I do not agree with your description for the reasons that follow.
In 1983-84 my employer was involved in significant expansion of our voice and data communication lines and we worked with Bell and AT&T. Personally, at home I needed a second phone line and extensive long distance service. The following is based on my experiences at the time.
Was the old Bell System perfect? Of course not. But it did offer excellent service at a fair price--given the state of the art _at that time_.
Let's first look at rates:
A common misunderstanding in discussing telephone history is a failure to understand the state of technology in 1983. Very simply, think about what a good PC cost to buy back then and how much horsepower came with it. Now think about what the same money, adjusted for inflation, will buy today. See the enormous difference?
Electronics used to be enormously expensive. The Bell System used massive amounts of it to provide dial tone, switch local calls, and terminate carrier equipment for long distance calls. Today, the electronics are cheaper. Also carrier systems for long distance are much cheaper today, making those calls cheap, too.
Public policy back then dictated that basic telephone service was to be cheap to encourage wide use. It was and it worked. Premium services were profitable, again, by public policy. When the company was divested and prices allowed to be free market, obviously the subsidized prices went up and the premium prices went down. In essence, a judge dictated a new public policy, overriding the FCC and Congress. So yes, you rented extensions (the main phone set was free, included in the service charge). That rent was deemed a premium service (of course, they provided all repair service for free).
Per the above, the charge for a single plain telephone (telephone set and all maintenance included) was dirt cheap, cheaper than today adjusted for inflation. They did not "charge through the nose" for simple service, and most people had only that.
Many communities did not meter local calls; that was more of a city function, and the calling area for cities was enormous, both in terms of land area and population. One could pay extra and get unmetered service, many did.
In my dealings with Bell staff, both at work and at home, I found them to be almost always knowledgeable and helpful. Service qualtiy was far superior to that of today. When you called repair service, dialing only 611, you spoke to a real craftsmen at a test desk.
I also professionally dealt with some government agencies in that time and they had a tough time of it. For their long distance services, Sprint and MCI sued and demanded to be given a share of the business, even if they didn't have the service quality or rate schedule to justify that. They litigated their way in instead of earning it.
Somehow I don't think "competition" was intended to work that way, I thought the market place was supposed to be allowed to choose for itself. If the old Bell System was as screwed up as critics claimed, it would've been easy for Sprint and MCI to come in and take over. But the truth was that by and large the old Bell System was good and most customers were quite satisfied.
A big problem after divesture (that continues today) was finger pointing when problems arose. In the old days, when the Bell System handled it all, we called them and they were responsible to fix it and fast. They did. But under the new arrangement, we had the modem maker pointing fingers to the local carrier who in turn pointed fingers at the long distance carrier.
Also, the Bell System provided many free consulting services to businesses to help them plan their telecom needs and make good use of their phones. This included training for employees, in not only how to use the equipment (what buttons to push) but also how to best serve customers and create goodwill.
After divesture that all disappeared. The quality of customer service over the telephone has declined along with it; nobody knows about the courtesy tips the Bell System once taught.
As to telecom administration, large companies had to go out and hire their own administrators and technicians to do what used to be done for free. Small companies had to hire consultants. So the so-called savings were in reality a cost shifting. You may have paid less in your phone bill, but had to pay more in salaries.
Lastly, I want to counter another myth and that is that divesture forced rates down. The truth is that technology caused rates to drop. The Bell System was reducing toll rates ever since the telephone was invented. Well before divesture AT&T implemented deep discounts for off peak calling and was expanding local calling areas. As technology improved (see above), customers were given price breaks. Likewise with technology, the Bell System's 1983 equipment offerings were pretty good for its day.