Google owns and maintains the servers, switches and other equipment necessary to connect phone calls. They're regulated just like any other telephone company. And they're connected into, and are part of, the national telephone network.
The difference is, the company is giving many Google Voice services away for free, rather than charging for them. Why?
What you can do with Google Voice
Google Voice is one of the coolest, most useful new services to come out in a long time. It's especially great for digital nomad types and business people who are already heavy users of the telephone. Note that Google is slowly rolling out the service, and it's currently offered by invitation only. Go here to get in line for an invite.
The main use of Google Voice is that all your phones - work and personal, landline and mobile - are connected. These connections are managed under your regular Google (Gmail) username and password. Google gives you a new telephone number, and all phones are reachable via that number.
You can choose exactly which of your phones ring for each caller. For example, if your spouse calls, it can ring all phones. If your boss calls, just your work landline rings.
And, of course, if the IRS calls, it can ring none of your phones! Google Voice has a "Spam" function that automatically blocks sales calls. A block caller" feature lies for you, playing the "number has been disconnected or is no longer in service" message for any phone number you specify.
Google Voice enables you to listen while a caller is leaving a voicemail, just like an answering machine does. You can record a custom voicemail greeting for groups, or even for individuals.
Google Voice lets you check voicemail from any of the phones you've authorised. You can also check via " visual voicemail", which looks like email. Voicemails are transcribed by default, so you can read them rather than listen to them if you like. You can choose to get your voicemails as SMS or emails, and can even reply via SMS.
During a call, just push a button to add new callers to existing conversations. Push another to actually record incoming calls (it notifies the caller that the recording feature is on). Google Voice lets you email the recording to yourself, download it as an MP3 file or even embed it into a web page. Google Voice will probably grow virally as bloggers embed recorded telephone interviews into their blogs.
Google Voice is cool, but it's not perfect. Users report issues with the SMS feature. (In my experience, SMS on the web never works right.) Other features are less than perfectly reliable also. Users have reported a wide range of small problems doing things like deleting voicemail and the slow delivery of transcriptions. Google publishes a list of known issues.
Another problem is with the phone numbers. Most people don't want to give up their existing number. Google hopes to allow users to port their current numbers in the future. Caller ID and SMS identification from Google Voice users can be problematic. If someone, for example, sends you an SMS or calls one of your numbers, the return SMS or call shows your Google virtual number. People have been struggling with this.
Why Google Voice is free
Of all the free services Google Voice provides, it's likely that transcription of voicemails is the most expensive for Google. Users tell me that transcription is very accurate, which probably means humans are doing it. My guess is that short, easy messages are machine-transcribed, but that longer messages are off-shored to human transcribers.
If Google is really paying so much for quality transcription, that gives us a clue about why Google is giving it away. The give-away makes sense only if you are clear on who Google's customers are - and what Google's product is.
The common assumption that Google's customers are its users is false. As a Google user, when is the last time you paid Google for services rendered?
Google users are the "product" - users are not Google's customers. By this I mean that Google is selling information about its users to advertisers, which are the company's real customers.
New services offered by Google are how Google improves its 'product.' They're making a better you - or, at least, they're making you a more transparent consumer.
Contextual advertising is the richest kind. If a company can offer advertisers access to people who are likely to want advertised products, it can charge a fortune for those ads. And this is what Google intends to do, and on a massive scale.
I'm going to give it to you straight: I believe Google Voice is free because Google wants to track your phone calls, read your voicemails and text messages and invade your privacy to offer you up on a silver platter to advertisers.
Let's look at the big picture. Google already scans and indexes all your Gmail email messages. It uses Google Maps and its hooks into your phone's GPS to know exactly where you are. With Google Voice, it will know who you call and who calls you and how often. It will know what your voice messages and text messages say. The data extractable from all this is worth a fortune to advertisers - and to Google.
Think I'm paranoid? Take 20 seconds to prove it to yourself. Go check the advertising that accompanies your Gmail e-mail. Just click through the messages, see what the emails are about, then notice how the ads on the right hand side of the page map exactly with the subject of those emails. Google computers are serving up ads based on the subject matter of your private conversations.
Gmail's invasion of your personal messages is just the beginning. In the future, I believe the company intends to combine what it knows about you - friends, family, purchases, location, schedule, blog posts and especially what you talk about in email, text messages, chat and telephone calls - into knowledge about what you want to buy. It will then show you ads based on that knowledge.
Given all this, it seems clear to me that the main purpose for the transcription service is to get your permission for Google to read your voice-mails for contextual advertising.
If all this sounds sinister, it isn't. This is simply where advertising is going. Most people have demonstrated willingness to give up privacy for free stuff. And in fact, contextual advertising itself is desirable. It's better to be pitched products you're likely to want rather than products you don't want.
So if and when you get your Google Voice invitation, enjoy its powerful features. But have no illusions about what's the service is all about. Google is paying you in the form of great new service for the opportunity to tell advertisers exactly who you are and what you want.
In other words: You're paying for Google Voice - not with money, but with your privacy.