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September 03, 2010

Google Voice an Imminent Threat to Skype and Others: Industry Experts

By Rajani Baburajan, TMCnet Contributor

When Google (News - Alert) announced Google Voice last year, the company faced criticism from the leading players in the telecom industry. There was argument that the service should be regulated as a traditional telecom service.

In a complaint letter addressed to FCC (News - Alert) last year, AT&T argued that Google Voice is a "creatively packaged" traditional telecom service, and that Google's practice of blocking certain, costly calls on the service violates the same so-called network neutrality principles that Google has long espoused.

However, Google countered Google Voice is an Internet service, so it is exempt from the telecom regulations.

Now, with the official announcement of Gmail voice service, Google is making it easier for users to talk, by offering instant access to voice through Gmail accounts. The new Gmail voice allows users to call any phone on Google Voice directly through their email account.

Calls made to phones within the U.S. and Canada are currently offered free, at least until the end of the year, while charges for international calls are billed at rates as low as 2 cents a minute.

Company spokesperson Randall Sarafa said the rates charged from international calls enable the company to subsidize the free calls in North America.

Just the day the service was launched, over 1 million calls had been placed through the service, according to Google sources.

Google Voice is emerging as a threat to traditional VoIP service providers like Skype (News - Alert). It’s not only the simplicity of the service, but also the cost factor that users take into account while looking for alternate telephony solutions. Google’s new service wins at both.

Google Voice, integrated with the mail, is much simpler than Skype, which requires a software program to install. The free calling service announced by Google clearly hints at the company’s strategy to pull Skype’s customers to it. While Skype now offers calls to phones in the U.S. at the rate of 2.1 cents a minute, Google is offering the service free in North America, at least for now.

Google is also a potential threat to telecommunications providers. VoIP services have already emerged as threat to traditional telecommunications companies. The new cheaper voice service from the most popular e-mail provider will further worsen the scenario.

While the service is currently an indirect threat, over the long term it will evolve to be a direct threat, says Ray Valdes of Gartner (News - Alert).

The only concern about Google Voice currently is the call quality. Google’s Internet calling may not guarantee the call quality offered by traditional services; however, according to Valdes, the Internet major is likely to improve the tool over a period of time.

“Google's big enough that eventually it will be stepping on different industry players, including Skype, telecoms and even other Internet firms offering an increasing array of communications services,” Valdes said.

Google’s spokesperson did not comment on how telecoms will receive the new service. Google had made a statement last year through Google's Washington telecom and media counsel Richard Whitt, that telecom carriers' argument that Google Voice should be regulated "doesn't fly."

While Whitt acknowledged that Google does block some calls on Google Voice, he said they were only those connected to "traffic pumping schemes" aimed at gouging higher fees from carriers. “The FCC's open Internet principles apply only to the behavior of broadband carriers -- not the creators of Web-based software applications,” Whitt said.

Simultaneously Google and Verizon (News - Alert) joined hands to lobby FCC on network neutrality. TMCnet reported about their possible partnership earlier in July.

The companies recently announced a public policy proposal that countered the network neutrality proponents saying the mandate did not call for strict network neutrality principles to be applied to wireless networks or certain future services.

While the net neutrality debate gets a fresh start with the launch of Google Voice, Google is now deploying a related marketing campaign for the service by planting at least five custom-made phone booths at airports and college campuses around the U.S., where potential users can pick up a hand set and sample the service.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Juliana Kenny

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