The demand for bandwidth: second telephone lines and on-line services

A binomial probit model is used to examine households’ decisions to purchase a second telephone line and subscribe to an on-line service. It is found that households subscribing to an on-line service are nearly four times more likely to purchase an additional phone line as are those not subscribing to an on-line service. The price elasticity of demand for second lines is found to be inelastic, though substantially more elastic than that for primary telephone lines.