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Google Voice, AT&T, and the FCC: Fighting Over the Wrong Thing

Posted by: Stephen Wildstrom on October 11, 2009

What do Google Voice, AT&T, sex chat lines, and New Deal efforts to provide rural telephone service have do do with each other? Quite a bit, it turns out; the seemingly unrelated issues of sex chat and rural phone service lie at the heart of the dispute between Google and AT&T. The real problem is an antiquated system of telecom regulation that, alas, is not likely to get fixed anytime soon.

To recap the recent action, AT&T complained in a letter to the FCC that Google Voice, Google’s call management service, failed to complete calls to certain rural telephone exchanges. The complaint prompted a letter of inquiry from the FCC to Google. In the meantime, Richard Whit, Google’s top telecom lobbyist, admitted in a blog post that Google did block some calls, but pointed out that AT&T has sought permission to block calls to the same exchanges.

What's behind this mess is a program designed to subsidize phone service to rural areas. Certain rural phone companies are allowed to charge trunk carriers, such as AT&T, state-regulated fees to "terminate" long-distance calls into their systems. A few years ago, some clever business folk realized they could get into the rural phone business. They set up free or low-cost conferencing services and sex lines, routed the calls through their rural phone companies, and made money by collecting termination fees instead of charging their customers.

Federal law requires voice carriers to complete any call made on their systems and to pay the termination fees (all local phone companies charge termination fees, but those of the rural carriers are much higher.) Google maintains, almost certainly correctly as a point of law, that since it is not a telephone carrier, the common-carriage regulations do not apply and that it can decide which calls it chooses to carry. In effect, Google is saying that as the provider of one free service, Google Voice, it has no obligation to pay fees so that its customers can enjoy another free service.

Rural termination fees are only one of dozens of regulatory provisions that may have had a purpose in the past but make no sense today. The 1996 Telecommunications Act created a distinction between "voice services," which are highly regulated, and much more lightly regulated "data services," a distinction that looks more arbitrary every day. At least one large program, the Universal Service Fund, provides billions in unneeded subsidies for rural voice service at a time when rural broadband badly needs help.

Unfortunately, there appears to be no taste in Congress for a comprehensive overhaul of telecommunications law and even the fixing of obvious problems like universal service is proceeding at a glacial pace. Fortunately, there does seem to be at least a bit of progress on the state level. On Sept. 23, the Iowa Utilities Board ruled (PDF), in a case brought by Qwest Communications (with AT&T and Sprint as intervenors) that a group of rural exchange carriers had massively overcharged on termination fees.

In a sense, AT&T and Google are both victims of a ridiculous anachronism, as is the FCC, which must enforce it. They should all be working together to bring telecom regulation into the 21st century.

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Reader Comments


October 11, 2009 03:11 PM

The Government should use soem of the stimulus money to build out rural wireless networks so they can get rid of the residual rural wireless crooks


October 11, 2009 03:48 PM

AT&T, Qwest and the other established carriers have no desire to get rid of the existing legal framework even if it is obviously ridiculous and out of date. This complex system of rules serves as a barrier to entry for companies that would like to compete in this marketplace. The existing carriers have all mastered the rules and have teams of legal people and have the right political connections. All of this is factored into their business operations and is ultimately paid for by their customers. The rules hurt the carriers not one bit.

The difference in treatment between voice services and data services is comical. All carriers now route their calls over VOIP lines to take advantage of the lower rates. This despite the fact that VOIP calls will never be of the same quality as a circuit switched call, the traditional TDM.

So the arbitrary difference in costs is driving a shift in the business that will ultimately result in all telephone calls having the quality of cell phone calls.


October 11, 2009 05:15 PM

I would like to state that VOIP calls actually have a higher voice quality but a lesser reliability. The POTS service was only designed to transmit from 300hz to 3400hz. Where as (depending on the codec) the quality of VOIP can be higher. Having been in Europe in the late 70s I can tell you the reliability of calls to the states were much worse then. You will also probably find that the major backbones of the phone systems already use digital to transmit long distance calls, while not exactly VOIP end to end, it is close, them just control the QOS.

Chris C

October 11, 2009 05:15 PM

Aaa: The carriers do NOT route their calls over VoIP. That's a ridiculous assertion.

It may be correct to say that the voice calls are routed down the same infracture as data (and voice) services, but using technology such as ATM allows the voice calls to "dedicate" bandwidth on those lines. Data services use separate bandwidth and, in some cases, can use the voice bandwidth in the case that the voice channel is "silent".

However, saying that traditional voice services use "VoIP" is baseless.

Fred Goodwin

October 11, 2009 11:06 PM

IANAL, but I think you have the legal argument backwards.

Its the nature of the offering that determines whether or not it is a telephone service, not the nature of the provider.

And if Google's service is indeed found to be telephone service, then Google needs to register as a telephone company and follow all the rules associated with providing telephone phone service.


October 12, 2009 07:34 AM

Your point would be valid if Google were charging for Google Voice but they are not collecting any fees associated with it other than added value as a diverse company. AT&T should just open a not-for-profit phone company and choose what traffic to allow if they are sick of fees.

And a VOIP system as a foundation for trunk line transmission would lessen congestion compared to Flood Search Circuit Switching. The antiquated telephone system we use is robust and reliable, but it was not designed to scale up in either bandwidth or end user multiplexing. Where as any and all packetised data using IPv4/6 can be multiplexed with stronger delineated network control, monitoring, and troubleshooting. Not to mention you can stop guys like me from leaching power off a phone line to charge wireless devices for free.

In 2003 I was selling T1 lines down in Florida and we were getting $1200/mon. for 1.544Mb/s that terminated to our main NOC which had dual OC192 aerial/underground and we could charge so much money because of how expensive carrier charges are when you bundle together so many terminations for your pipes.

The phone system we use is the same thing the Army has used for 70 years in some cases. It is just old and worn out like a Russian bride in Vegas.


October 12, 2009 11:08 AM

Let's say I have a friend who owns multiple telephone numbers and a reliable switching system. He decides to let me use one of his numbers as a means for switching to one of my phone numbers. If none of my numbers can be reached than he stores a voice message and emails it to me. Now some one explain how in the world my friend could suddenly be tagged as a carrier.
I use voice and there is no means to make a call from or to your Google voice number without using a carrier like AT&T. Heck you can't even set up your voice mail system without making a call from a phone owned by a legitimate carrier.
This case is all about wasting more user time on voice mail so the users have to pay more for the phone service.


October 13, 2009 02:44 PM

Seems to me is AT&T and all POTS should lobby to have termination fees to rural communities be adjusted the same as urban users. Actually, they should eliminate all together, since taxes on these phone services exceed basic phone service.


October 13, 2009 09:08 PM

This is a mess only Congress has the power to clean up. Convergence is happening and will only increase. This problem is the result of the FCC regulating according to the old silo treatment of media in the Communications Act. That silo model is outdated and needs to be replaced with something more akin to layers. The layers are: content (i.e. data), applications (e.g. voice, video, etc), logical routing systems, and the physical media (wire, air, etc). The laws and regulations would then be applied to all actions within the layers or to actions related to the interaction between the layers. In this case, the rural carriers would get a reasonable connection fee that applies to all data sent to it. There would be no termination fees.


October 14, 2009 01:08 PM

"Unintended consequences" - I'd reword your 3d paragraph to read - "What's behind this mess is that ATT complained in a letter to the FCC...". ATT (a bad company) is using a cheap marketing ploy by taking advantage of an old, out-of-date law. (The fact that the feds won't fix this is another reason not to trust Wash DC...

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