I believe AT&T long subsidized its local operations with revenue from long distance operations. This took advantage of businesses' higher willingness to pay for long-distance in order to subsidize local access networks (as opposed to reinvesting all the long distance profits into more long distance capacity). It stopped not just because of capacity increases but because the govt created the incentive for competition in long distance, and imposed a ramp-down of the local access subsidy. When ISPs allowed ordinary people to finally communicate with the world without paying huge rates, AT&T successor companies fought hard in the 90s for Internet dialup to be treated like "interstate calls" because they made more money on them that way. If we were living in AT&T's internet, we'd pay more to access the websites that are far away, not because it costs more, but because business customers are willing to pay enough for it that it makes it more profitable than giving it for less to consumers.