Demand for telecommunication services is now believed to be stimulated by a continuous increase in user value associated with relevant externalities and learning processes. A radical change is necessary in the economic analysis and estimation of the demand for telecommunications services in order to avoid misinterpretation of the causes for current growth in demand and of policy and decision makers at the price level. When the role of diffusion of information technology is considered in the demand for telecommunications services, then: 1. the demand is derived from sales and usage of information technology products with strong complementarities and low price elasticities, 2. appreciation of the relationship between demand for telecommunications and diffusion of new information technology products emphasizes the quality of the telecommunications infrastructure, and 3. price elasticities of telecommunications services may be biased or play only a marginal role. A reassessment of the determinants of demand has major implications at the policy level.
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