tly charge these back to their retail subscribers; AT&T and MCI, for instance, had to charge the same thing for a 1,000-mile call to a rural telephone coop with a 25- cent per-minute terminating rate as it charged for a 1,000-mile call to an RBOC with an 8-cent per-minute rate. But this rate averaging was not applied to leased-line services. So the IXC's price for an interLATA circuit would consist of three explicit components, the IXC's own PoP-to-PoP charge and the two LEC charges for each side. The LEC rates for this special access service were thus exposed to the actual bill payers. And what rates these were! For some years before divestiture, AT&T's rates had been regulated based on the notion that it was entitled to a fair rate of return, no more, no less [1]. Just how that return was calculated was always con- troversial, of course, but by the late 1970s, as competition was taking hold, the FCC had adopted a complex set of fully distributed cost methodologies. The RBOCs, as monopolies, were originally subject to rate-of-return regulation. Typical approved rates were in the 10% to 15% range. At the federal level, these rates were supposed to apply to every type of service offered, not merely in the aggregate. States were expected to take greater liberties in allowing cross- subsidization of unprofitable residential and rural services by profitable business and urban customers. Digital "high-capacity" services, so-called T1 lines, were only introduced to the general marketplace after divestiture. AT&T's old backbone network was primarily analog, and fiber optics were still just being installed on many routes, SO T1 service really only took off after divestiture. The RBOCs had to set prices for them, which needed regulatory approval. Although rates for purely intrastate services were approved by state regulatory commissions, the intraLATA legs of interstate circuits were classified as interstate special access, subject to FCC jurisdiction. The RBOC rates for high-capacity special access were high. They were u