-distance calls over a wireless hand- set has been falling at double-digit rates. Surely this suggests at least the possibility that sufficient consumers view a wireless service as a substitute for wireline service to make it difficult for traditional telephone companies to exercise market power. Evidence of Wireless-Wireline Substitution Ideally, one would use econometric analysis of individual subscription deci- sions to estimate the degree of current wireless-wireline substitution. The determinants of such decisions would be the relative prices of wireline and wireless access, the price of using the network through the two technolo- The Rapid Growth of Wireless Telecommunications Figure 7-1. Real Long-Distance and Cellular Rates, 1993-2002 1982-84 dollars/minute Cellular Interstate long distance Source: For long distance: FCC, Telecommunications Industry Revenues, 2002 (March 2004); for cel- lular: FCC, Eighth Annual CMRS Competition Report, appendix D, table 9; for deflator: BLS, Consumer Price Index. gies, household income, and various demographic variables, particularly the age of the consumer. It is well understood that teenagers and young adults are much more likely to use cell phones than are older consumers with similar incomes. Unfortunately, individual subscriber data are not eas- ily obtained; most disaggregate data on telephone usage is obtained at the household level, and such data are generally not available for households without a wireline connection. In a recent study of wireless-wireline substitution using U.S. household data, Mark Rodini and his colleagues found the cross-price elasticity between wireless subscription and the price of a second fixed-wire line to be 0.18 and 0.13 in 2000 and 2001, respectively. 26 They also calculated own-price elasticity of wireless subscription to be -0.43. These results are for at least three years ago, when the number of wireless subscriptions was much lower and the wireless pricing plans were likely much less generous than those available in 2004. Therefo