FCC Opens Inquiry into Google Voice Practices

WASHINGTON, D.C.—After receiving complaints by 20 House legislators, the Federal Communications Commission (FCC) on Friday sent a letter to Google Voice requesting answers to a handful of questions related to complaints—most notably from AT&T and other carriers—that it is restricting calls from consumers to certain rural communities.

“In light of pending Commission proceedings regarding concerns about so-called ‘access stimulation,’ the Commission’s prohibition on call blocking by carriers, as well as the Commission’s interest in ensuring that ‘broadband networks are widely deployed, open, affordable, and accessible to all consumers,’ we are interested in gathering facts that can provide a more complete understanding of the situation,” the letter read. Answers to the questions were requested by Oct. 28.

According to Sam Gustin at AOL’s DailyFinance.com, however, the dispute “is not so much about fairness or rural access as it is about steamy phone sex and piles of money.”

After the telephone industry was deregulated by President Clinton on the mid-’90s, Gustin explains, “rural areas came to receive their service primarily from two types of local carriers: an ILEC, for ‘incumbent local exchange carrier,’ the local phone companies that predated the Ma Bell breakup; or a CLEC, for ‘competitive local phone exchange,’ companies that emerged after the industry was deregulated.

“What these new local phone exchanges quickly discovered is that they could make gobs of money by partnering with phone sex and adult chat companies to route the numbers through rural exchanges—a practice known as ‘traffic pumping,’” Gustin continues. “The local exchanges then turn around and charge AT&T and other national carriers like Verizon a fee—sometimes as high as 10 or 20 cents per minute—to connect long-distance traffic coming from all over the country to these supposedly rural numbers, many of which are actually forwarded to sex call centers in Los Angeles and elsewhere.”

The coup de grace occurred when the exchanges then split the millions of dollars in AT&T's fees with the phone sex companies, which then used that money to advertise their services, thus completing a self-perpetuating cycle. In 2008, Gustin writes, AT&T “warned that traffic pumping could force higher rates for phone consumers across the country to offset some $250 million in extra costs due to these fees the previous year.”

Volume to these local numbers had increased dramatically in recent years, with numbers being used mostly by free conference call sites and adult chat rooms.

Ron Laudner, CEO of Farmers Telephone, a local exchange in Riceville, Iowa, last year told USA Today the arrangement was routing some 40 million minutes of calls each month to his exchange, generating $2.2 million per month.

“In other words,” Gustin says, “AT&T knows this dispute isn't about getting Google Voice to provide service to rural America—it's about porn,” but adds that AT&T “could wage its battle against the sex chat lines that are exploiting FCC regulations in a more direct manner than trying to drag Google Voice into also paying these fees.”