Quote from: carl on July 01, 2012, 09:22:13 PM
@JohnBowler : While the wholesale costs of VOIP traffic might be near zero, there is something called termination charges = money you have to pay to the local telco to get the call processed through the local PSTN or cellular network. Those charges can be steep, that's why Magic Jack does not service many area codes or exchanges and that's why the calls to European cell phones are so horribly expensive.
My understanding is that in the US termination charges must be symmetric; so what GV gets charged by local telco xyzzy to terminate a GV call equals what GV gets paid when a user of local telco xyzzy makes a call to a GV number.
I suspect this is why GV gives away numbers for free in the US (but not elsewhere) and why they are very happy indeed with users like me who get incoming on GV but use another provider for outgoing. (In the worst case their cost for incoming is zero - one termination charge in, the other out - but for outgoing they probably suffer a small net loss.)
It's not clear that wireless operators are actually charging any call termination charges. Rates are negotiated between Google and the operator and, in the US (unlike Europe) wireless operators charge to receive a call as well as make one, compared to which the call termination charge is small change. (This is why European rates are apparently higher - because Europe is currently caller-pays so that instantly doubles the cost to make a call because there is no cost to receive one.)
The math of GV is tricky, but here are some facts:
1) If GV negotiate a zero call termination charge then GV has no problem passing this on to the customer, because the actual cost of the VOIP traffic is minimal and they can make profit in other ways.
2) If an incoming call goes to GV VM then GV pocket the termination charge (profit.)
3) If an incoming call goes to Google Talk (including an Obi) then GV pocket the termination charge (profit.)
Of course there could be other details here. So far as I can see US call termination charges are kept highly secret because they are negotiated bilaterally between call terminators. It's also not clear to me exactly what happens when GV has a point of presence in a local exchange and routes a call to the local number. I suspect GV has a lot of PoPs to provide local numbers, to allow it to participate in local number portability and, probably, to obtain favorable rates for call termination.
If GV can use a PoP to obtain zero cost call termination to a non-GV local number then clearly it now profits in the case where an incoming call is answered (whereas before it only broke even.) If that is possible it is now (effectively) sucking up part of the monthly subscription fee paid by US landline (wired) telephone users.
There are too many unknowns, at least so far as I am concerned, in the actual payments that really happen in the US telecom market. However every time I find out something it seems to back up my initial suspicion that GV has a sound business model - they can continue what they are doing and be confident of not losing money. However they are vulnerable to any number of restrictive practices that other parts of the industry might initiate. (Particularly de-prioritizing time critical traffic on regular consumer internet connections; short, maybe only 0.25s pauses in traffic to a single consumer would, I think, be enough to kill VOIP.)