Google's New Phone Service Poses Questions for Regulators
September 18 2009 - 10:56AM
Dow Jones News
Google Inc.'s (GOOG) new "Google Voice" phone management service
is an innovation destined to draw scrutiny from the Federal
Communications Commission as the agency struggles to reconcile
rotary-phone-era rules for iPhones and Blackberrys, government and
industry officials said.
Google is still testing the free voice service that allows
people to link all of their phones to a common number and manage
calls and messages through a website.
The FCC's first look at Google Voice came earlier this year,
when the commission asked why Apple Inc. (AAPL) rejected the
application for the popular iPhone. Apple said it is still
considering Google Voice for its iPhone application store, a
response that appears to be satisfying regulators for now.
But Google Voice is one of many new phone services that raise
questions about how they fit into the heavily regulated phone
industry.
Google argues that its Voice application isn't a traditional
phone service and shouldn't be regulated like other common
carriers. The company is pressing forward even though regulators
have yet to determine how traditional telephone regulations apply
to these new services.
"There may be an absence of regulatory certainty, but we're not
going to sit on what we think is a highly useful and innovative
service," said Richard Whitt, Google's Washington telecom and media
counsel.
One issue for the FCC: Google reserves the right to restrict
calls to certain telephone numbers, such as adult chat lines or
free conference-call centers, that have overly high access
charges.
Traditional phone companies such as AT&T Inc. (T), Verizon
Communications Inc. (VZ), and Qwest Communications International
Inc. (Q) aren't allowed to block those kinds of calls. Those
companies could cry foul if newer phone services like Google Voice
aren't given the same treatment.
Several years ago, AT&T and others tried blocking calls to
lines with inflated access charges. They were rebuked by the FCC,
which said common-carrier phone companies can't pick and choose the
numbers they will patch through and those they will block.
Verizon, AT&T, Qwest, and Sprint Nextel Corp. (S) all have
protested smaller carriers' ability to route popular numbers
through high-cost areas, forcing them to pay several times the
average rate for connecting customers' calls.
Google is in a different position from the wireless and landline
companies because its voice service is free, and it doesn't replace
a traditional phone service. Google Voice compiles an amalgam of
features using the Internet, mobile data networks and voice
connections, which all are subject to different rules.
Google may be pushing the boundaries in terms of how people
think about using telephones, but Bell-era phone companies will
push back if their business is affected.
"It's not clear where Google Voice fits on the
regulated-versus-unregulated services," said Paul Gallant, a
telecom policy analyst at Concept Capital. "At some point, carriers
may press the FCC to start regulating apps that take market share
from carriers' regulated services like basic voice."
FCC Senior Counselor Colin Crowell said the agency will be
data-driven and consumer-oriented in its approach to new services
like Google Voice. "We're moving to a broadband world and we want
to maximize innovation and investment in the space," he said.
The FCC faced a similar quandary several years ago when it
confronted the first Internet-based phone services like those
offered by Skype or Vonage Holdings Corp. (VG). The FCC said in
2004 that voice-over-the-Internet phone services, or VoIP, aren't
subject to state regulations, but it didn't offer much clarity in
terms of how federal regulators should look at VoIP services.
Since then, the FCC has imposed some obligations on VoIP
companies, like requiring them to connect emergency 911 calls.
Crowell noted the FCC also has made sure new phone services like
VoIP meet the traditional phone standards of universal service and
consumer privacy.
FCC and industry insiders say regulators have been reluctant to
subject newer phone services to traditional rules for fear of
squelching an emerging technology.
Whitt said it would become "a real challenge" to justify
Google's investment in Google Voice if the FCC declared it was
subject to common carrier rules. "Imposing legacy common carriage
requirements would be unfortunate not just for Google Voice, but
also for lots of innovative companies, large and small, who are
using the Web to revolutionize the way people communicate with each
other," Whitt said.
Regulators are likely to take a forward-looking approach when
addressing outdated phone rules, keeping in mind that all phone
service will be Internet-based in the future.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com