Yes you do need to subscribe to the call waiting service and in some areas you will want the "enhanced call waiting" service which allows you to turn off call waiting if you don't want the interruption. You may also want to get Caller ID so you can tell whether you really want to pick up the call or not. Would be nice if the modem also supported caller ID to your computer screen. Most local phone companies offer packages where you can get multiple added services for a better price.
Personally, I think that anyone that would use call waiting (when calls between two other people is the case) is rude. If you have a business where you need to be able to field as many calls as possible, get other phone line(s) installed.
.bh.