AT&T, Google Spat Over Google Voice Blocked Calls Is Important... But Totally Misses The Point

from the distracting,-but-important dept

Well, well, well. It looks like AT&T's latest line of anti-Google attack is to accuse the company of being hypocritical on net neutrality by not living up to the same principles when it comes to its Google Voice product. The issue is that, apparently, Google Voice is now blocking calls to free conference services like This is identical to the problem I discussed a few weeks ago when I noticed that the MagicJack VoIP service blocked calls to those same services. Oddly, at the time, I got around the MagicJack block... by using Google Voice. So if it's now blocking those calls, I haven't yet seen it, but there are numerous complaints. And, just like I said at the time with MagicJack, I think that the FCC has been pretty clear in the past that this is not legal. If you're offering a phone service of this nature, you need to connect it with the phone calls customers are making.

So, I have to admit that I find Google's response to be disingenuous. It basically tries to shrug off the problem by saying Google doesn't have to follow such rules on connecting phone calls because it's a "web-based" offering. First, making such a claim just makes Google look like it's ducking the issue. Second, Google has done a dreadful job letting Google Voice users know that such calls are totally blocked by its service.

However (and this is important), the actual issue here is not net neutrality. The real issue is ridiculous regulatory setups in certain rural areas, that force unnaturally high connection fees on telcos to rural telcos, creating a massive arbitrage opportunity that the Free Conference call offerings making good (and profitable) use of in offering their services. Basically, every inbound call to these telcos requires massive per minute fees from the connecting service provider to the rural telco. It's so expensive that as long as the rural telco can offer a service (such as conference calls) at a cheaper rate, they make money on every inbound call -- but it's all due to outdated regulations that "protect" those telcos. Google mentions this in its response, but it should be the headline, not buried in the details: the issue with net neutrality is the telcos trying to double charge for the use of their network. The issue with these calls is a dumb regulatory setup that forces telephone service providers to pay insanely high rates to a small group of small telcos for any inbound calls.

So, yes, I agree that it's bad that Google (and MagicJack) blocks these calls -- and I believe it may in fact go against some previous statements by the FCC concerning phone services. But... it's not a net neutrality issue where they're doing so to squeeze extra money out of customers by holding part of the access for ransom. Instead, it's the result of bad and outdated local state regulations concerning connection fees that really need to be overturned.

Filed Under: arbitrage, conference calls, connection charges, google voice, net neutrality, phone service
Companies: at&t, google

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  1. identicon
    Cheese McBeese, 25 Sep 2009 @ 7:00pm

    Re: Re:

    "Well, they're really designed to benefit the rural telcos... at the expense of bigger telcos."

    Mike, I'm sorry, it's not that simple. Are you a city boy?

    The current regulations were designed to provide financial incentive to the rural telcos to provide service to expensive and hard to reach rural locations. The main benefactor of the regulation is the rural subscriber, not the telco. The rural telco incurs a lot of cost in order to be able to deliver those inbound calls. Not only that, the bigger telcos are generally happy with this regulation because in areas where there is no rural telco, the larger telcos are required to offer end-user service at tarriffed rates if they want to operate in that state. In some cases, this means that at&t and Verizon have to offer satellite service to otherwise unreachable customers at normal landline rates.

    A shakeup is coming, but we aren't quite ready for it yet. As soon as the tier-1 operators can hook up WiMax or LTE networks at the end of their fiber pipes, the rural telcos are toast, IMHO. If I were a rural telco, I'd be spending a lot of time trying to figure out how to reinvent myself.

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