Discussion Papers

Bridger M. Mitchell, Tenzing Donyo

Utilization of the U.S. Telephone Network

Nr. 126 / März 1994 Summary The United States has experienced high and steadily increasing use of its national telephone network. In 1960, one of every four households was without a telephone. Businesses and households used their telephones to make an average of 205 calls per line per month. Thirty-three years later, about 94% of American households have a telephone, although the proportion is notably lower in young and low-income households. More than 11% also have access to a cellular phone, and an increasing percentage have a second line. Calling has risen to an average rate of more than 290 calls per line each month. Traffic on the public telephone network has been growing throughout this period. Since 1980, when minutes of use were first collected on a national basis, long-distance minutes have been rising at a rate of 7.2% per year and local minutes of calling are growing at a 2.1% rate. A number of major influences have stimulated the high and growing use of telephone services. Increases in the population and growth in per capita real income have expanded the demand for telephone lines. Major technological changes have improved both network services and consumer equipment. The result has been a greatly expanded range of communication and information services available in the market. Rate restructuring and overall price reductions for long distance service have stimulated the use of communications. Finally, network access has been broadened, with nearly-complete availability in residential units and rapidly growing use of cellular and cordless phones. Although residential telephone penetration is approaching saturation, the use of the U.S. telephone network continues to expand. Vigorous growth of wireless services demonstrates consumers' demand for greater access and convenience. Carriers are modernizing their networks with intelligent information-processing technology and high-capacity switching and transport facilities. Customers and value-added audiotex services suppliers are developing new applications. Facsimile and personal-computer uses of the network expand steadily. The prices of network services can be expected to decline further as competition extends into access and local service markets. All of these factors strongly suggest that utilization of the U.S. telephone network will continue to intensify for some years to come.

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