Will Google Kill Telecom?

Thanks Mashable!

This is Part 1 of a two part series on Google Voice in Canada. Part 2 will theorize on what the impacts will be on Canadian Telecom when Google offers Canadian phone numbers.

This week’s announcement of Google Voice integration with Gmail, with free calling and free long distance is perhaps one of the most controversial moves yet by an Internet company to change the telecom industry. Free computer to computer calling (a la Skype) isn’t problematic, it’s when free extends to long distance and calls to to the PSTN (public switched telephone network) that the Google service gets spooky.

Telecommunications companies around the world continue to invest billions of dollars into *the last mile*, that’s the distance from your house back to their closest switching office. Folks with a regular telephone (as opposed to a VoIP phone) rely on that last mile to make and receive telephone calls. Despite pushes to move everything to the Internet, that last mile is going to be important for a long time to come. 

If Google is offering free calls to the last mile (this is called call termination), you know they aren’t paying [hardly] anything to the carrier who is actually providing that last mile call termination. They’ve managed to strong arm someone into offering it at no charge, perhaps in exchange for some other service.  Where it gets very spooky is with Long Distance Termination. Again - free over Google, but there is a real and true cost to terminate a call to a standard telephone in Canada and the United States.  If no one is paying for that call, then the local carrier is losing money, and has less revenue to be able to maintain their local telephone network.

:-(

Let’s look at an example:  I called my PRIMUS phone from Gmail. The call routed from Google, through Verizon, up to Allstream, and then down to Primus. All for free to me. Perhaps Google did indeed pay Verizon something, who had to then pay Allstream, and lastly Primus. And this is the call flow for a VoIP call, where most of the routing bypasses the local mile of infrastructure, since my Primus phone is layered on top of my Rogers Broadband connection. Confused yet?

If I call my Bell phone line from Gmail [yup, 2 carriers in this house - diversity and redundancy is important with 2 teleworkers under the same roof], the call still starts in the US, at Google’s data centre, heads off to Verizon, up to Bell Canada, and then down my little copper wires from the Richmond Hill Bell wire centre. If there’s no costs to the user [me], then there are no revenues flowing to Verizon to maintain their interconnection with Bell, and no revenues to make sure my little copper wires from the Bell wire centre stay nice and healthy, or get upgrades when needed. At some point, in the not-too-distant future, there won’t be any money left to manage, maintain and upgrade the public telephone network.  That’s all well and good if EVERYONE in the world has migrated to VoIP service over Broadband Internet, but not so good if you are a carrier who has to maintain 2 networks, one for VoIP and one for the public telephone network. It’s certainly bad news if you have to rely on the public telephone network for your phone services.

At some point, carriers will realize that getting into bed with Google is going to destroy the telecom industry. Everything will be free, for a while. Then everything will be bad, very bad.  Right now, Google can only offer outbound free dialling from Gmail. Just wait until Google gets its hands on Canadian phone numbers. I can only hope that it won’t be a free service too.

Canada Gets the Cold Shoulder by Voice Apps

A few years ago I was mesmerized by the idea of Grandcentral coming to Canada, but then all went quiet… Shortly thereafter, Grandcentral was purchased by Google, and boy! For sure they will expand to Canada now!

Grandcentral became Google Voice, and in the past few months Google Voice has come back into the limelight, but still no love for Canada.

Skype could have been a contender, with its SkypeOut capabilities. Still, no maple leafs for Skype.

Why are global providers deciding to leave Canada on the backburner? We can blame the recession for a certain amount of hesitation on the lack of movement, but the biggest trick is that it’s expensive to open up a *free* voice service in Canada. Even if there’s a monthy service fee, our carriers aren’t yet really ready to push IP to the PSTN. Carriers aren’t all that keen to give away market share at rock bottom prices, and for Google or Skype to try and build their own networks, the geography and addressable market for the service isn’t all that lucrative.

Canadians interested in next gen voice apps are going to have to sit tight, consider a foreign phone number, or even a change of address. ;-)

It’s not going to be until the CRTC changes foreign ownership and competitive influences that there will be changes driven into the way technologies are delivered to the consumer. It’s an eventuality, perhaps even in my lifetime.