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November 04, 2009

Google Voice Victimized by Traffic Pumpers

Its not just the traditional fixed line operators that are falling victim to traffic pumping. These days traffic pumpers are branching out and taking advantage of new communications technologies, as well as the companies bringing them to market. Just this past weekend The New York Times ran an article explaining that Google's' Voice service had been victimized by traffic pumpers located in and around rural America. (See: Why Google Doesn't like Its Phone Bill - www.nytimes.com/2009/11/01/business/01digi.html)

Under the Common Carrier laws, long-distance companies must provide universal terminations. They can not block calls to other carriers. And, in rural areas long distance carriers are required to compensate local telephone companies for calls originating and terminating to and from those networks. When long-distance carriers connect to those local networks, they may be charged excessively high rates to connect. And, as a result of this loop-hole, local carries in rural areas can take advantage of the inter-carrier compensation system. They do it by partnering with and sharing revenue generated from services that "pump" lots of calls onto their networks. Services that generate lots of in-bound calls include such things as adult pornographic chat lines, free conference calling services, and party lines.

When Google discovered what was happening last August they began blocking outbound Google Voice calls to a small number of these rural numbers. This, in-turn, prompted AT&T's complaint to the FCC that Google Voice should be treated the same as other traditional phone services. The ensuing battle ultimately led to the Google Voice application being rejected from the iPhone App Store. Google's claim was that since they are providing a free, Web-based software application, and are not technically a phone company, they should not be held to the same common carrier laws that other long-distance carriers must adhere to. Regardless of whether Google should be called a long-distance provider, or not, one thing it does have in common with the rest of the industry is that our current carrier compensation system is broken, outdated, and in need of help from the FCC to fix it.

At this point it is unclear when the FCC will take up this matter and issue a formal decision. But, one thing is clear -- as communications technologies continue to converge, we will see more companies like Google fall victim to traffic pumpers. As long as the current loop-holes in our carrier compensation system remain, traffic pumpers will continue exploiting them at the expense of more victims.

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