North Dakota Telephone Co. has dropped plans to boost residential rates by $4.54 monthly to allow unlimited long-distance calling within its northwestern North Dakota service area, the company's manager said.

However, the Devils Lake company is going ahead with a separate proposal to charge the same monthly residential and business rates for the 26 communities it serves, Dave Dircks said. The "rebalancing" initiative would boost telephone bills for many residential customers by more than $2 monthly.

North Dakota Telephone now has about 20,000 customers and an assortment of rates, depending on each customer's location and service type. The state Public Service Commission is reviewing the company's proposal, and held an informal hearing last week with Dircks and James Howard Jr., a consultant.

"This is not intended to bring us more revenue," Dircks said in an interview. "What we are trying to do is to treat all of our customers the same."

Telephone rate hearings are rare for the PSC. It has no jurisdiction over cellular telephone companies, rural telephone cooperatives and small independent companies.

Qwest, which serves most of North Dakota's largest cities, is limited by state law to charging $18 monthly for basic telephone service.

"This is the last true rate-regulated phone company in North Dakota," Commissioner Kevin Cramer said. "We have the final say in exactly what their rates will look like."

North Dakota Telephone is asking to charge its residential phone customers $13.12 monthly. In Devils Lake, that represents a 27-cent increase. For Cando customers, the phone bill would rise by 82 cents, regulatory filings say.

For 11 communities, including McVille, Starkweather, Tolna and Warwick, the increase would be $1.12, the company's proposal says. For another dozen, including Rugby, Velva, Esmond, Fessenden and Balta, monthly phone bills would go up by $2.23.

The proposal would also cut costs for some ratepayers. Monthly "combo" rates charged to farm customers would fall by more than $4 monthly for most exchanges, while multiline rates extended to some small businesses would also drop.

North Dakota Telephone had also proposed charging an additional $4.54 monthly for all of its residential customers to call anywhere within the company's territory without long-distance charges. For business customers, the increases would have been much steeper.

Customers in Rugby, Velva and other communities on the western border of North Dakota Telephone's service territory balked at the idea.

The Public Service Commission got dozens of messages from customers saying they seldom made long-distance calls within North Dakota Telephone's service area, and that the proposal would make them pay for a service they wouldn't use.

The idea "would be of no benefit for most people in the area," Duane Veach of Rugby told the commission. "It will only mean increased rates that would benefit maybe one of 100 people."

Another customer, Dan Humble of Rugby, said he and his wife "don't call Devils Lake often enough to receive any benefit from such a large increase."

North Dakota Telephone is owned by three rural cooperatives - United Telephone Mutual Aid Corp. of Langdon, Dakota Central Telecommunications Cooperative of Carrington and Polar Communications Corp. of Park River.

The company purchased Devils Lake and 14 rural phone exchanges from the Contel phone company in 1993. Three years later, it bought 11 rural exchanges from Qwest, which was then known as U S West, as part of a U S West divestment of its rural North Dakota telephone properties.

Dircks said the different rates are a lingering remnant of those acquisitions. The company intends to survey its customers about the extended area service charges to see what other options they might prefer, he said.

"I think most of the customers probably perceived it as a general overall rate increase," he said. "They didn't like it."