Google VoiceGoogle announced the latest application for Google Voice – a mobile app for BlackBerry and Android platforms. It has the blogoshphere all abuzz. Reactions range from ‘nothing to see here’ to predictions that Google is your next phone company.

Fear of Google Voice (GV) is justifiable. One knock on Google is their innovation creates unrealistic expectations of consumers, primarily because they seem to have a love affair with the concept of ‘free.’ Their billions in profits from search advertising gives them great latitude to experiment in other business lines, with little or no expectation of profits. YouTube is probably the best example of this. Many people blame it and all the other video aggregation sites that followed its lead for injecting this expectation of free video distribution via the Internet. Great for consumers but havoc for long established business models.  Is telecom next?

I know there are plenty who will argue that this innovation is healthy, keeping legacy industries honest. It helps get rid of the dead weight, and even offers an element of revenge for consumers against  these legacy companies who’ve been exploiting  us all for so long. I agree with this argument to a point. Innovation and competition, generally speaking, are good. But I’m sorry, free doesn’t pay the bills. Maybe I’m wrong, but I don’t see ads, no matter how targeted they are, replacing basic business fundamentals of return on investment and profit and loss.

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Back to the issue at hand. Is Google Voice a threat? Unfortunately, there’s no easy answer. I think it’s relatively safe to say, in the short term, not really. GV, no matter how innovative, still relies on an underlying PSTN (I include mobile in my PSTN definition) connection or two. Despite all the hype, GV isn’t removing any minutes off the network. At least not yet. Should it evolve to an IP voice app, things could change. Many believe that’s Google’s ultimate goal.

With a properly engineered IP voice product, providing acceptable QoS, GV could indeed get interesting. Perhaps an IP GV product empowers a company like Apple or Palm to cut out those annoying service provider relationships. Hey, maybe Apple and Google are conspiring to cut out AT&T on the iPhone. You have to think Apple’s tired of all that bad press around AT&T’s wireless network problems and the indirect brand reputation damage it brings Apple and the iPhone.  Google’s CEO Eric Schmidt is on Apple’s board after all. Is a GV/Apple iPhone combination telecom’s version of the grassy knoll? Maybe the 4G iPhone will come with a native GV client, and run over Clearwire. I love conspiracy conjecture – you can come up with anything!

All jokes aside, GV’s real threat comes from its implications on the ‘dumb pipe’ argument. This argument suggests that broadband carriers may be destined to simply transporting ones and zeroes. Kind of like the digital equivalent of any municipal water authority. Let’s face it, innovation in communications is led by companies like Google, Apple, Grand Central, Twitter, and any number of unfamiliar start-ups.  It’s not coming from AT&T, Pioneer Telephone, Verizon, SureWest, Sprint,  Paul Bunyan Telephone Cooperative or any number of the 1000+ telcos across the country. That’s no indictment on these phone companies. Some of them are quite innovative in their own right. But in reality, they are not controlling innovation, nor its implications, of their core business. Maybe that’s always the case. It’s hard to create innovation in a service culture. You’re too busy maintaining those five nines, not to mention the lack of developer resources at most telcos.

More than anything, the GV threat illustrates the dumb pipe debate. With GV and other apps sure to come, broadband carriers, particularly smaller ones, may be losing there ability to determine their dumb pipe destiny. Can a broadband carrier survive as a dumb pipe provider? It’s a complicated question. Some will argue absolutely not. While others will argue, can carriers provide the innovation muscle necessary to avoid it? Should they?

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