hat AT&T could not counter effectively because it was still regulated until 1995. As access charges declined, from more than 17 cents a minute in 1984 to 6.5 cents a minute in 1995, retail rates followed, but with a lag. As a result, the new carriers and AT&T could reap substantial cash flows from this business. But if access charges were to stabilize, and if AT&T were deregulated, the margins might shrink rapidly in the face of intense competition. When the 1996 act was passed, the FCC was expected to respond to the requirement that interstate subsidies be made explicit by moving rapidly toward cost-based prices, thereby abandoning the implicit subsidies in the interstate rate structure created by above-cost switched access charges. The act did not force states to rebalance their rates toward cost, but they might have been induced to do SO if the FCC were successful in its rebalancing. The Death of Distance and of the Long-Distance Carriers Table 6-2. Average Long-Distance Rates and Carrier Access Charges, 1984-2002 Dollars/conversation minute Interstate Interstate Interstate and Interstate (three largest switched international (FCC) carriers) access charge 0.176 0.304 0.166 0.250 0.146 0.205 0.120 0.195 0.105 0.180 0.092 0.156 0.076 0.146 0.071 0.149 0.143 0.069 0.148 0.067 0.135 0.068 0.125 0.065 0.124 0.061 0.108 0.056 0.114 0.040 0.112 0.033 0.088 0.024 0.079 0.018 0.070 0.016 Source: FCC, Trends in Telephone Service (May 2004); FCC, Telecommunications Industry Revenues, 2002 (March 2004); Robert E. Hall, Long Distance: Public Benefits from Increased Competition, study prepared for MCI (October 1993). At first, the FCC moved slowly toward further rate rebalancing. How- ever, a consortium of local and long-distance carriers offered the commis- sion a proposal to lower interstate access charges to 1.1 cents per conversa- tion minute for the larger carriers in return for higher monthly charges per line and some absorption of the lost revenues by the large local carriers. Eventually, the FCC approved this "CALLS