Will Google Speak Up? Rachel Rosmarin, 01.31.06, 6:50 PM ET
Google could be gearing up to set its talkers free. The company has entered into a business agreement with a small service provider that could help it become a player in the fast-growing market for voice-over-Internet Protocol, which allows users to make telephone calls using their computers. VoIP Inc. filed a U.S. Securities and Exchange Commission document Monday describing a business relationship with Google (nasdaq: GOOG - news - people ) in which the company will provide voice-over-IP services in 2006. Google said Tuesday that it was working with VoIP Inc. on a test of its "click-to-call" advertising, which lets Google search-users click on an ad and speak directly with advertisers. It's important for Google to show investors it has the ability to expand its core search business, a fact highlighted by investor's skittish reaction to the company's fourth-quarter results, which were also released Tuesday: Shares tumbled 15% after earnings of $372.2 million, an increase of 82% over the same period the previous year but less than what analysts had projected. But Google's deal with VoIP Inc. could eventually let the company offer not just more effective advertising but a way to enter the rapidly growing voice-over-Internet subscription market. The VoIP market is worth an estimated $840 million, according to Yankee Group analyst Taher Bouzayen, who says it could increase to $3.3 billion by 2010. Today, the industry is dominated by a handful of players, including eBay's (nasdaq: EBAY - news - people ) Skype, Vonage, MCI (nasdaq: MCIP - news - people ) and AT&T (nyse: T - news - people ). Google's VoIP offering is provided through its Google Talk service, but it has been limited to date because Google Talk users can only start voice conversations with each other. Google's deal with VoIP Inc. could increase its reach. The VoIP Inc. filing says the company's VoiceOne subsidiary will provide Google with "direct-peering" services and "the transport of such services at multiple locations." Using direct peering, which lets VoIP traffic travel between several service providers without involving a middleman, would be an important move for Google. It means Google could offer calls between different phone networks, whether or not the networks have agreements with each individual company. VoIP Inc.'s VoiceOne network includes cable operators, ISPs, long- distance telephone carriers, wireless carriers and VoIP providers, according to VoIP Inc spokesperson Tammy Snook. She said the company's network is capable of reaching 93% of the U.S. population. The Fort Lauderdale, Fla.-based company lost $13.9 million on sales of $6.5 million during the first nine months of 2005. Though Google could initiate peering relationships with other telephony networks on its own, using a company like VoIP Inc. would give it quick access to a variety of providers. And should Google decide to enter the home and enterprise telephony business, VoiceOne's other services will come in handy. One of VoiceOne's product offerings is "v911," a private network for routing emergency VoIP calls. U.S. Federal Communications Commission regulations require that all VoIP providers have E911 emergency calling services available to subscribers. http://www.forbes.com/technology/2006/01/31/google-ebay- voip_cx_rr_0131googletalk1.html
