Thanks in part to the finger-pointing of AT&T, Google has to answer the accusations that it does not connect calls to certain rural areas. AT&T believes this is unfair–Google should be made to connect calls to any location, regardless of how expensive it is to the company–but Google is firing back, claiming that it’s only blocking calls to obvious “traffic pumping” numbers.

Now, Google has gone one step further. In a letter to the FCC, it claims it has isolated less than 100 numbers that are responsible for the practice, and is now only blocking those specific numbers. If you’re short on time, here’s the pertinent text from Google’s letter:

In June 2009, Google Voice began noticing extremely high cost calls to a concentrated number of destinations. Our internal investigation revealed that the top 10 prefixes to U.S. destinations (NPA-NXX) accounted for l.l percent of our monthly U.S. traffic by volume – an unusually large number, and some 161 times the expected amount by prefix. In tum, this traffic accounted for 26.2 percent of our monthly U.S. cost – again, an unexpectedly large number. In addition to these grossly anomalous call patterns (which include the frequency and duration of calls to rural areas), we also were aware through various industry sources of certain in-bound traffic stimulation practices, and the identities and locations of some of the carriers in question. Many of these businesses are located in rural areas with local carriers that charge unusually high rates for terminating traffic. Our own underlying carriers would assess Google Voice up to 39 cents per minute for some of this interstate traffic. As a result, based on an application of these data filters to the total universe of our outbound traffic, in August 2009 Google Voice began the practice of restricting calls to certain high-cost destinations. Currently, fewer than 100 U.S. telephone numbers are restricted based on an application of these filters.

For a couple of technology giants, they sure are good at tennis. The ball is now back in AT&T’s court!

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No, not Eric Schmidt. Not Steve Jobs. Nope, it’s Arthur Levinson.

Levinson remains on the board of both companies, leaving the door wide-open for the FTC to warm-up its various probes. In fact, if it were not for Levinson, the rectal tension would have already been relieved for both companies:

“Generally it would have shut down the investigation because they (regulators) achieved what they wanted to achieve,” said Gary Reback at the law firm of Carr & Ferrell.

So why is Levinson still on the board of both companies? Well, with the lack of any statement from Mr. Levinson, we’ll go with the obvious: corporate greed.

You see, according to public records, Levinson stands to lose a considerable amount should he give up either position. If he quits the Apple board, he stands to lose total compensation of $711,434. Quit Google and he’ll lose $189,606. Any bets on which seat he’ll likely give up?

Of course, you can’t really blame Levinson for wanting to eat from both sides of the buffet line. After all, $900k for a few days work each month, would be hard for anyone to give up! Throw in the fact that both companies are equally high on the “cool” chart and you compound the decision.

Still, if Levinson truly loves both Apple and Google, he must ditch one to spare both of them a colonoscopy.

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Let’s start with the good news. Both California and Hawaii look set eject the planned affiliate nexus, with vetoes from their respective governors.

CA’s Arnold Schwarzenegger stated:

“After passing the largest tax increase in California history, it makes absolutely no sense to go back to the taxpayers to solve the current shortfall – that’s why yesterday I vetoed the majority vote tax increase passed by the legislature.”

Meanwhile HI’s Governor Linda Lingle says:

“I am vetoing this bill immediately to help ensure Hawai‘i is not economically hurt by legislation that was not well thought-out and would have negative consequences for non-profits such as the University of Hawai‘i bookstore, and businesses throughout our State”

Both actions were enough for Overstock.com to announce the reinstatement of affiliate programs in both California and Hawaii. There’s no news on a reversal from Amazon, but I suspect it will happen this week.

On to the bad news.

North Carolina still seems set to pass its Amazon Tax legislation and Rhode Island looks to be the next state to make the blunderhead move.

So, what exactly is the Amazon Tax? It’s not that these states plan to add new taxes for those affiliates earning income from these online retailers–they already pay their income taxes. Nope. The Amazon Tax effectively claims that, by having affiliates in a state, the retailer has an obligation to collect sales tax on all its online purchases from that state.

When you consider that an affiliate isn’t even close to being a contractor–which employers are not obliged to collect income tax–let alone an employee, you see why this legislation is nothing but a desperate money-raising effort by states that over-spend and can’t otherwise balance their budgets.

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The AP does its best to make bloggers out to be “quite different” from the “journalists” that work for mainstream media–and therefore must all be on the up-and-up, right? So, I’ll spare you the fluff and cut to the chase:

New guidelines, expected to be approved late this summer with possible modifications, would clarify that the agency can go after bloggers — as well as the companies that compensate them — for any false claims or failure to disclose conflicts of interest.

It would be the first time the FTC tries to patrol systematically what bloggers say and do online. The common practice of posting a graphical ad or a link to an online retailer — and getting commissions for any sales from it — would be enough to trigger oversight.

Honestly, 99% of bloggers have nothing to worry about. If you forget to disclose that you used a 50 cent coupon on that hamburger you raved about, you’ll probably be just fine. Likewise, if you blog that your new Ford gets 33mpg but in reality only gets 31mpg, you won’t likely face the wrath of the FTC.

In fact, the only bloggers that need to be wary of any new FTC guidelines are the ones that have brought this on us all. They are the ones that accept gift cards, then rave about their shopping experience. They claim their acne cleared up overnight, while receiving a free monthly supply of the skin-care treatment. In other words, the FTC is going after the professional bloggers that make a living off of freebies and commissions–all without an ounce of disclosure.

So, how can you make sure you don’t ever hear from the FTC?

If in doubt, spell it out! Cheesy, I know, but it will help you. If you ever stop to ask yourself, “should I disclose this?” then the answer is probably “yes.” The chances are that whatever is causing the guilt-trip isn’t worthy of the FTC’s attention, but you’ll feel better for disclosing it AND you’ll earn the trust of your readers!

Other tips that might help you sleep at night:

• Create a page that lists all of your potential “conflict of interests” and simply link to it whenever your post includes mention of one of those relationships.
• Tag any links with something visible and obvious. Such as (affiliate) or (sponsor).
• You don’t have to publish the full terms of your compensation. Simply stating “Company X sponsored this post…”) or (“We received free XXX as part of this review…”) will likely be enough to satisfy the FTC.

My last piece of advice is to simply sit tight and see what happens. The FTC hasn’t actually enacted anything yet–and we have no guidelines from it on what we should or shouldn’t say. In addition, any guidelines could hurt the revenues of those companies that rely on affiliate marketers. If Amazon is being proactive about protecting its affiliate revenue stream in one state, you can bet it’s going to try and block any new standards from the FTC.

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Is the government truly trying to find a way to bring antitrust charges against Google? It wouldn’t be the first time, would it?

Or, is this simply the FTC “going through the motions” so as to appease those that feel Google’s too dominant, while using a platform–Section 8 of the Clayton Antitrust Act–that’s rarely enforced?

I’m leaning towards the latter, for a number of reasons.

First, Eric Schmidt was recently named to President’s Obama’s Council of Advisors on Science and Technology (PCAST). Sure, Obama wants to send a message that there are no “free passes” in his administration, but forcing Schmidt off the Apple board is hardly a victory for those against corporate conspiracies.

Second, the overlap between Google and Apple is somewhat minor and certainly not in an area that warrants antitrust concerns. The two companies compete in the mobile space, but neither are monopolizing in this area–although both could be within the next 5 years. If Apple were a major player in the search space, then I could see the FTC’s motivation.

Lastly, if we’re to believe the New York Times, Section 8 is rarely actioned on by the government, so if this is a legitimate attempt to keep Google’s footprint contained, then it’s a poor one.

What do you think? Is the government sharpening its swords or toothpicks?

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