AT&T vs. the Farm Team

The telecom giant wants to close a legal loophole that allows rural phone companies to profit from conference-calling and sex-line services

Making money has never been easy for small-town phone companies, most of which rely on federal subsidies to survive. But two years ago, Ronald Laudner, chief executive of Farmers' Telephone, in rural Iowa, hit on a lucrative new source of profit, thanks to a convoluted federal mandate that requires long-distance carriers to pay rural phone companies. By the end of 2006 his call volume was up twelvefold and annual net revenues had doubled, to $2 million.

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