That description is only part of the old pricing model. The other very critical part of that model was that the old-line providers were forbidden to charge high rates or engage in high profit external value-added services. They were not allowed to engage in lines of business that would be profitable. Their research and inventions, which they paid for, would be in the public domain.
Normal businesses may expand into new areas that are highly profitable. For example, accountants branch into information systems consulting which is more profitable.
In other words, the Bell System theoretically could've had its own TV studio or made TV broadcast equipment, and made a lot of money doing so. But it was forbidden, and other companies made a heck of a lot of money instead.
Further, the premium services, while generating more profits, were not "high" profits, they just paid a little better than the basic services (in some cases covered the basic service losses). The Bell System's profit rate was far lower than say IBM. AT&T stock appreciated only slightly over the years.
And it's perfectly justified for the Bells to complain. Another issue is that the other companies are cutting into the Bell's business, so not only are the Bell's losing their more profitable businesses, they're losing their basic business too.
It was the same regulatory attitude that killed off the railroad industry in the U.S. in the 1960s and 1970s and left us with very expensive clogged highways and airports. We put a strait-jacket around the railroads, artificially held their rates down, wouldn't let them enter new businesses, etc. Cars and planes -- capitalized by taxes -- took their business away.
It is neither a scam nor an old argument, and you are not expressing their argument correctly. It is simply reflecting business in today's conditions. The RBOCs no longer have the monopoly they once had. Further, they, like any other business, have a right to participate in new markets and technologies, especially as their old markets are shrinking. They might do well, or they might not (as happened to AT&T).
What exactly c> that they're already being paid to provide the basic service that > makes it possible.
That is not the issue.
The issue is that: (1) that basic service market is shrinking, and (2) new markets are opening up.
Say for example a long-time wedding photographer is frequently asked about planning the wedding. The photographer sets up a planning service. Maybe the photographer will go into bridal gowns and tuxedo rentals. Maybe even into catering and music.
Under your argument, this photographer would be limited to photography and that's it, even though others can become photographers and other service providers. It's not in the economic interest to deny a provider from the market place.
Western Electric and Bell Labs were excellent organizations, but limited to telephone and defense. I wonder if consumers and industry would've been better service if they would've been allowed to develop and sell other products. Maybe they would've beaten RCA in television sets and broadcast gear, or spurred RCA to develop stuff faster and cheaper. Maybe they would've beaten IBM at computer development.