Why Google Voice restricts calls to some numbers

Google Voice is becoming more popular than what most critics would have expected. Currently there are close to 1.5 million Google Voice users, and another couple of million waiting for the invitation. So this surely makes them a new phone company. Last month, AT&T had complained to FCC about Google not terminating some of the calls to rural numbers. The irony is that AT&T did the samething couple of years back to block free conference calls. So what is the deal with restricting calls to some of these rural numbers? Well, in order to call a rural number, the phone company needs to pay an exorbitant termination rates to the local rural phone company. Apparently Google providing Google Voice service is a phone company, and needs to pay very high termination rates to the local rural phone company

The Call Termination to some of the rural numbers is quite expensive. As per the FCC regulations, these termination charges which typically is 4-5 times higher than the normal termination rates is required to allow rural telephone companies to provide phone service to rural residents. However, this loop hole is being exploited by some free conference call and sex chat providers, who partner with rural operators and allow users to make free calls using the rural operator provided phone numbers. These services drive high volume of traffic to the rural phone numbers, which is called “Traffic Pumping” in the telecom industry. The revenue generated by these services is split between vendor and the local rural operator. This is how all the Free Conference call service provider exist today. Check out my earlier article on how Free Conference call works and who pays for the call.

Interesting comment from Google public policy blog

“AT&T apparently now wants web applications -- from Skype to Google Voice -- to be treated the same way as traditional phone services. Their approach is what a former FCC chairman has called "regulatory capitalism," the practice of using regulation to block or slow down innovation. And despite AT&T's lobbying efforts, this issue has nothing to do with network neutrality or rural America. This is about outdated carrier compensation rules that are fundamentally broken and in need of repair by the FCC”

According to Google’s FCC Reply , the traffic generated by free services were accounted for 26.2 percent of the total US cost. Earlier Google was restricting the calls to the entire rural region. However, Google has found a new way to restrict calls to certain numbers instead of the entire region. For now, Google is only restricting calls to few numbers that are black listed.

Interesting article from Newyork Times on this. Andy calls it Traffic pumping or pimping