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Google’s expanding telecommunication service

In the pre-Internet days, if a U.S company wanted telephone service, one’s choice was easy—AT&T. If you’re interested, the "official" history is available on the "new" AT&T’s Web site at corp.att.com/history/history1.html.

In 1982, Federal Judge Harold Greene shattered the AT&T monopoly. AT&T had evolved into a government-regulated monopoly, and spoilsports like William McGowen, MCI Communications, wanted a piece of the expanding telco money pie. Prior to the court-ordered breakup, AT&T provided about 80 percent of U.S. telephone service.

AT&T was a diversified monopoly. In addition to its residential services, it operated a think tank and a manufacturing operation. As I recall, prior to the breakup, plugging a non-Western Electric device into the AT&T system required a degree in electrical engineering or an AT&T-trained specialist, plus an electrical engineer. Plug and play was not a concept widely supported by the "old" AT&T.

Anti-monopoly moves

AT&T was a monopoly for most telephone users. Third-party hardware was not an option for either consumers or some organizations. There were pricing allegations about AT&T’s charges. Even the 1968 Federal Communications Commission ruling to allow customers to connect third-party equipment to telephone lines did not cause AT&T to move with much alacrity.

Then the Judge Greene decision enlivened the U.S. telecommunications sector. In late 1982, I was working on a project at Bell Labs’ Piscataway IBM facility. People in nice clothes entered the IBM MVS TSO computer area and used electrician’s tape to split the facility into two parts. I was standing on the side of the work area that was owned by the seven Baby Bells. The people on the other side of the tape belonged to the hobbled AT&T. My next paycheck was issued by Bellcore or Bell Communications Research, an entity owned by the seven Regional Bell Operating Companies or RBOCs.

A "natural monopoly"

At the time, I was not sure if a breakup of the Bell monopoly was a good idea. I had lived in other countries, and I had experienced lousy telephone service on a couple of continents. To establish a dialup connection in the United Kingdom, one had to pre-arrange with British Telecom to get special access codes. Then a technician had to configure the telephone line to allow me to hook up my 1200 baud Texas Instrument’s Silent 700. Voice calls were often hit and miss. AT&T may have been a monopoly, but the system worked. The Western Electric equipment was durable if not the most innovative gear available in the 1980s. Most people did not know that complex software made long-distance dialing and local-exchange handoffs speedy and reliable. The task of keeping the systems synchronized kept quite a few AT&T and Bellcore engineers busy. A common code base for switching, routing and other pieces of the voice data puzzle reduces costs and points of failure.

Ultimately I felt that the technical and financial benefits of the old AT&T made the monopoly a good idea. I used the phrase "natural monopoly" in my articles and speeches to describe how information systems want to hook up, merge and coalesce into a single, integrated entity. Most people thought that I was wrong.

In the 1980s, telephone service emerged as a lubricant of personal and business activity. The breakup of the old AT&T hastened the modern digital era. In my view, other countries have moved further and faster with certain telecommunications services. In Aarhus, Denmark, high-speed connections make wireless access pervasive and plentiful. In Harrod’s Creek, Ky., where I have my office, the only pervasive wireless connection is in my office. My broadband pokes along at 1.5 megabits per second. The connection I used in Aarhus in November 2008 was a free WiFi link that served up 5.0 megabits per second from the hotel lobby.

Economies of scale apply to certain types of infrastructure-centric services. In Harrod’s Creek, I don’t have a choice about water, power or cable TV service. I get water from the Louisville Water Company, power from Louisville Gas & Electric, and a television feed to the hollow from Insight Communications.

Competition doesn’t exist because power, water and cable TV seem to fall into the category of "natural monopoly." In today’s economic climate, I don’t think Harrod’s Creek will sprout an alternative power generation, water or cable television vendor. Once the infrastructure is in place and works reasonably well, the would-be competitor faces a formidable barrier. A savvy entrepreneur will look elsewhere to generate revenue.

Google Voice

Enter Google. Several established players, including AT&T, Sprint and Verizon. Mobile vendors in a dog fight for subscribers. Internet telephony like Skype and Vonage. Assorted startups.

The most interesting development for me in the last month or two is Google’s Voice service. In March, Google made available a service that offers users a single telephone number and a bevy of features. Google’s interest in telecommunications, mobile devices and on-the-go search reaches back to the company’s earliest days. Few know that Google co-founder Sergey Brin is the inventor of one of Google’s patents filed in February 2001, "Voice Interface for a Search Engine," US7027987.

Google’s telephony capabilities are a combination of Google inventions and acquisitions like Grand Central, purchased in mid-2007. Grand Central offered a software system that made it easy to use one number as a single point of contact. Miss a call and the Grand Central software would function like an answering machine. Grand Central also behaved like the secretaries from the 1950s. The system would transcribe the voicemail and send an e-mail notification that a voicemail had been left.

A year went by. Grand Central fell off my radar. This year, I received a notice that my Grand Central account was active. Then in March 2009, Grand Central emerged, rebranded as Google Voice. Google was officially a telephony company.

All digital

Google Voice goes beyond Skype, the free and low-cost calling service now owned by the struggling eBay. Google Voice is a "smart" application, delivering a range of useful services running on the Google infrastructure, which consists of several dozen data centers and more than 900,000 servers.

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