The FCC has started an investigation into Google Voice. The new service offers users a phone number with a number of call and messaging management features. Incoming calls can be forwarded, while outgoing calls make use of the Bandwidth.com IP network, resulting in cheap calls in the US and Canada. Google Voice is a call-back service, where the user gives both the number of who he wants to call as well as his own number (fixed or mobile) that he wants to use. The service is still restricted to a limited number of users and available by invitation only.
On 27 September AT&T filed a complaint against Google (which it describes as one of the strongest supporters of net neutrality) with the FCC about the limitations of Google Voice. The complaint centres on the fact that Google Voice does not meet the common carrier rules, as it excludes certain rural phone numbers. AT&T also cited the FCC's Internet Policy Statement, which aims to ensure free competition among providers. These blocks on Google Voice appear to give Google an advantage. AT&T also called on the FCC to put an end to so-called "traffic pumping". This is when service providers make use of the high termination rates in rural areas for the exploitation of sex lines. When customers at the big operators call these lines, the rural operators collect the high fees as well as sometimes reportedly sharing in the income from the sex line.
In its reaction to the complaint, Google also complained about the high termination rates collected by rural operators. It rejected the claims from AT&T, saying that Google Voice is not a replacement service (a fixed or mobile connection is still needed to use the service), and as a software application and invitation-only service, it does not fall under the common carrier rules. The FCC has now asked Google for more information, which it has until 28 October to supply. Is Google Voice free, and if yes, will it remain so and how is it funded? How does Google itself define the service? How are the numbers blocked by Google Voice selected?
Interestingly, AT&T writes in its complaint that "Google Voice claimed for itself a significant advantage over providers offering competing services". From a financial perspective, that's a fact, as termination in certain areas can be very expensive. However, from a commercial perspective the claim doesn't really hold. By making calls to certain numbers impossible, Google Voice is at a marketing disadvantage compared to other services that do allow such calls.
Google also makes a questionable claim: Google Voice is not meant to be a "replacement for traditional phone service – in fact you need an existing land or wireless line to use it". This of course fits the call-back nature of the service, but for on-net calls there is an element of over-the-top service. The idea is to think of Google offering more a call management service: subscribers in rural areas can still receive calls if they turn Google Voice off. From this perspective, AT&T seems to have little chance of succeeding with its FCC claim.
The limitations of Google Voice can be seen as a call to do something about the high termination fees demanded by small operators. The filings from Google and AT&T suggest they are equally annoyed by potential misuse among small operators. In the mean time a bipartisan group of 20 members of Congress has expressed its discontent to the FCC that certain numbers are excluded from Google Voice. They are standing up for the consumer view: if old operators can't run call blocking, why should new ones be allowed this?
Google still has a way out - through innovation. By blocking calls to rural numbers, Google can build up its market position and make its innovation (the call management services, essentially a form of unified communications) available to a large public while also saving on costs. Important though is that the call blocking is only an interim strategy. If Google Voice is eventually subject to the common carrier rules, this implies that the service is only at the first step of its evoluation, or the first rung of the ladder of investment. By first securing a market position, Google can then strengthen its position with the necessary investment. This immediately makes the FCC questions relevant: What is the business model? Will it remain free? Will it remain invitation only?
In conclusion, we can say that there are two issues bothering everyone: 1) The misuse of high termination rates in rural areas. It's up to the FCC to do something about this. It has already started an investigation in to the 'middle market', assessing the backbone costs in order to try to devise a new fee structure. 2) The exclusion of rural subscribers from Google Voice. If problem (1) is solved, this won't be a problem anymore either. Furthermore, it's up to Google to determine whether it wants to make more of Google Voice than a call management service.
AT&T may be shooting itself in the foot by complaining about Google to the FCC now, as it may force Google to take the next steps in its evolution towards becoming a full carrier. And then AT&T will really have a formidable competitor.
