nlikely to say it in public, but it seemed as if special access rates were being pad- ded to make up for the loss of switched access revenue that could occur if much traffic moved off of the switched network onto leased lines. Corporations rou- tinely built voice tie-line networks to connect their facilities together. So RBOCs might have wanted to extract their pound of flesh one way or another. After some investigation, the FCC found, for instance, that NYNEX had set its rates to earn a return of well over 50%, several times the allowable level. But the FCC did not step in to lower these levels. The way was being paved for competi- tion, with excessively high rates acting as a kind of price umbrella for Competitive Access Providers, the Costly Way to Local Competition competitors to live beneath: Had the RBOCs been held to a fair rate of return, then the course of history might have gone differently. States Supported RBOC Monopolies More Than the FCC Did During the 1980s, most state regulators were rather friendly with the RBOCs. These newly minted offspring of the old Bell System began life with a consider- able degree of goodwill. Known by the cutesy nickname "Baby Bells" and sub- jected to considerable restriction on their behavior, the RBOCs positioned themselves as the defenders of cheap home telephone service. And lacking both direct long distance revenue (never mind the huge cut they got via access charges) and the embedded base of terminal equipment rentals (which had gone to AT&T), they had to get their "universal service" money from somewhere. Regulators also understood that home telephone subscribers had more votes than corporate telecom managers. This resulted in the continuation of a tradition of noncost-based pricing. Indeed some states adopted so-called "residual pricing." Under that scheme, the explicit goal of regulators was to minimize the "1FR" single-party flat-rate resi- dential monthly base rate by applying profit-maximization monopoly pricing (sometimes called "incremental willingness to p