China moves against SkypeOut VoIP calls

Chinese telecommunications companies are blocking access to cheap Internet phone calls in China by cutting off software services such as SkypeOut, the popular VoIP (voice over Internet protocol) service, analysts and service providers said Monday.

Under current regulations in China, PC to phone services are strictly regulated and only China Telecom Corp. and China Network Communications Group (China Netcom) are permitted to carry out some trials on a very limited basis, said a spokesman at China Telecom, the nation's largest phone carrier.

Until recently, carriers in China have stood by as users in the nation downloaded Skype Technologies' popular Skype software and paid for the SkypeOut phone service. Such offerings, along with others from rivals, allow users to make inexpensive phone calls from their PCs to telephones worldwide.

But Chinese phone companies have apparently seen enough customers switching to the Internet phone services that they are now concerned about losing revenue, according to one analyst in the region who asked not to be identified because the carriers are sensitive about the topic.

Some telecom companies in China may even be going so far as to cut off broadband Internet service to users who continue to call through SkypeOut after being warned against doing so, the analyst said.

Even a joint venture between Skype and Hong Kong-based Tom Online to provide a Chinese-language version of Skype's software to users in China has been caught in the middle of the fray.

"The service we promote jointly with Skype is just PC to PC services, it doesn't include PC to phone" said a Tom Online representative. Over 3.4 million people in China have already downloaded the software, he added.

There is little controversy in China over the PC-to-PC voice calls, but calls made from PCs to overseas telephones, which would normally bring significant revenue to telecom companies, have become a hot-button issue, he said.