I love telecommuting, saves a lot of time and hassle fighting rush hour traffic and maintain a car. Not to mention that it can be far away so one doesn't have to move, a very expensive and life disruptive process. I'm willing to accept quite a bit less pay for a telecommuting position. But it is against most employers' religion, even progressive seeming technology employers such as Google.
Many cling hard to the mindset that workers are lazy slackers who have to be closely monitored to ensure they're working instead of goofing off. Instead of leading and inspiring workers, they use the slave driver approach and push and prod workers. Much harder to push telecommuters, so they simply don't allow it. No doubt many workers would abuse the situation. But it wouldn't last. If the telecommuter doesn't do any work, this is going to be noticed pretty fast. Telecommuters can't get away with much more slacking than office workers, often even less because of the necessity to counter the higher levels of suspicion by working harder.
Then there are the managers who believe a work environment and the close communication it enables is necessary to be highly productive. And, yes there are environments, home environments especially, where doing any work is very difficult thanks to loud, needy family members. But it's hardly an insurmountable problem.