China Telecom moves to block Skype

By Steve Malone

Posted on 12 Sep 2005 at 10:47

China Telecom, China's biggest telco is reported to be looking at ways to block calls made by the Skype VoIP service.

However, this time it would seem the reason is not to crack down on dissidents as reported last week. The reason for the crackdown appears to be purely commercial.

According to reports from newspapers in Beijing and Shanghai, China Telecom will disconnect anyone who tries to make a phone call over one of its broadband connections. The reports suggest that the controls might be in place by as early as next year.

The block, implemented by China Telecom's Shenzhen branch, affects those who have registered for the fee-paying SkypeOut service 'outside' China - which in this case affects the Hong Kong business community. At present, computer to computer calls through Skype are said to be unaffected.

SkypeOut allows users to make calls to phones anywhere in the world for little more than the local call tariff. As such, like many other incumbent telcos around the world, China Telecom will see it as a threat to its business.

Currently, Skype does not offer SkypeOut to mainland China as VoIP services are not permitted in the People's Republic. The move therefore should be seen in the light of trying to prevent an outsider like Skype establishing a foothold among China's 100 million odd Internet users while the fixed line telcos like China Telecom lobby to get the law changed and offer their own services.

The mood at China Telecom will not have been improved by Skype's announcement last week that it had signed a deal with the Hong Kong based TOM Online, China's leading wireless Internet company. The companies have signed an agreement to establish a joint venture to exploit China's rapidly growing online communication market. The combination of free VoIP calls and wireless Internet could create serious damage to its revenues particularly in regard to the lucrative long distance International call market.