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Analyst fuels talk of Google telephony service
By James Niccolai

Comments from a U.K. industry analyst have added to speculation that Google Inc. is planning to offer a voice-over-Internet Protocol (VOIP) telephony service.

"This would be an obvious development for the world's leading search engine. Millions have downloaded the 'Google toolbar,' so why not a VoIP client too?" said Julian Hewett, chief analyst with Ovum Ltd., in a note distributed to reporters on Monday.

Such a service would allow users to place calls over the Internet from their PC using a headset and some client software, which can be cheaper than using a traditional voice network. VOIP services have been popularized by companies such as Skype Technologies SA and Vonage Holdings Corp. and are also being rolled out slowly by carriers worldwide.

"The appeal for Google is obvious: search for something, then 'click here' if you'd like to speak to the company that's selling what you're looking for," Hewett continued. "Google then collects a fee from the 'sponsor' for each voice connection. Voice calls with very little cost AND funded by advertising. What a sweet extension to Google's advertising-driven business model!" he wrote.

Speculation over a future business move by Google actually began more than a week ago, when it said in a job posting that it wants to hire people with experience negotiating "dark fiber" contracts to develop a global backbone network. Dark fiber refers to fiber-optic cables that are already laid but have not yet been "lit up," or put into use.

A VOIP service is only one reason Google might be interested in operating its own backbone network, however. The company may simply be looking for a better way to move the masses of data it collects for Web search results among its servers around the globe, noted Danny Sullivan, an editor at SearchEngineWatch.com. "It may just be that they have a lot of bandwidth costs and this could make things cheaper," he said.

Hewett agreed that Google may have other motives for building its own network, but said in an interview he is "100 percent certain" that the company is exploring a VOIP service. "It's just such a natural extension of what they do. ... I'd put money on it, but the timing and nature of it I know nothing about."

He said he had not received any information about a VOIP service directly from Google.

Citing Hewett and the Google job posting, The Times newspaper in London reported on Monday that Google "looks set to launch a free telephone service." The "logical use" of building its own network would be to offer such a service, which would pose a competitive challenge to local network operator British Telecommunications PLC, according to the paper.

The Times report also did not appear to be based on information from Google. A spokeswoman for Google in London dismissed talk of a VOIP service as "rumors and speculation."

Posted January 24, 2005 04:59 PM |