There are two basic categories for long distance rates: INTERSTATE AND INTRASTATE
Interstate (between states) rates vary by carrier. When a carrier quotes an interstate it generally is valid for all states (except, on occasion Alaska and Hawaii). If a carrier states a $0.099 interstate rate,that telephone rate is good in Maine, Idaho and Missouri. But that rate does NOT apply to the intrastate rates. Interstate rates are calls between states, i.e. California to Oregon; Florida to New York, or Texas to Alaska. Intrastate calls (also called in-state) are calls within your state. i.e., Los Angeles to San Francisco, Pittsburgh to Philadelphia and Dallas to Houston.
It is important to understand the cost components of a long distance call. Essentially, there are 3 costs: Origination Leg: The price the Local Exchange Carrier (LEC) charges to connect the caller's telephone to the long distance carrier, also known as the interexchange Carrier (IXC). Long Distance Leg: This is the "transport" or long haul portion of the call, which can consist of anywhere from a few dozen miles to thousands of miles across the country or the world. Termination Leg: The reverse of the Origination leg. This is the rate per minute that the receiver's LEC charges to connect their telephone to the IXC. Your interstate rate is a combination of these 3 costs.
However, this same logic does not apply to intrastate (long distance calls within your state) calling. All 3 legs on an intrastate call are usually handled by the same carrier. Intrastate rates vary widely(!!!!) by state. Please note that with many carriers, it is cheaper to call across the country, than across the state. The intrastate rates are a direct reflection of the Origination Leg (access) and Termination Leg (egress) costs that the local telephone companies impose on LD companies. It is a tariff issue as well as a "cost of doing business" calculation that the LEC's are allowed to use when pricing access and egress. OK. It gets better! If a call accesses and egresses in the same state, the in-state pricing applies. If the call accesses in one state and egresses in another state, then the interstate tariff applies. The formula for pricing is very complicated. It is somewhat based on the density within the state and the cost of running the switch. The more people you have on the switch, the cheaper it is. If you have access and egress with the same LEC within the state, it costs a lot.
Then what are IntraLATA and InterLATA ?
There are actually 4 terms that describe access areas: interstate, intrastate, interLATA, and intraLATA. Some of these overlap and are frequently used interchangeably - which leads to the confusion. LATA: Local Access and Transport Area. Think of a lata as somewhat similar to an areacode (not the same, but a geographically defined area none the less. Some states are broken into many LATAs others may only have one.)
IntraLATA is your local service area. In some states the entire state is covered by one LATA, so every call within that state would be considered intraLATA. Other states have several LATAs, so calls within your own LATA are intraLATA (also called local long distance), and calls within your state but outside your service area are interLATA. Both of these are also referred to as intrastate by most consumers.
InterLATA is service between two different LATAs. This could be between 2 LATAs in your state or between your LATA and one in another state. It doesn't matter - they are technically both interLATA and that is how the carriers refer to them - anything outside your local LATA is interLATA.
The confusion comes from the public perception and how they have come to refer to these. Most people refer to interLATA calls between states as interstate and calls within their state as intrastate but, while this is geographically accurate, it is technically inaccurate. Interstate and intrastate only divide the calls for regulatory purpose (inTRAstate = PUC, inTERstate = FCC).
Now if Long Distance Telephone carriers priced their calls by those same categories wouldn’t life be easy. No such luck. LD carriers (most if not all) price by Intrastate (within the originating state) and Interstate (between two states). Some throw in a third category just to make life more complicated IntraLATA (defined the same way that the LEC defines it). Now for the real test. How do IntraLATA and InterLATA calls fall into Long Distance Telephone carriers pricing structures? Well, IntraLATA calls are priced as IntraLATA if the carrier has that pricing structure, if not, they fall into the Intrastate category (because they originate and terminate in the same state). InterLATA calls are a little trickier. They can terminate in the same state they originate in or in another state (either way the have originated in one LATA and terminated in another).
So where do you price them. Well if they originate and terminate in the same state they would be Intrastate and if they originate in one state and terminate in another they would be Interstate. Basically, most long distance providers do not have special rates for intraLATA service. They just bill those calls at the in-state rate. Those providers who do have special intraLATA rates will state them on their rate page.

RBOC and Pricing Tiers

The single most determining factor in telephone service cost is location. RBOC (Regional Bell Operating Companies) were created as a result of the Federal Court decision in 1983, mandating the breakup of AT&T. These companies are; Ameritech, Bell Atlantic, Bell South, NYNEX, SBC, PacTel, and US West. The decision allowed for the creation RBOC's to offer local phone service while permitting AT&T to retain their long distance customer base as a separate entity. These RBOC's are the LEC for the majority of consumers. Other consumers live in areas where the LEC was never a part of the original Bell System. In general, the companies that are not part of the RBOC charge a higher tariff for the origination leg of a long distance call, which the long distance company will pass onto the consumer. Most long distance companies adjust their rates according to the LEC of the originating location. This is called a Tier structure, Tier A having the lowest rates and Tier C the highest.
Tier A = Ameritech, Bell Atlantic, Bell South, NYNEX, SBC, PacTel, and US West
Tier B = Cincinnati, Bell, GTE, Frontier Communications, SNET and Sprint/United
Tier C = NECA and all remaining carriers
If a company advertises an interstate rate of 4.9 cents per minute and you live in a Tier B area, you can expect to pay more, usually 1 cent more.

Pricing is a dynamic issue. Many alternatives to pricing are usually short lived and have bad quality. Every Carrier receives the same access and egress costs. That's right. AT&T has the same costs for making a call as the low cost providers do. The low cost providers are usually finding a way to beat the system. Good examples of the price fluctuation are California (intrastate rates from $0.0392 to $0.129) and Maine (intrastate rates as high as $0.459). It pays to shop the intrastate as much as you do the interstate rate.

TAXES and FEES

A part of your long distance telephone cost is the taxes and fees that you are charged. The most common:
Federal Tax (AKA: FET, Federal Excise Tax) This tax appears on both your local and long distance phone bills. It is charged as a set percentage regardless of which telephone service provider you use. Little known fact is that it started as a temporary luxury tax in 1898 on telephone service to pay for the Spanish-American War. It was then phased out. A 1 cent Federal tax was then applied in 1914 on toll telephone and telegraph messages costing more than 15 cents. That was again repealed in 1916 and reinstated in 1918. It was repealed again in 1924, and reinstated again in 1932 at a rate of 7%. It then continued to rise to a high of 25% on messages costing more than 24 cents (and 15% on local service charges) in 1944. It was reduced to a flat 10% tax on toll calls and 9% on local in 1954. The rate gradually was reduced to as low as 1% in 1982. It was raised again to 3% for toll calls and 2.7% for local in 1983. For more details on this tax, you can contact the Internal Revenue Service Excise Tax Branch or take a look at the FCC Reference Book, Rates, Price Indexes and Expenditures for Telephone Service.
USF (AKA: Universal Service Fund Charge or Universal Service Charge, Carrier Universal Service Charge) This charge started on January 1, 1998 as part of the FCC overhaul of telephone fees. All companies that provide telephone service between states pay a set percentage of their previous year's billings. The charge is designed to ensure affordable access to telecommunications services for telephone customers with low incomes, telephone customers who live in areas where the cost of providing telephone service is extremely high, libraries, schools, and rural health care providers. Although all companies providing interstate telephone service are charged the same percentage of their billings, companies are allowed to recharge you for this in any way they see fit, and each company uses a different method to charge this carrier specific fee. It is normally not presented to you in such a way that you would think it is a competitive pricing issue. But it is! Some companies do not charge this fee at all, some charge a carrier specific flat fee, others charge a percentage of your interstate and international usage, while others charge a percentage of your entire bill. Although the charge the companies pay is in essence a tax, the fee on your bill is carrier specific, and is NOT a set tax. The telephone company keeps any difference between the USF fees they collect and the charge they pay to the Universal Service Fund.
Monthly Fee Some calling plans have a per month fee in addition to all of the other fees. This differs from a monthly minimum. It is a set fee regardless of how many calls you make each month. Some companies will waive their monthly fee if the usage amount reaches a certain point (an important thing for the consumer to check on!)
Carrier specific fees Some companies will add in fees (they may look like a tax, but they are not) such as; 'property tax recovery fee' or 'interstate access fee'.
Local Taxes Many local governments (state and/or city) will charge sales tax or an access fee.
As if it wasn't bad enough that there are all these different charges, each company calls each charge something different! The following link will open a page with a detailed list of all the common aliases we have heard of for the various charges.
An explanation of Taxes and Fees on your bill

So, to accuratly compare the cost of long distance telphone service you need to look at: the interstate rate, the intrastate rate, monthly service charge, USF fee, and any carrier specific fees. The following link will allow you to do that: Best Rates Search Engine

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