[Aloha]

Yes, at first it was an analog process with toll tickets making their way to your local business office who would prepare your bill, eventually it went to tabulation technology (punched cards) and then into the 1960's computers.

As far as the bill - you'd be billed for local service (either unlimited or metered rate), plus a phone rental, and then on top of that local toll and long distance usage. For this, you got a telephone, and the phone company was responsible for your inside wiring as well.