Skype May See Restrictions in China

by Tim Gray

The VoIP provider appears to be getting squeezed out of the Chinese market.

The Chinese government is preparing to block access to Skype's popular Internet telephone service that has been undercutting the country's telecom business, according to the Shanghai Daily online newspaper.

China Telecom, the nation's largest fixed-line phone carrier, is already blocking access to service in the southern province of Shenzhen, but is expected to expand the ban nationally, according to the paper.

The Shenzhen branch of the telecom is said to have instituted fines for users if they are caught operating Skype or other VoIP products.

The government is also said to be preparing to take the lead in limiting the VoIP software that allows people to make calls through computer terminals, according to the paper.

A spokesperson for the Luxembourg-based Skype told internetnews.com that the company was currently looking in to the matter.

Meanwhile, a China Telecom spokesperson said the company is waiting for upper management to present a roadmap nationally.

"Whether to ban the software should be decided by our superior authority and so far we haven't received such a notification," Zheng Jianping, a Shanghai Telecom's spokesman, told the Shanghai Daily yesterday.

Under the current laws and regulations in China, PC-to-phone services are strictly regulated and only China Telecom and China Netcom are permitted to experiment with VoIP, the spokesperson told the newspaper.

China has a tradition of blocking access to Web sites based on politically sensitive subjects. Such was the case in June when Microsoft caved from government pressure and agreed to abide by censors banning the words "freedom" and "democracy" on its Chinese internet portal, MSN China.

However, the Skype case appears to be strictly a matter of economics, since Internet-based calls are much cheaper than landline calls.

It is not clear with the ban will have an impact on Skype's rumored talks with auction giant eBay , which is said to be in negotiations to buy the company. Neither company would comment on those rumored talks.

This article was originally published on Friday Sep 9th 2005