Three papers consider the provision of telephone service to rural and/or low income customers. The first paper, "An Analysis of Telephone Penetration" (Alexander Belinfante), analyzes the relationship between telephone penetration (the proportion of households with phone service) and prices, household income, and other factors. This study found that the majority of households without telephone service are low income, and it is suggested that subsidies or some other form of special consideration are needed for these households. Twelve tables and two graphs displaying the data for the study are appended. The second paper, "The Illinois Lifeline Experience: Using Value of Service To Implement Universal Service" (Perry J. Pockros), tracks the development of a targeted lifeline subsidy to low-income households as part of a locally measured service restructuring agreement in Chicago and eastern Illinois, and considers various subsidy proposals for their likely impact on subscription level. The third paper, "Telephone Subsidization in Rural Areas" (Joseph P. Fuhr), examines the history of the Rural Electrification Administration (REA) in the telephone industry, the structure of rural telephone companies and their customers, and the subsidies that REA borrowers have received and continue to receive. Finally, the paper examines the future of the rural telephone company and develops some policies which would help achieve universal telephone service. (Author/EW)