Google's eBay VoIP Deal

It was the talk of the telecom industry. Early last year, someone noticed that Google had posted a job ad for an expert who could, among other things, negotiate contracts for "dark fiber" — that is, optical fiber that is installed but not yet in use — in metropolitan areas and over long distances. For the credulous, only one conclusion was possible: Google had "dropped a hint" that it wanted to become a "global telecom powerhouse," replete with massive international infrastructure. The disclosure set off a storm of speculation about how the search giant could compete with and crush just about anyone in the telecom business, in fields ranging from VoIP to Internet access to cellular services. In August of last year, Google obligingly introduced Google Talk, a PC-to-PC VoIP service attached to its instant messaging client. Telecom carriers taking all the talk seriously had to be terrified, especially if they were already worried about VoIP in general. Last week, Google dropped a quite a different hint, in the form of a click-to-call ad deal with eBay. Yes, the deal showed it is getting more serious about VoIP, at least. But from the evidence, it won't soon be going after the AT&T's and Verizons of the world, or even the Vonages. It'll be using VoIP, rather, as a way to — surprise — help sell Web ads. (News "analyses," meanwhile, eventually reported that Google was believed to be, according to an abundance of rumors, "going dark" on its never-announced, never-verified plans to build a global fiber backbone rivaling those of major network operators.) The new deal will make Google the exclusive supplier of text-based ads on eBay sites outside the U.S. More important from a VoIP perspective, it calls for Google and eBay to incorporate click-to-call capabilities into their ads on one another's sites. This will allow users to make VoIP calls to participating eBay merchants or Google advertisers via either eBay's Skype or Google's Google Talk soft-phone clients and headsets, by simply clicking on the ads. But it won't convince them to throw away their home phones. "I don't think [the deal is] that much about VoIP," says David Lemelin, an In-Stat analyst. "I think it is about two companies that are probably in the best position to test the waters on customers' willingness to click and advertisers' willingness to pay for those clicks, and to really understand the dynamics of whether it's going to be worth an advertiser paying for a click to call or not." In fact, the announcement said more about Google's lack of interest in competing with telcos or their VoIP rivals for the mainstream voice market, than about its interest in doing so. That lack of interest becomes particularly evident in light of its previous lukewarm efforts. Unlike AOL with its AIM Phoneline, Microsoft with its Windows Live and Yahoo with its Yahoo Messenger, Google offers no outbound service to connect calls to the PSTN. And although working through Skype could offer that capability, the announcement only says the companies will "explore interoperability" between Skype and Google Talk — a tepid endorsement of the idea, at best. The search leader has left itself at least one opening. Since Google Talk is based on the open XMPP protocol, developers can create their own gateways to the PSTN and offer dial-in or dial-out services. Still, trying to use VoIP to replace or displace conventional phone service makes little sense for big portals like Google, according to Yankee Group analyst Jennifer Simpson, author of a recent report on Web voice services. That's because the real value of Web voice applications lies in what they can offer that conventional telephony can't. "Increasingly, we're seeing contextually based applications," Simpson says. "Users who might be looking at content or doing online gaming, or in this case are shopping online, are given the ability through the VoIP client to call friends or other users or a retail facility, and comment or ask questions. This is very different from our traditional use of the telephone line." The key difference is that the VoIP calls users make as a part of a broader Web interaction are often calls they wouldn't have otherwise made. In some cases, they might not have known that the other users or sellers were there, because they wouldn't have learned of them through chat rooms, context-based ads or presence detection, for example. In other cases, they might have known they were there, but would have felt more hesitant about picking up the phone and making a conventional call than about clicking on an icon as part of a Web interaction. "When you look at social networking or gaming, I don't think most gamers would think of calling each other on the phone while gaming," explains Simpson. "But if they can click a button and talk to one another through a VoIP connection while gaming, then that makes sense." Either way, it's evident that Web-based voice services of the sort Google and other portals are beginning to emphasize are attractive not because they are voice, but because they are Web-based, and part of larger sets of interconnected services and applications. The lesson is clear: Web portals will play an increasingly important role in creating the new kinds of socially interactive services that will in the future come to define telecommunications. And telecom carriers should worry less about portal operators' ability to move in on their shrinking traditional telephony territory than about their own inability to move in on the portals' rich, ever-expanding territory. For more about VoIP service providers, see our Service Provider Resource Center and our Phone System Resource Center .