Modeling Residential and Business Telecommunication Flows: A Regional Point‐to‐Point Approach

Regional telecommunication flows, measured in terms of numbers of messages and conversation minutes, are analyzed with a systematic random sample of toll calls characterized by their timing, duration, cost, and origin‐destination (O‐D) locations. Point‐to‐point models are econometrically estimated, with such independent variables as destination market size, O‐D distance, and average and time‐of‐day (TOD) prices, for the residential and business sectors separately. The results indicate that (1) the demands for calls and conversation minutes are price‐inelastic and slightly elastic, respectively, (2) business demand is relatively more price‐elastic than residential demand, (3) distance is a strong determinant of telephone demand, and (4) most TOD demand substitutions resulting from TOD price changes would take place between the daily and evening rate periods. Several areas for further research are outlined.

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