Why Google Doesn’t Like Its Phone Bill

WHEN you call Grandma on her farm in Iowa, your long-distance phone company pays her local phone company an access fee. That’s fine. It’s much higher than elsewhere but few calls go to her and her neighbors, so the fees don’t add up quickly. And it’s a business-to-business transaction. You, the caller, aren’t even aware of the fees paid on your behalf.

But Google is aware. It has entered the long-distance phone business, having introduced this year a service, Google Voice, that includes the ability to make free long-distance calls anywhere in the United States. It knows that access fees are a part of the phone business. But it quickly noticed that a few numbers in sparsely populated areas were accounting for a disproportionate percentage of Google Voice’s total costs.

In a company blog post last month, Google said some rural phone companies partner with “sex chat lines and ‘free’ conference calling centers to drive high volumes of traffic” in what is called “traffic pumping” in the telecom industry.

“People are on the phone for hours — Grandma wouldn’t be on all day,” said Richard Whitt, the Washington telecom and media counsel for Google, in a recent interview.

The F.C.C. regulates the access fees and permits rural phone companies to charge high ones, on the assumption that call volume will be low and that the high fees are needed to support phone service to rural residents. In a traffic-pumping operation with high call volume, however, the local phone company collects the high access fees and splits the bonanza with the partner.

The Google blog calls the fees “ludicrously high.” Instead of being charged a half-cent to 3 cents a minute to have one of its Google Voice calls connected to a local number in these places, Google was assessed 12 or 14, or even 25, cents a minute, Mr. Whitt said.

High fees, as well as high call volume and calls of long duration, meant that Google was not paying typical wholesale prices. In effect, it was being held up by rural highwaymen working with accomplices who pulled in a high volume of calls.

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http://www.nytimes.com/2009/11/01/business/01digi.html?_r=1