Repression Effects of Mandatory vs. Optional Local Measured Telephone Service

by Bridger M. Mitchell, Rolla Edward Park

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When all residential telephone subscribers in three Illinois communities are charged for local telephone calls (at the rate of 2.5 cents per call plus 1 cent per minute) telephone use is repressed (reduced) by some 15 percent. However, if subscribers are offered a choice between a measured rate and the customary flat rate, repression will be much less because households who choose measured rates tend to make fewer than the average number of calls and to make smaller reductions in use. If 50 percent of the households selected the measured rate, the reduction in calling would be only 12 percent of the reduction if the rate were mandatory. To track the repression effects of optional rates, data systems must be carefully designed to account for substitution of calls between measured and flat-rate subscribers and to control for trends in use.

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