Cellnet is predicting that its cellular phone sales for the year to March will be 33% down on expectations at 270,000 units, as the UK economy continues to put pressure on companies to cutback on unnecessary expenditure. Cellnet has pumped UKP200m into improving its network over the last year, in its attempt to take market share away from Racal Vodafone but its new service announcements indicate Cellnet’s desperation to boost sales. Cellnet and Racal have, however, called a truce for the moment, insofar as they are laying down proposals for a joint effort to stop service companies poaching the other’s customers. Meanwhile, sales of cellular phones in the US, too, are on the fast decline. It seems the novelty of mobile phones is wearing off – according to Bear, Stearns & Co analysts in New York, average customer use of cellular phones has over the last year dropped to between two to two and a half hours per month, from over four hours a month. It is generally acknowledged that the number of commercial customers is falling, again because of company cutbacks, whilst casual users, not directly affected by the US recession, are on the increase. Some cellular phone companies are clamping down on this non-cost-effective use of their services, tightening credit to new subscribers – last year, Ameritech raised its infrequent user charge to $21 a month from $7.50, and companies that didn’t previously demand deposits for phones and services are now charging $200 to $1,000 service deposits. But, while Bear Stearns estimates that the 40% to 60% growth rates in the number of US cellular service subscribers in the last few years will fall to between 20% and 25% growth this year, cellular specialists are happy to put this down to the recession, saying the industry still has plenty of growth potential with the recovery.
