A new report by UK regulator Ofcom has revealed that consumer spending on communications services such as mobile is proving resilient in the recession. According to Ofcom’s sixth Communications Market Report – published today – around half of UK consumers said they would sooner cut back on eating out, home improvements and holidays than give up communications services. When asked which items consumers were likely to cut back on in the recession, 47 percent would choose to cut back on going out for dinner, 41 percent on DIY and 41 percent on holidays. This compares with only a fifth (19 percent) who would cut back on mobile phone spend, 16 percent on TV subscriptions and 10 percent on their broadband services.
However, in the mobile sector, there was evidence that UK consumers are increasingly looking for cheaper deals. Ofcom said that some 70 percent of mobile users said they would retain rather than upgrade their mobile handsets to save money on their bills. The Ofcom study found that a fifth of all mobile phone contracts were SIM-only deals, which typically offer lower monthly fees and also give consumers greater flexibility to shop around for the best deal as they often only require a one-month contractual commitment. Around a quarter of new mobile contracts in the first quarter of 2009 (24 percent) were for one month only, up from 10 percent a year ago. At the other end of the scale, Ofcom said that 24-month contracts are also becoming increasingly popular as consumers commit to longer periods in return for lower monthly fees and inclusive, or heavily discounted, handsets. In the first quarter of 2009, more than one in ten new mobile contracts (13 percent) were for a 24-month period, compared to only 2 percent a year previously. Ofcom noted that the number of mobile phone users on contract plans increased in 2008 by over 3 million to nearly 30 million. At the same time, it said that prepaid connections fell slightly for the first time, down by 100,000 to just under 47 million.
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