The Ashland MultiComm Services (AMS) marketing department wants to increase subscriptions for its 3-For-All telephone, cable, and Internet combined service. AMS marketing has been conducting an aggressive direct-marketing campaign that includes postal and electronic mailings and telephone solicitations. Feedback from these efforts indicates that including premium channels in this combined service is a very important factor for both current and prospective subscribers. After several brainstorming sessions, the marketing department has decided to add premium cable channels as a no-cost benefit of subscribing to the 3-For-All service.

The research director, Mona Fields, is planning to conduct a survey among prospective customers to determine how many premium channels need to be added to the 3-For-All service in order to generate a subscription to the service. Based on past campaigns and on industry-wide data, she estimates the following:

Suppose that additional surveys of 50 prospective customers were conducted in which the number of free premium channels was varied. The results were as follows:

How many free premium channels should the research director recommend for inclusion in the 3-For-All service? Explain.

Number of Free Probability of Subscriptions Premium Channels 0.02 0.04 2 0.06 3 0.07 4 0.08 5 0.085