Google is not a happy camper about a recent Federal Communications Commission (FCC) request for details about its Google Voice feature, sent to the company on Friday. But the search engine giant isn't directing its ire at the FCC; it's going after the telco that raised a ruckus about the voicemail application's call restrictions.

"AT&T apparently now wants web applications—from Skype to Google Voice—to be treated the same way as traditional phone services," Google attorney Richard Whitt wrote on his policy blog on Friday. "Their approach is what a former FCC chairman has called 'regulatory capitalism,' the practice of using regulation to block or slow down innovation."

The quote comes from ex-FCC Chair William Kennard, who argued that this kind of capitalism is triggered "when companies invest in lawyers, lobbyists, and politicians, instead of plant, people, and customer service." But however you want to classify it, the Commission has indeed asked for details on Google Voice. The letter's key questions focus on the fact that Google Voice blocks certain calls to certain areas.

"How does Google identify the telephone numbers to which it restricts calls?" the inquiry asks. "Why does Google Voice restrict calls to these numbers?"

Blocking specific calls is something that AT&T grumbles it would also like to do, but can't because of the FCC's "common carrier" rules. "No fair," the telco yelped in late September; if the FCC really believed in net neutrality, it would make Google do what traditional phone services have to: complete calls to everywhere.

Critics have called the protest a total "red herring." Google Voice isn't an ISP or common carrier, it's an application, they note. It doesn't carry phone calls along its own network.

Still, some AT&T skeptics argue that a Google Voice probe is a useful endeavor, even if it has nothing to do with common carrier or Internet non-discrimination. "The Commission is starting down a worthwhile path to examine the changing nature of today's telecommunications service," Public Knowledge's Gigi Sohn declared.

So what exactly is this call-blocking stuff all about? Welcome to the sleazy world of "traffic pumping."

Pump up the volume

All this static comes from a medium-to-big fight AT&T, Verizon, and Qwest had in 2007 with a bunch of smaller carriers over "traffic pumping," or "access stimulation" as it is more politely called. The FCC's intercarrier compensation rules require the big telcos to pay the smaller carriers certain access fees to complete calls through their often rural networks. That's reasonable because making rural phone service profitable is often an uphill battle, but there are some pretty sweet ways for small services to game the system.

Verizon outlined the mischief in a June 2007 letter of complaint to the FCC. Here's how the scheme works: You, the Local Exchange Carrier, get chat-line providers and conference call companies to advertise free or low-cost services with call numbers that terminate in your area (everybody in this debate is always very circumspect about what kind of, ahem, "chat," we're talking about here except Google, which titled its latest blog post "Sex, conference calls, and outdated FCC rules").

Then you charge hefty intercarrier compensation rates to Verizon or AT&T to complete the calls to your neck of the woods. Then you kick back some of the intercarrier comp loot to your conference call/chat line buddies. "This creates a windfall for both sets of entities," Verizon complained. "Providing excess access revenues to the LEC while sustaining an artificial business model for the conference and chat-line providers."

AT&T was particularly peeved at a band of smaller competitive carriers in rural Utah, all allegedly working in cahoots with the incumbent local carrier Beehive Telephone Company. According to AT&T, Beehive's largely desert service area consists of around 1,200 legit phone lines.

"It is difficult to conceive of a locale that would be less attractive to a genuine competitor," the telco charged. But somehow a set of companies offering free chat line/conference deals, billed over 200 million minutes of intercomp traffic to AT&T.

"That these [competitive carriers] were created for the express purpose of engaging in traffic pumping is underscored by the fact that traffic pumping appears to be their only business," AT&T noted. In fact, since their creation, nobody has ever actually made a phone call from the service areas of two of these companies, AT&T charged.

Ain't that America

But some of the companies about which AT&T, Verizon, and Qwest have complained have brazenly pooh-poohed these concerns. There's nothing illegal about traffic pumping, noted lawyers for the All American Telephone Company and five other carriers in their response to the Commission. "Indeed, discovering new ways of generating increased telecom traffic is what telecom carriers do, and what they have always done," they note. "We are unaware of any finding by this Commission, or any regulatory commission, that telecom carriers are generating 'too much' traffic."

When rural carriers set up help desk style call centers "in areas that are desperately seeking to stimulate job growth, is that 'illegal traffic pumping'?" All American et al's letter rhetorically asked. "Or is it a valuable means of bringing jobs to rural communities that need them?" (the filing didn't say much about the job stimulating qualities of chat services). And hey, AT&T engages in pumping too, they charged:

"When AT&T Mobility entered into an arrangement with American Idol to provide the

service that allows viewers to vote for their favorite vocalist by text message or cell phone call, the teaming was described in the media as: 'This high volume application will be the first major wireless interactive TV tie-in ever seen in the U.S.' Does this constitute an 'illegal traffic pumping scheme'? Or is AT&T exploiting a new service application designed to increase both its service and access revenues?"

Don't help yourself

As the froth over these questions rose, the FCC issued a Declaratory Ruling advising the big telcos that, although the Commission understood that there were some problems to address here, they should not resort to "self-help" measures like blocking calls to select areas. No carriers "may block, choke, reduce or restrict traffic in any way," the agency reiterated. Later in 2007 the agency launched a Notice of Proposed Rulemaking on how to deal with the access stimulation problem. The FCC "tentatively" concluded that a local exchange carrier that "shares revenue, or provides other compensation to an end user customer, or directly provides the stimulating activity, and bundles those costs with access" was violating the Commission's rules.

But there hasn't been much movement on this issue since the FCC extended the deadline for comments on the proceeding into mid-January of last year—the administration of former FCC Chair Kevin Martin deadlocking on intercarrier compensation questions almost across the board. So it appears that Google Voice has gotten caught in the cross hairs of a long-standing and intractable issue that the big telcos would very much like resolved. It may indeed be that AT&T is engaging in a bit of "regulatory capitalism," but that's probably not the worst kind of capitalism compared to jacking up your incoming call revenue by arbitraging the FCC's intercarrier comp system.

"This issue has nothing to do with network neutrality or rural America," even Google concedes. "This is about outdated carrier compensation rules that are fundamentally broken and in need of repair by the FCC." The connection to net neutrality may be dubious, but by linking the traffic pumping problem to Google Voice, AT&T has succeeded in getting the issue on the regulatory front burner.