Urban dwellers have for decades paid higher phone bills to subsidize service for rural callers. But that may soon be ending. The rise of competition in the $700 billion global telecommunications market -- coupled with the advent of the Internet and wireless telephone service -- may spell the death of the subsidized system.

• Small rural phone companies will mainly feel the brunt -- since they receive up to 70 percent of their revenues from the subsidy system, compared to 40 percent for the regional Bell companies and GTE.

• About 900 independent rural companies nationwide serve about four million of the nation's approximately 200 million phone lines.

• The subsidies have been justified by the fact that it is cheaper to provide service in large, urban markets -- where more people share in the fixed costs of installing phone lines and other equipment -- than it is in rural areas, where fewer phones and longer distances increase those costs.

• The nation's big long-distance companies say the subsidies account for about 40 percent of the price of a long- distance call.

The Federal Communications Commission, which regulates the industry, is expected to change the system in a multi-step process during the next two years.

Source: Steve Rosenbush, "Rural Calls at Crossroads," USA Today, August 30, 1999.