Demand for additional telephone lines: an empirical note

This study combines data from a nationwide survey of households for the fourth quarter of 1998 with data from a FCC survey of residential telephone service prices in 90 US cities to estimate the residential demand for additional access lines. The study finds that urban households are moderately sensitive to the price of flat-rate residential service. Expressed as an average of the household level elasticities, the estimated elasticity is - 0.590, substantially above that for primary access lines as reported in the literature. The moderately high sensitivity to the price of additional access lines has direct implications for a national public policy objective of universal Internet access since the price of a second line generally exceeds that of the primary line as a result of different Federal charges. (C) 2001 Elsevier Science BY. All rights reserved.