Every state has their own state agency which establishes rates for in-state long distance calls in their state. Whereas rates for state-to-state calls are controlled by federal laws for interstate commerce and are subject to intense competition, rates for in-state calls are controlled by each state individually, and thus are often many times higher than state-to state calls. While it is not logical that a long distance call of 50 miles within your state should cost 2 to 3 times more than a call to another state up to 2500 miles away, there are two main reasons for this difference.

One reason is the extra taxes and fees imposed by the state agency on in-state long distance and the other is the monopoly power of the phone companies within the state. The local phone company can legally charge an exorbitant rate for their in-state services because they have virtually no competition on in-state calls. While this is slowly beginning to change, it will be some time before in-state rates are as competitive as state-to-state calls.