cell if you're in a coma and can't get out of it because you're no longer covered under major medical and can't get care.

[gerrrg]

@DrollTroll,

You're correct, but much of that hurt is still limited to small numbers of people. When the west coast unemployment reaches 8% at the end of the year, and national unemployment reaches 9% next Spring, a lot more people will be hurting, and that group effect will affect the bottom line of cable and other service companies.

This will complicate Clearwire's WiMax IMHO, rolling out in December in Portland, whose unemployment rate for October was 7.3%, and it's only going to get a lot worse by December....since we're in the wireless blog.

[DrollTroll]

My reply addressed those NOT unemployed. The unemployment statistic doesn't account for those hurtin because of givebacks... Companies don't have to fire or layoff to save; they can cut back benefits (like health, tuition reimbursement), pensions, perks (like subsidized lunch in company cafeteria), etc.

[gerrrg]

@DrollTroll,

The current quarterly reports from cable companies and wireless providers show overall increase in subscribers.

My point is, the hurt - therefore - isn't widespread. But when it does manifest itself throughout the entire economy, then it'll probably show up as a downward trend in subscriber numbers. But before then, there is a lot of fat to trim out, including duplication of services, ie land line and wireless phone service.

[mrmiata7]

Unfortunately unless you are an illegal alien you will have to pay for your health care. They receive chemotherapy, dialysis, organ transplants and other care denied to U.S. citizens along with free education, food stamps, welfare and birthright citizenship (at taxpayer expense instantly qualifying them for wic and other benefits costing taxpayers a total of 400 billion dollars annually for all of this). This figure continues to rise as thousands continue to pour across our border every week. Any jobs that may emerge from the proposed stimulus package will be taken by them because employers will hire them for cheap labor. Obama has no intention of securing the borders and enforcing federal hiring and immigration laws. Once 20 million illegal aliens and their immediate and extended family members are given amnesty they will compete with unemployed Americans for what few jobs remain again including those stimulus jobs. Employers will then get rid of those "instant citizens" who now will fall under EEOC guidelines and have collective bargaining rights so they can hire more cheap labor flooding across the border at the rate of 5,000 to 10,000 weekly which is what is happening now, and they with their families will be legalized too because of wide open borders further straining our health care, land, food, water, energyand other LIMITED resources.
Those of you relying on unemployment insurance may be in for a surprise as millions of newly legalized former illegal aliens unable to find employment will be added to the unemployment rolls when state unemployment trust funds are already running out of money due to the increasing number of unemployed Americans requiring assistance.
Anyone who supported Obama or McCain was most likely unaware of this but now we will pay the penance for this. The economy will never improve as long as our borders remain open and we continue to subsidize the never ending flood of impoverished, illiterate and uneducated humanity pouring into this country threatening our sovereignty and ultimately our way of life.