Tom Esvlin points out that the former SBC sued the former AT&T in 2004 over much the same issue the current combined SBC+AT&T+Cingular is suing other telcos:

The complaint alleges: “… AT&T orchestrated and implemented a fraudulent scheme to avoid tariffed ‘access charges’ by delivering its long-distance calls for termination over facilities that AT&T obtained under the express condition that they be used for local traffic, and thereby disguising its long-distance calls as local calls.”

Now at&t is alleging that FuturePhone calls are being described as domestic long distance when they’re really international.

Local? Long distance? International? Why’s it important anyway? Not because of actual costs. Costs on the Internet over which these calls are being routed isn’t sensitive to distance at all; and, truth to tell, other than international tariffs and other monopoly rents, switching costs and not distance are the main cost component on POTS (Plain Old Telephone Service). Certainly the cost to terminate a call on a local network has nothing to do with where that call originated.

— at&t and FuturePhone – POTS Calls the Kettle Black, by Tom Esvlin, Fractals of Change, February 2007

Esvlin points to the legal locus of the problem, as summarized on Techdirt:

No matter what happens, this demonstrates the continued problems with these attempts to build up the Universal Service Fee, or other taxes designed to provide more telco services to rural places. They’re almost always misused in a way that ends up in some telco’s pocket — rather than actually being invested in telco service improvements. Of course, AT&T has been the beneficiary of many of these regulations in the past — but it brings out the legal guns when such a plan takes money out of its pocket instead of putting it in.

— Phone Call Arbitrage Is All Fun And Games (And Profit) Until AT&T Hits You With A $2 Million Lawsuit, Techdirt, 7 Feb 2007

Sure, we want rural service. But the current USF doesn’t seem to be working very well. How about if we fix it instead?

And remember that much of POTS is already carried over the Internet Protocol on the telcos networks. Why should they act differently as ISPs than they have been as POTS telcos after 2008 if there is no net neutrality on the public Internet?

-jsq