creasingly diffi- cult to separate "long-distance" charges from local charges or even broadband charges. 3. Before the AT&T divestiture, long-distance charges reflected an arbitrary division of the company's costs between the interstate and state jurisdictions. See Robert W. Crandall and Leonard Waverman, Talk is Cheap: The Promise of Regulatory Reform in North Ameri- can Telecommunications (Brookings, 1996), chap. 5. This revenue division was designed to keep local rates low. When AT&T was broken up, the FCC was forced to establish formal access charges, which are paid by AT&T and other long-distance carriers to the local carri- ers, including the divested Bell operating companies. 4. FCC, In the Matter of Access Charge Reform, et.al., Sixth Report and Order in CC Docket 96-262 and 94-1, Report and Order in CC Docket 99-249, Eleventh Report and Order in CC Docket 96-45 (May 31, 2000). 5. For estimates of the cost of this policy, see Robert W. Crandall and Leonard Waver- man, Who Pays for Universal Service? When Telephone Subsidies Become Transparent (Brook- ings, 2000). 6. Jeffrey H. Rohlfs and J. Gregory Sidak, "Exporting Telecommunications Regulation: The U.S.-Japan Negotiations on Interconnection Pricing," Working Paper 02-3 (AEI- Brookings Joint Center for Regulatory Studies, March 2002). 7. Obviously, interconnection costs were likely much higher in the 1970s and 1980s than today, but not nearly as high as the implicit rate built into the settlements process before 1984. 8. "Special Access" revenues for the Bell companies have increased from $3.07 billion in 1996 to $12.84 billion in 2002, while interstate switched access revenues have declined from $9.41 billion to $4.35 billion. FCC, Statistics of Communications Common Carri- ers, 1996-97 and 2002-03 editions. This shift occurred mainly in originating traffic. The alleged unlawful diversion of traffic discussed here refers to terminating traffic. 9. Tim McElligott, "AT&T Airing Industry's Dirty Laundry with New MCI Fraud Alle- gations," Telephony Online, 