Demand for combinations of telecommunications services in a competitive environment

Recent legislation to liberalize the telecommunications industry has made the packaging of wireline, cellular, paging and cable television services an important issue to service providers. The paper describes econometric models of demand for packages of telecommunications services in a competitive environment. Discrete choice models were estimated using stated preference data from a survey that asked respondents to choose individual services and/or packages of services from any of several service providers. An elaborate experimental design was used to ensure sufficient price variation, and a nested logit framework was used for the analysis. The results of this study indicate that customers tend to: (a) gravitate to a handful of packages and (b) prefer preset packages to individual service items