[business week] 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.
Google Voice, AT&T, and the FCC: Fighting Over the Wrong Thing