Google bought Internet-calling service from VoIP Inc.
NEW YORK (MarketWatch) -- Google Inc. (GOOG) inked a pact with VoIP Inc. (VOII) for Internet-telephony services in September, VoIP in revealed in a filing Monday. In an 8-K filed with the Securities and Exchange Commission, VoIP said Google agreed on Sept. 1 to test voice-over-Internet-protocol, or VOIP, services offered by VoIP's VoiceOne Communications unit on Sept. 1. Then in October, Google moved into implementation phase, buying VoIP's services and putting in place direct Internet links between the two companies at multiple locations. VoIP did not disclose the terms of the deal but said it expects material revenue from the pact during 2006. It didn't not gain any material revenue from Google last year, the company said. Founder Steven Ivester declined to say what services VoIP is providing the Internet giant, citing a non-disclosure agreement. "We've been working with them for quite some time," he said, and are developing services for Google, which he declined to discuss. VoIP provides Internet-calling services as well as features like e911 calling and voice mail to carriers and large companies, including Customers Broadwing Corp. (BWNG) and Pac-West Telecomm Inc. (PACW). Google could not be immediately reached for comment.
Google's Major Investments Hint Search Giant Might Become ISP BY BRIAN DEAGON
INVESTOR'S BUSINESS DAILY
Posted 7/7/2006
One day you might be able to tell your phone or cable company to cancel all services because you have a new provider — Google. (GOOG)
Some observers are looking at Google's investments and the fast-changing market and saying they add up to a company that could become a provider of Internet services, including phone.
Doing so would let Google supplement its ad-based search revenue business by also collecting user fees for those services, potentially creating a huge new round of growth for the Internet star.
"It's now totally accurate to say Google could become a phone company," said Ken Rutkowski, a technology consultant who also broadcasts his KenRadio tech show over the Internet.
Google says little about its plans. But here are some of items considered by Rutkowski and others:
• Google has over recent years quietly purchased enough dark, or unused, fiber-optic cable — used to provide high-end broadband — to cover the U.S.
• It's teamed with EarthLink (ELNK) to provide Wi-Fi wireless high-speed Internet services in San Francisco and nearby Mountain View, Calif., where Google is based.
• Last July, it bought a stake in Current Communications, which aims to deliver broadband over electrical power lines.
• In February, it bought a stake in Fon, a firm with technology that Fon says expands Wi-Fi's reach.
Some say Google could be positioning itself to become a one-stop provider of Internet services, using wireless to get into homes, and then fiber or electrical power lines to complete the connections.
The moves by Google come as Internet companies wage a battle with phone companies over net neutrality. The carriers have hinted they will charge extra fees to deliver certain content.
Google opposes that idea, and is pushing for a net, or network, neutrality law that would prohibit such premiums. By building its own broadband network, Google could sidestep the entire issue.
Analysts speculate Googlewill make $1.3 billion in capital expenditures this year, up 62% from 2005. While big phone carriers routinely spend $1 billion a quarter, that's a huge sum for an Internet company. It's more than double what Yahoo (YHOO) is expected to spend. (Yahoo has tackled the ISP business by partnering with AT&T (T) to offer broadband access.)
Slash License Spurs ISP Talk
Another recent Google move has sparked speculation.
ARIN, or the American Registry for Internet Numbers, granted Google a slash-20 license, giving it a large bank of Internet addresses.
"You don't get those address allocations unless you sign a contract saying you will use them," said Alex Lightman, chief executive of Internet conference organizer Innofone. "What this shows is that Google will become an ISP."
Slash-20 licenses also are held by big telecoms such as Britain's Vodafone, (VOD) Japan's NTT (NTT) and Spain's Telefonica. (TEF)
The Internet addresses Google received were made available for Internet Protocol version 6. IPv6 makes it easier for many devices, such as household appliances, to connect to the Internet.
The switch to IPv6 from the first version, IPv4, is occurring gradually. It greatly expands the number of Internet addresses.
About slash-20, Google spokesman Barry Schnitt said, "We're simply planning for the day in the future when the services we currently provide via IPv4 will need to be accessible via IPv6."
He added, "Google has no current plans to be an Internet service provider outside of our pilot Wi-Fi projects in San Francisco and Mountain View."
But then, many of Google's job postings are related to building big networks. One current job posting seeks a "strategic negotiator for global infrastructure," a job Google says is for the "development of a global backbone network."
Becoming an ISP in theory could give Google an opportunity to learn a lot more about the habits and trends of online users.
"Google is setting up the ability to monitor users 24-7," said Lightman, widely considered an expert on IPv6. "Google is becoming a different company. They are becoming a wireless ISP."
The answer as to how Google might accomplish the job of becoming an ISP could be in Oregon.
Along the Columbia River, 80 miles east of Portland, Google is building what some speculate will become the world's largest computing center, or server farm. The site is near hydroelectric power centers, giving Google access to the significant amounts of electricity such a server farm would require.
The data center will help in Google's expanding search business. It also complements other plans Google might have in the works, observers say.
"They haven't announced anything, but it's fairly clear Google's plan is to converge media, video and audio into one," said Jimmy Nguyen, an attorney for Foley & Lardner, who recently compiled a strategy analysis on Google for the law firm.
"Building the communications infrastructure," he said, "is the last piece to this puzzle."
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