Google seeks to eat phone company lunch

Posted on August 26, 2010  /  5 Comments

We have been saying for sometime that telecom operators urgently needed to think beyond their core voice business. Mobile, beyond voice, is what we wrote about incessantly in the past two years. Here’s more reason:

Google entered a new business beyond Internet search on Wednesday with a service within Gmail to make phone calls over the Web to landlines or cellphones.

The service will thrust Google into direct competition with Skype, the Internet telephone company, and with telecommunications providers. It could also make Google a more ubiquitous part of people’s social interactions by uniting the service for phone calls with e-mail, text messages and video chats.

“It’s one place where you can get in touch with the people that you care about, and how that happens from a network perspective is less important,” said Charles S. Golvin, a telecommunications analyst at Forrester Research.

Gmail has offered voice and video chat for two years, but both parties must be at their computers. Google said the new service would work well for people in a spot with poor cellphone reception or for those making a quick call from their desk.


  1. Success would be depend on the revenue model used, since the termination rates of the local operators would still valid.

  2. Interesting. As long as people continue to receive calls on handsets that are connected to networks that they subscribe to for voice services, yes, the telcos can live off termination revenues.
    But why would people want to use one instrument and mode for originating calls and another for receiving? After a short transition, they will do both origination and termination off gmail. The telco will now get only payment for the broadband connection. Voice will have to be seen as a bundled service that come with it.

    This is why telcos must come up with revenue sharing schemes for applications providers. That could be what saves them.