Google Dials Into Directory Assistance

Sometimes, I want 411 directory assistance (DA) -- but I don't want to pay more than a buck per call for the privilege. Instead, I ring up 1-800-FREE411, which gives me the info I want in exchange for listening to a 15-second ad. Google (Nasdaq: GOOG  ) , having sniffed out another hefty market opportunity in the 411 space, is now pushing its own DA service: 1-800-GOOG-411.

A recent study from the Kelsey Group pegs the U.S. directory assistance market at roughly $9.4 billion. Its beneficiaries include Verizon (NYSE: VZ  ) , Comcast (CMCSA), and even Vonage (NYSE: VG  ) .

Google has the necessary infrastructure for a DA service. The firm already handles billions of user queries, sports a well-known brand, and boasts an extensive base of advertisers.

Google's DA system uses voice recognition technology, and in several tests I made, it seemed to work fine. I even tried finding the I Cugini restaurant in Santa Monica, Calif.; Google nailed it on the first try.

At present, Google's service is ad-free, but I'm sure this will change. If you call Google's DA for pizza, might you connect to a local joint that has an ad? It makes sense that the service could steer a lot of users toward paying advertisers -- a benefit for which those advertisers would likely pay up.

Dipanshu Sharma co-founded V-ENABLE, which provides DA technologies for mobile platforms. "The challenge for advertisers will be to have an audio ad library to support such services," he recently told me. "This is a challenge 800-FREE411 faces as well."

Google's not the only Internet portal moving into the DA space. Microsoft (Nasdaq: MSFT  ) recently purchased Tellme Networks in a rumored $800 million deal. The company has its own DA beta with 1-800-555-TELL; at present, it has no ads, either, perhaps because Tellme also powers the DA systems for companies like Cingular.

Yahoo! (Nasdaq: YHOO  ) also appears to be taking aim at the DA space. According to a recent Wall Street Journal story, the company snagged two former Tellme executives.

It looks like the directory assistance arena will host yet another slugfest among the major portals. While billions in local advertising dollars may hang in the balance at present, the growing competition could weigh on pricing and market share potential. Still, that competition could ultimately benefit consumers, who'll get valuable service for free.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,719 out of 25,386 in CAPS. Yahoo! is a Stock Advisor pick. The Fool has a disclosure policy.

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