How did unlimited long distance become the norm for telephone plans?

Once upon a time the phone company was a well-regulated monopoly (and surprisingly, it worked quite well). Generally, local calls were cheap and long distance calls expensive. Inasmuch as the vast majority of long distance calls were made by businesses, it didn't really hurt the average person. Long distance calls were made by operators (like my mother) who would make the connection for the caller. Then came direct dialing. (Interestingly, direct dial long distance calls were common among military installations long before the technology was introduced to the civilian world.) I well remember when the equipment was being installed. The technicians gave operators the lists of area codes and asked them to please use the system (to test the equipment before it went on line). The billing portion of the system was not yet activated so that we made calls to family all over the country free-of-charge. Still, long distance calls were expensive while local service was cheap inasmuch as most long distance calls were still business related. One of the advantages of the high cost of long distance is that it made basic telephone service affordable for the poorest. The telephone is essential, especially inasmuch as it is essential for emergency calls - fire, police, and medical. Then came the court cases complaining that only competition could reduce the costs of long distance calls. That was a lie. As a regulated monopoly, the phone company could be directed to reduce long distance costs, but to maintain the basic return on investment that kept the phone company in business, they would have to raise the cost of basic phone service. In other words, the poor couldn't afford it. Another lie told in those days was that the phone company was stifling innovation. What a laugh. Bell labs was constantly introducing innovation from the transistor to the fax machine. Little known is the fact that Western Union sought and received a court injunction preventing the phone company from selling fax machines. Hard copy transmissions, they claimed, were their exclusive purview. BTW, MCI who wanted to compete in long distance owned Western Union at the time and was using the case that the phone company stifled innovation to press their case. Well, MCI won, long distance became competitive, the phone company had to raise rates for local service, and the government had to subsidize basic service for the poor. Net effect, we just allowed competitors into a market where they weren't needed and wounded one of the great innovators. So, that brings us to the final question: Why did long distance stop being competitive and become basically free. With VOIP - Voice Over Internet Protocol. The last interesting observation I have to offer is that it is my syspicion that the phone company didn't really fight MCI as assiduously as they might. I believe they saw well into the future and realized that their holdings of copper wire companies (local phone companies) was going to be an utter loss. They were preparing for the Internet and VOIP which they now dominate.

The free market happened and through the wonders of competition, phone companies improved technology and service and now we have a better life.

Plus it was usually the case that intrastate long distance cost more than interstate long distance.