ubsidize the service for higher-cost rural users. The Bell System, which by this time had established a pattern of cooperating with regulatory authorities, acceded. So long as the resulting rates protected its aggregate rate of return, it had little concern over the allocation of that revenue across different customers and services (Temin 1987). Over time, outside forces began to undercut this cozy arrangement. First, after a long period of rate decreases during the 1940s and 1950s, the Bell System began to seek increases in long-distance rates. Complaints from members of Congress and the General Services Administration prompted the FCC to initiate its first systematic analysis of the Bell System's costs, which revealed wide disparities in rates of return across seven different classes of interstate service. As a result, the FCC abandoned its system of "continuing surveillance," in which long-distance rates were established through informal negotiations between AT&T and the agency, in favor of a more formal regulatory regime based on cost-of-service ratemaking (FCC 1965c). In addition, competition began to emerge from providers of complementary services. For example, producers of the telephone equipment located in people's houses and individual offices, known as CPE, began to seek access to the Bell System's local telephone networks. "Foreign attachments" provisions contained in the Bell System's tariffs prohibited the interconnection of any CPE not manufac- tured by the Bell System's manufacturing subsidiary, Western Electric. As noted in Chapter 4, prompted by the D.C. Circuit's Hush-a-Phone decision, the FCC issued its landmark Carterfone decision, which eventually led to the adoption of the Part 68 rules requiring the Bell System to open its network to any CPE that met specified requirements (FCC 1968, 1975, codified at 47 C.F.R. pt. 68). The emergence of microwave transmission as a means of transmission allowed competition to emerge in long distance as well. A new company called Microwave Communications, Inc