Two weeks ago, Google Inc. (NASDAQ: GOOG) launched its bid to change the phone industry. It wasn�t the announcement of yet another smartphone using the company�s Android operating system. For that matter, Google�s new offering wasn�t even technology new to the telecom market. Still, Google Voice, the new phone call service attached to Google�s email application Gmail, has the potential to make Internet phone communication a major competitor to established telecom companies in the United States.
Google Voice is technically no different than other Internet voice services, like eBay Inc. (NASDAQ: EBAY) and its Skype technology, and works like a traditional voice over Internet protocol, or VoIP. Calls can connect one computer user to another for free. Google Voice, also similar to Skype, allows a user to call any landline or mobile phone. Google Voice makes any call to any type of phone in the United States or Canada free to users inside those countries and it also makes international calls incredibly cheap, as low as $0.02 per minute in some cases.
Compared to the hefty price on international calls from telecoms like AT&T (NYSE: T), who will charge over $5 per minute for international calls made over a landline without an established calling plan, that affordability makes any Internet-based voice service seem appealing. Google is a threat to the likes of AT&T, though, as well as competitors Sprint (NYSE: S) and Verizon (NYSE: VZ), thanks to the strength of their brand and a base of nearly 200 million Gmail users fed up with outrageously high mobile and home phone service prices in North America. That�s not to mention that Google Voice can easily be integrated into the suite of Google applications on every Android phone on the market.
It�s the fleet of Android smartphones and how they incorporate Google Voice that will really determine the application�s impact on the telecom market. While Google has the potential to make inroads where Skype has not thanks to the strength of the Google name, they are still at the mercy of Verizon, AT&T, and others when it comes to getting mobile devices running their operating system connected to the Internet. As some analysts have pointed out, Google Voice will certainly bring free voice service on phones, mobile and in the home, closer to reality, but anyone who thinks that Verizon will let Droid phones ship with integrated Google Voice service at the expense of the company�s existing voice plans is crazy. Even in the event that Google Voice broke down the price barrier for voice, it may only lead companies to further hike data plan pricing, something that is already in the cards as the smartphone market grows.
Since its launch on August 25, over 1 million calls have been over Google Voice in the United States. It�s a promising start for a service that has the potential to change the telecom world. Until Google isn�t reliant on established telecoms for getting handsets with their software in to people�s hands, though, the company won�t be replacing AT&T, Sprint, and Verizon anytime soon.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
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