Europeans giving up their mobile phones

In the U.S., smartphones have become extremely popular to the point that talk around the water cooler is not about Lebron but is about the specs on the Samsung Galaxy S III. But over in Europe, there has been a change as mobile subscribers have started to drop their lines in droves. For example, in April alone 380,000 mobile lines were dropped in Spain. And in France, the number of handsets expected to be purchased this year will be lower than the total from 2011.

What is causing Europeans to turn ice cold on a market that was once red hot? The obvious answer is the economy. In Spain, for example, an unemployment rate of 25% is forcing those with low incomes to cut back, which is why pre-paid carriers suffered the most in Spain. That shows you how bad things are in that country. During tough times, you would expect pre-paid carriers to add subscribers as mobile phone users shift from hefty monthly contract rates to paying for service on a month-to-month basis.

Some Spanish carriers like Telefonica and Vodafone are testing out a new business plan and are removing subsidies from new phone prices which has to hurt in this economy. In France, analysts believe part of the decline in handset sales has to do with the upstart carrier Free which sends voice traffic over Wi-Fi when possible, similar to Republic Wireless in the States. Free is signing up customers coming to the carrier with unlocked smartphones, purchasing SIM cards but not new phones.

For many years, many European countries had more phones in use than people living in the country to use them. This better than 100% penetration has finally come home to hurt the carriers as users seem to be able to squeeze more life out of older phones. Now that is something that U.S.smartphone users would laugh at as many upgrade their handset as soon as the Next Big Thing comes along. The penetration numbers might have come back to earth a bit, they are still high and once the economy turns around, Europeans might just decide that they cannot live without their mobile handset.source: GigaOM