The goal of the regulators was universal service. The "entry" rate
> for the most basic residential and business phone services was
> intentionally kept as low as possible to encourage as many people as
> possible of modest means to have a phone. This applied to tiny
> businesses as well. Premium services, both toll calls and
> equipment, cost more intentionally.
You must be speaking in state regulators. The FCC, which regulated interstate long distance, had no such goal. The FCC required long distance rates to be as low as possible.
Also note that Bell rates were intentionally ordered to be uniform,
> by air miles, not actual transmission costs. So a low-cost
> corridor, such as Chicago to St. Louis ended up being priced above
> cost, while a high cost corridor, such as in Montanna, was priced > below actual cost.
That was interstate service and so under the FCC's jurisdiction. An artifact was that in a large state the long distance rates, subsidizing local service, were often (usually) higher over considerable distances than interstate calls, which were regulated by the FCC. A notable example often cited is that the rate from Dallas to Phoenix (interstate) was lower than the rate from Dallas to El Paso (intrastate), although the distance to El Paso was less than the distance to Phoenix. Wes Leatherock snipped-for-privacy@aol.com snipped-for-privacy@yahoo.com