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When, How Will Google Voice Challenge Skype?

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August 25, 2010

When, How Will Google Voice Challenge Skype?

By Gary Kim, Contributing Editor

Will Google (News - Alert) Voice become a standard feature of Gmail, basically making voice calling a feature of the browser? That's a distinct possibility, says CNET. The idea is to make VoIP calling a standard feature of Google Chat, which runs inside Gmail, a web browser application.

That essentially would make VoIP calling a feature of the Chrome browser, without any need to run an external application, something Google founders have said in the past they want to avoid. Such a move would make Gmail, the email client, a VoIP client at the same time. 

CNET has learned that Google is testing a Web-based service within Gmail that will allow users to place phone calls from their in-boxes. It is launched from the Google Chat window on the lower left-hand side of a Gmail page and allows users to place and receive calls from within their contacts directory using an interface that strongly resembles the one used in Google Voice, CNET says. 

It is no secret that Google has been working towards a VoIP service that supports features and capabilities we normally associate with Skype (News - Alert). Few likely would venture a guess about whether this new feature affects Google Voice, essentially replacing it, or whether the two services would remain separate applications. 

There might some logic to keeping them separate, given the way each will work. The Google Chat app really is a native VoIP application, with the strengths that approach implies, in terms of multimedia support, messaging aond integration with other apps. Google Voice uses a combination of call forwarding and call bridging techniques to enable call sessions on other devices with access to the public switched telephone network.

Users of the new Gmail-based phone service aren't required to have a Google Voice account, and calls placed to U.S. or Canadian numbers will be free, with discounts on international calls as compared to standard rates. That sounds like Skype, but it is conceivable there could be some spillover effect on suppliers of desktop and Web-based VoIP clients as well. 

Google's new features would not be the first, or the only, similar approaches. But they would represent one more important shift of voice communications from "service" to "application." Though many users would use the app on their PCs, over time it would somewhat naturally become a mobile device app as well, representing some shift of activity and usage from fixed network locations to mobile devices. 

In a broader sense, the evolution also suggests why the business case for fixed-line networks is becoming more complicated. Where voice once represented 90 percent or more of total fixed-line revenue, it is shrinking over time. At some point, it will be a negligible contributor to fixed network revenue. 

That means the revenue from a fixed-line network has to be generated by broadband access, video services and managed services consumers can be persuaded make sense. Many believe even that will not be enough, and that fixed-line providers will have to rely increasing on providing services to business partners that those partners value enough to pay for. 

In other words, just at the point that fixed-line networks require almost-continual investment (Internet access bandwidth has doubled about every four years, for example), one crucial component of the expected revenue stream is declining. 

In fact, that has been a key stumbling block for the business case all along. The narrowband, existing network does just fine for voice services. So upgrading to some fiber-to-customer network adds almost nothing in terms of support for the legacy voice service. That means the business case has to be driven by new service revenues and cost savings. The case can be made, but it is not easy. 

Google's voice services provided by Gmail, making voice a feature of a browser, is not going to help.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Ed Silverstein

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