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FCC Investigating Google Voice

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[qi:090] Updated: Well the wheels of regulatory justice are certainly spinning a lot faster these days. The Federal Communications Commission has decided to investigate Google’s refusal to connect its Google (s goog) Voice callers to certain numbers in rural areas. The agency has stepped in after AT&T (s t) two weeks ago complained that if Google wanted to provide phone services it needed to act like a phone company — which means connecting calls to all telephone lines. Yesterday, members of Congress also called on the FCC to investigate the search giant.

Apparently, the FCC isn’t buying Google’s line that it’s an Internet application provider rather than a phone company. In a letter issued today, the FCC asks Google several questions seeking to discover:

  • Details on how the service works;
  • How the money flows from the consumer to Google and then from Google to the back-end bandwidth providers;
  • If Google thinks that the invitation-only nature of the service means it doesn’t fall under the rubric of the Communications Act of 1934 that created the FCC;
  • What Google tells the users about the service’s limitations;
  • Which service providers Google contracts with to deliver the service and how much Google pays them.

Responses are due by Oct. 28. The FCC is operating in a kind of a gray area here given that its role is to control the airwaves and the nation’s telecommunications infrastructure. Its decision to get involved may be driven by political pressure, but I think it’s also because the FCC is willing to extend its mandate beyond traditional telecommunications services, as it recognizes that we need to bridge the gap between our old communications infrastructure and our coming broadband infrastructure.

Update: Google has posted its response to the FCC, noting that:

The reason we restrict calls to certain local phone carriers’ numbers is simple. Not only do they charge exorbitant termination rates for calls, but they also partner with adult sex chat lines and “free” conference calling centers to drive high volumes of traffic. This practice has been called “access stimulation” or “traffic pumping” (clearly by someone with a sense of humor). Google Voice is a free application and we want to keep it that way for all our users — which we could not afford to do if we paid these ludicrously high charges.

Essentially it argues that it doesn’t terminate calls to those lines not because they are rural, but because such lines are also used by sex lines and free conference calls to artificially inflate their revenues by charging callers high termination fees. We explain the concept in posts here and here:

Typically, long-distance or cellular providers pay local telcos a termination fee for each call that is completed. In rural areas where regional telcos have higher-than-usual termination fees, telcos and free-calling concerns have partnered to build businesses where some amount of profit is based on the spread between what the call-completion costs and what they charge the long-distance provider.

While it tries to distract us with images of sex lines, I’m still unclear as to whether Google is objecting to having to pay more to terminate calls because rural areas have higher call termination fees (owing to the lower population density to support the infrastructure buildout,) or if somehow it can prove that it’s being victimized by sex and free conference lines trying to profit off charging Google’s bandwidth providers more to terminate calls to those numbers. The former is just the cost of doing business for a telecommunications provider, and the latter is a loophole that Google rivals like AT&T have been complaining about for years. No wonder Google would rather be an “Internet application” instead of a phone company.

18 Responses to “FCC Investigating Google Voice”

  1. Justin

    The FCC has no jurisdiction in this case so I’m surprised Google didn’t drag them into court and challenge their authority to even investigate this matter. Regardless, they have consented to it now.

  2. Seriously, I’m beginning to think we should circulate a petition and send it to Charlaine. LOL! Yep, it’s Eric, hands down. Well, I’m a canine person, so whatever animal I designed would end up looking like a dog, possibly with bat ears?

  3. Even though it is generally perceived that GV is something revolutionary and it is disrupting big telcos like AT&T, the fact is that such a service is being offered by many companies, complying to telcom rules. So I hope FCC investigates GV on their behalf.

    Please reconsider the claim that GV is an internet application. Yes, I provision and manage the service using a browser; but all calls go over the PSTN in all forms, save Gizmo. It is most decidedly a PSTN service. It issues PSTN numbers to its subscribers. If PSTN interconnect is not part of the service then GV loses all its features.

  4. exAOLVP

    As much as we can all hate the telcos, it’s patently unfair for Google Voice to act as a layer on top of the telcos that shunts the expensive calls to the underlying telcos, and does the free ones themselves. Want to do a GoToMeeting call – sorry, have to dial it from your BB directly and Verizon has to pay the 5c/minute termination charges. But want to call your girlfriend down the street – sure, we’ll do that for you.

    I’m surprised that we haven’t seen the FCC bring back the notion of the $1.00/phone number/month charge the FCC was contemplating back in 2006 – I’ll bet that’s another issue that Google Voice will have to face over the next 4-6 months.

    Frankly, the real test for Google Voice is whether it can stay free, and whether the audience will stick with it if they have to pay. There’s actually some neat stuff in here around find-me/follow-me, but no one has historically been able to charge enough for that to pay for it in the “real” telco world.

  5. Jerry Fleckhiemer

    Welcome to the world of telecommunications Google. Google admits to terminating calls and negotiating rates with interconnecting telcos. Kind of sounds like a “telco” to me. I think they will be turning down the service before EOY 2010.

  6. My guess is that this sort of inquiry oversteps the FCC’s legal authority. But, given Google’s expansive view of the FCC’s proper role (e.g., with respect to net neutrality), Google is hardly in a position to complain on those grounds!

    • Josh, why would you guess that it oversteps their authority? Google is working to become an internet-based voice service provider and is actually complaining to the FCC about AT&T, etc. It would seem to me that once they start providing these connnection services (Google Voice) they start to fall under FCC guidelines. I would be pissed if they did not connect my call to a rural phone line.

  7. The difference? Should this end up causing the FCC to have instructions for Google to follow, the effort will be made. Who ever the FCC claims Google is under serving will get what they are supposed to have.

    …*unlike* instructions made to AT&T, who fill stall, fight, refuse for decades.