FCC Has Questions, Google Has Answers

Story from Information Week

The Federal Communications Commission has opened an inquiry into Google (NSDQ: GOOG)'s rationale for preventing its Google Voice users from making calls to certain phone numbers.

The rules the govern payments among telecommunications companies for the exchange traffic and connection of calls across different networks allow certain calls to be billed at very high rates. Some phone companies, particularly in rural markets, have found that by partnering with local services like pornographic chat lines, they can demand these high rates from long distance phone providers, a scheme known as "traffic pumping."

AT&T last month complained that Google, which isn't regulated as a phone company, should be forced to connect high-priced calls of this sort, just as AT&T must do under common carrier rules.

On Wednesday, 20 members of Congress, representing constituents who benefit from the current connection fee system, sent a letter to the FCC, asking the agency to investigate how Google operates Google Voice. The letter says that while Google may not consider itself a telephone company, its operation of telephone services could put competing telephone companies at a disadvantage.

"[I]t is our opinion that a company should not be able to evade compliance with important principles of access and competition set forth by the FCC by simply self-declaring it is not subject to them without further investigation," the Congressional letter states.

That investigation has begun. The FCC sent a letter to Google on Friday asking the company to explain how Google Voice routes and restricts calls, how it informs users about these restrictions, which of its services are free, whether it intends to charge in the future, and how Google pays for Google Voice.

More ominously for Google, the FCC asks, "How does Google believe its various Google Voice services fit within the statutory classifications of the Communications Act of 1934 [and the Commission's regulatory classification of interconnected VoIP]?"

Google's answer has been that it's not a phone company and shouldn't be regulated like one. And the Computer & Communications Industry Association (CCIA), a tech industry group that counts Google as a member, suggested as much on Friday in a statement responding to the FCC's letter.

But simply saying so, as the letter from 20 members of Congress stated, isn't the final answer.

Google has until Wednesday, October 28, to respond to the FCC, but the company's telecom and media counsel Richard Whitt has already offered a preview of the company's response.

"The reason we restrict calls to certain local phone carriers' numbers is simple," he said in a blog post on Friday. "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. ...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."

AT&T, Whitt charges, wants to slow down innovation by having the government saddle Web applications like Skype and Google Voice with the same regulations imposed on the telecom sector.

"And despite AT&T's lobbying efforts, this issue has nothing to do with network neutrality or rural America," he said. "This is about outdated carrier compensation rules that are fundamentally broken and in need of repair by the FCC."