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BTW, I thought most of what makes cross-border IT-enabled services possible was the cheap underseas bandwidth.

Yes. The undersea cables were placed before we figured out the world of satellites. Network routing rules prohibit a voice path from traversing both forward and reverse paths via satellite because of the huge delay introduced.

I'm a former Bell System employee and very familiar with the helps and hindrances that government introduced into the telecom industry from the earliest days. Anyone who doubts the ability of government to lay taxes and tariffs on telecom need look no further than the monthly bill. I get my wireless activity in excruciating detail...along with some general taxes. The excruciating detail that you see in the billing records is evidence of the fine granularity of modern billing systems. It would be simple to impose targeted tariffs. Custom programming of the operational support systems was my specialty before I left PacBell.

"Anyone who doubts the ability of government to lay taxes and tariffs on telecom need look no further than the monthly bill....It would be simple to impose targeted tariffs."

As I said in my post above, I'm no protectionist, but I must say that this idea has some appeal to me. I think that we should demand that our elected representatives study it. My biggest questions are
(1) How high would the tariff have to be to offset the huge labor cost differential? My sense is that it would have to be enormous - much larger than the base it is being levied on. Is that really practical?
(2) What are the unintended consequences? They are always there when you start taking protectionist measures. It may be that the unintended consequences are justifiable, but I would rather know what they are, rather than getting blindsided.

I have to say that this is the first time I have heard a proposal about actually doing something about the outsourcing trend. It may be that we could set a rate that would not be so high as to completely reverse the trend, but would change the equation enough to slow the hemorraging and bring in much needed revenue.