Smartphones have become so popular that over 50 percent of all American cell phone users own one. According to the Labor Department’s most recent data, cell phone service is up 4 percent from last year, as more people are willing to cut spending in other categories like shopping, entertainment, and dining out in order to afford new smartphones and associated costs. (Here are 4 Fast Ways to Save Big Bucks on Daily Expenses).
While this news doesn’t bode well for the apparel, film, and restaurant industries, wireless carriers are getting even greedier—attempting to drive cell phone bills up further by offering new usage-based data plans, and faster speeds on new networks.
You would think at some point consumers would trade in their smartphones for cheaper models and dump their pricey data plans. But, that’s not going to happen with consumers more likely than ever to use their phones to surf the Web, watch TV shows, and play games.
Gone are the days when utility bills were the big expenditure of household income. The Wall Street Journal reports that families with more than one smartphone are easily paying over $4,000 annually in cell phone bills, a high chunk attributed to data usage. And, once a new model comes out, everyone races to be the first in line, no matter what the cost.
How long before the bubble bursts and Americans can’t afford their rising cell phone costs anymore?
Investors and industry executives are predicting revenue growth will come from higher income households who can afford to spend big money on fast wireless data. But, plenty of revenue already comes from lower-income users.
Experts forecast that as wireless service gets more expensive, the trade-offs will become more painful for the lower-class. Will that stop them from buying the next new model? Not likely, say industry executives. If anything the experts predict buyers will continue to penny pinch and the economy could see a further decrease in consumer spending in sectors already feeling the strain.