In an economic downturn, cell phone is last “luxury” to go

November 30, 2011, 7:13 PM UTC

By Michal Lev-Ram

How will the economic downturn affect the mobile phone industry? Well, despite Sony Ericsson issuing a tk warning and Virgin Mobile’s recent tk, one thing is clear — most people who have phone service aren’t planning to get rid of it anytime soon.

Take, for example, Grace Kibreab, a 21-year-old store manager from San Francisco. Like a growing number of people, Kibreab recently cut the cord to her land line and now uses her mobile device as a primary phone. That’s why she says that, even in a pinch, her cell phone would be one of the last “luxuries” she would cut back on.

“It’s become such a necessity,” says the 21-year-old store manager from San Francisco. “It’s the only way people can get a hold of me now.”

That’s the key — although they didn’t exist a mere tk decades ago, cell phones are no longer seen as a luxury in the United States and other countries. They’re a necessity.

Over 80% of the U.S. population now carries a mobile device, according to CTIA tk. And, like Kibreab, a growing number of Americans are cutting the cord to their land line and opting to use their cell phone as their communication device of choice.

Not only are cell phones indispensable to a growing number of consumers, but even for those who want to get out of tk hard to do with the current model of carriers locking in to one or two year service contracts. tk…

Of course, consumers who are trying to decrease their spending can find other ways to cut back on their wireless spending. They could wait longer to upgrade to a new device, or pick cheaper ones. Both of these could hurt cell phone manufacturers. Sony Ericsson has already issued warning about high end devices…

Cell phone users can also opt for cheaper plans and lower minutes.

tk example of Tom Cook….

But the real danger to carriers is tk lower data plans or … new subscribers

“… data arpu doesn’t increase enough to offset the erosion in voice arpu. ,” says Stanford Group analyst Michael Nelson.

That’s because, increasingly, the cell phone is becoming an indispensable communication tool, not an indulgent gadget.