| Abstract: | Premium telephone rates, population density, and the grade of telephone service that rural customers choose all vary with distance from the nearest urban center. A survey of 3800 rural subscribers determined their choice of service for alternative prices given the addition of a new service. A two-stage probit model was used to estimate the new market shares for a wide range of conditions. The model was applied, as part of a large-scale revenue/cost simulation system, to the current and forecasted distribution of customers to evaluate the economic impact of numerous pricing and provisioning possibilities. |
