“How come it costs more to call my aunt in Portland than it does to call my sister in California?”

Chances are you’ve either heard a question like that before or asked one yourself.

The simple answer is social pricing. That’s the policy that has dictated the price structure for Maine’s telephone rates for a half century or more.

Until now.

Spurred by business and economic development concerns, the Maine Legislature this year passed a bill which requires that the intrastate access rates Bell Atlantic charges to other long-distance carriers for originating and completing calls on the local network in Maine be reduced to the same level as interstate access rates by 1999.

That will effectively end the social pricing policy that has historically caused long-distance rates in Maine to be among the very highest in the nation.

To understand why social pricing was a good policy in the first place, you have to go back to the days when the telephone industry was in its developmental stages. It was determined by policy-makers — and time has shown them to be correct — that it was in the best interest of the country to structure telephone prices to help achieve universal service.

Basic local service was considered then, as it is now, a necessity. Long distance, on the other hand, was considered discretionary, if not a luxury. I can remember my folks talking about gathering with the family around the telephone Saturday night to call relatives maybe 40 or 50 miles away. That was a big deal.

Thus regulators traditionally placed any responsibility for cost recovery elsewhere, usually on long-distance rates, to keep local service charges low and people on the network. It worked. Today, 96 percent of all households have telephoen service, and Lifeline-type programs have made service available to low-income residents for about half of what is already a very low basic rate.

So what’s this got to do with the legislation to reduce intrastate access rates to competitive long-distance carriers? The result is that those rates will be reduced by about 75 percent, from current rates of about 20 cents a minute down to 5 1/2 cents a minute. In revenue terms, that means about $100 million of Bell Atlantic’s in-state revenues — nearly a quarter of its total revenue — will be removed from usage charges as access rates achieve parity with the interstate access rate levels.

Recognizing that such a dramatic decrease could have a crippling effect on the state’s telecommunciations infrastructure, interested parties, including consumer groups and competitors, joined in a negotiating process designed to assess the impact on Bell Atlantic.

What came out of it was an agreement that will permit Bell Atlantic to increase its Maine basic exchange rates in a three-step process that would inlcude a 50-cent increase now, a $1 increase in 1998 and a $2 increase in 1999. The low-income rates would be unaffected.

If the agreement is fully implemented, it will produce $28 million in additional annual revenue for Bell Atlantic in Maine.

Why would Bell Atlantic accept only $28 million when $100 million is at risk? In the first palce, under the existing alternative form of regulation agreement, the company could not have filed a rate case until the year 2000. And if it did, the lengthy and litigious process of a rate case would take another year with no guarantees. The agreed-upon increase will at least permit the company to continue to invest in its network which has become so vital to job creation in Maine.

So what’s the bottom line for consumers? First, Bell Atlantic’s in-state long-distance rates — now among the highest in the country — will become among the lowest. Its basic service rates — because of social pricing policies, among the lowest in the country — will remain among the lowest in New England, even with the $3.50 increase. That’s in spite of the fact that Maine’s extensive geography and low population density combine to produce some of the highest serving costs in the nation.

While the company, the Public Utilities Commission staff, the public advocate, State Planning Office and Departments of Education and Administrtion and Financial Services have approved the agreement, opposition has been voiced by the Maine People’s Alliance and the Maine Chapter of the AARP.

They contend, among other things, that cost savings resulting from the merger with Bell Atlantic will offset the company’s revenue losses in Maine. Maine’s share of savings, however, along with cost efficiencies Bell Atlantic has achieved in other areas of operations, are already reflected in current rates. In fact, the possibility of greater than expected efficiency savings partially explains Bell Atlantic’s willingness to settle this case for less than dollar-for-dollar recovery of the potential $100 million shortfall.

It’s generally agreed that today Maine has one of the leading telecommunications networks in the nation. Intensive users of telecommunications seem to agree, investing heavily in the state in call centers. The fact is that well over half of all new job creation in Maine in the past five years has come from telecommunications-related businesses.

That’s occurred because NYNEX — corporate predecessor to Bell Atlantic — invested heavily in Maine in new technology, to the tune of a billion dollars over the last decade.

It was those investments that made NYNEX-Maine one of the first states in the nation to convert all of its network switches to state-of-the-art digital technology. Those same investments permitted the expansion of the company’s fiber optic network to the point where its capabilities now spread out to all corners of the state.

And, again, it was NYNEX investments that permitted the University of Maine System to create one of the leading interactive educational television networks in the country; that brought Internet access and data transmission to all of Maine’s public schools and libraries; that enabled Asynchronous Transfer Mode (ATM) technology with its high-speed data and video capabilities to provide solutions to meet the needs of some of Maine’s leading business, educational and governmental institutions.

Ask MBNA, L.L. Bean and Unum. Ask some of the many thousands of people who are now employed in telecommunications-related businesses. Ask communities like Belfast, Limestone, Presque Isle, Oxford and others where technology has permitted the creation of new jobs in rural areas that until now have not enjoyed the benefits of business expansion that more populated communities have.

For that important investment stream to continue, Bell Atlantic must have the potential of a reasonable return in Maine. The proposed agreement, though still short of what it should be, provides some of that potential and is balanced solution to a very complex situation. It is supported by a diverse group of Maine’s policy leaders and by people who are looking out for the welfare of our citizens.

In-state long-distance rates will be among the lowest in the country, basic monthly rates for local service — even after the proposed increae — will remain among the lowest in the Northeast, low-income households will see no increase in their local service charges and Bell Atlantic will still be in a position to continue its investments that have meant so much to the economy of Maine.

Edward B. Dinan is president and chief executive officer of Bell Atlantic-Maine.