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This brings up the question of how it can be long distance even if it's the same ILEC providing service. I honestly don't know how that's the case, or quite how it works. All I can say is that it is.

I think the answer to that question lies in the use of LATA. Intralata calls are "local long distance" and interlata calls are traditional long distance. Which leads to situtations where calling the next town over is often more expensive than calling three thousand miles away.

As for starting your own voip provider, that market space isn't empty at the moment. The biggest player is Vonage, but there are plenty of competing companies like sunrocket and packet8.

Matthew