The demand for telephone services in Australia

The objective of this study is to develop and estimate demand models for residential telephone network subscription and calling demands, where the household is the basic decision unit. The analysis assumes that households consider the subscription-calling rate structure in determining the household telephone service demands and that the demands are conditioned by the socio-demographic characteristics of the household. Model estimation requires household network subscription and calling data under different rate structures. Because alterations to the subscription-calling rate structure are both infrequent and small in magnitude, stated-preference experimental design methods are employed as an alternative data source. The household's subscription probability is assumed logit while the calling demand equations are assumed a seemingly unrelated system. The model is estimated by continuous/discrete econometric methods. Estimates of the parameters are provided for the economic variables and socio-demographic variables specifications of the model for the Sydney Metropolitan Area, Penrith and New South Wales Country regions. The estimates indicate that both the household network subscription and calling demands are affected by the rate structure and household socio-demographic variables. Base and hypothetical rate structure scenario simulations for the Sydney Metropolitan Area show that rate structures substantially impact on quarterly household telephone communication expenditures.