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Does Google Voice on mobile pose a threat to carriers?

Since Google launched the Google Voice Web application for the iPhone and Palm WebOS devices, one question comes to mind: Does it threaten carrier revenues?

Google Voice for mobile lets users make calls from their phone, listen to voicemail and read voicemail transcripts, send and receive text messages for free, and take advantage of low international call rates. With all these free services, will consumers deem carrier voice and data plans unnecessary?

?With Google Voice there is a further shift from a cell phone to a Web phone,? said Gary Schwartz, president/CEO of Impact Mobile, New York. ?Yes it is disruptive but will not trigger a flight from the cellular networks and monthly voice and data plans.?

?Intrepid Web phone users must be within range of urban-centric Wi-Fi Internet networks that are in place in cities like Boston and Toronto,? he said. ?The cell phone will be with us for a long while yet.?

While Mr. Schwartz believes that nothing can ultimately replace carriers, others feel that applications like Google Voice are going to be threatening to the service providers.

Google Voice integrates with a handset?s native address book or Google Contacts. Voicemails are automatically transcribed to text so users can read them like email.

With all this free functionality, why would consumers choose to pay for carrier services such as SMS?

"I think Google Voice will have a price compression effect on the wireless voice marketplace. In a short time we have seen T-Mobile, Verizon, and AT&T all reduce the price of unlimited voice plans to $69.99," said David Nies, CEO of Ballyhoo Mobile Marketing, Jacksonville, FL.

"The fact that we are seeing drastic response is good," he said. "The wireless carriers are responding to a changing marketplace and remaining competitive.

"Spending $70 is not the same as free, but if the cost is reasonable enough, the average person would rather pay for it than investigate alternative methods."

In July, Apple turned away the Google Voice application because it repeats key iPhone functions.
Google Voice allocates a phone number to a mobile phone, landline or Internet phone account.

Industry spectators guessed that AT&T had something to do with Apple's rejection of Google Voice. The wireless carrier has an exclusive agreement with Apple to provide service to iPhone users.

"Google Voice on its own does not enable someone to place VoIP calls from a mobile phone, and Google Voice is not a phone service," said Carolyn Penner, a spokeswoman for Google, Mountain View, CA.

"Rather it works with your existing phones to give you more control over your phones and voice communications," she said. "So you still need a voice plan on your mobile phone to use Google Voice."

Apple lets voice over Internet service provider Skype work at WiFi hotspots but not over AT&T's connections.

Google Voice does use airtime minutes, but letting users make cheap calls from their iPhones and text message through the application could definitely take a cut from carrier profits.

Right now especially, consumers are doing whatever it takes to manage their costs.

?The mobile phone carriers hold all the cards in the end-game when it comes to the evolution of the mobile voice-over IP market,? said Brennan Hayden, vice president of WDA, East Lansing, MI. ?Mobile spectrum is a scarce resource, and they control most of it, regardless of the technology used over it.

?In the short term, the basket of services available over the standard mobile network will make mobile voice over IP nothing but a nuisance to them,? he said. ?In fact, the relative quality of service overall will serve as a positive differentiator for them.

?Over time, mobile voice over IP does have the power to affect the product mix of the mobile carriers, but not their revenue.?