China VoIP Ban May Render Skype Illegal

If there was need of any proof that operating a business in China, especially one involving the internet, was risky, this is it, China will now move to ban all VoIP services on the mainland except the ones offered by the state-owned China Telecom and China Unicom.

The Ministry of Industry and Information Technology has declared all VoIP services, except those offered by the two giant carriers, illegal earlier this month. However, there is no deadline for enforcing this and there are few other details on how this will affect existing services.

Skype could be one of the affected companies as it is already quite popular in the country. VoIP services in general are particularly popular since they offer significantly better prices than existing telecom services.

There are a couple of possible reasons behind the move, banning such services makes it easier for the government to control and snoop in on all communications but also ensures that the state-owned operators are not threatened by VoIP competitors.

Note that the ban is only for VoIP calls to or from phones, apparently, PC to PC VoIP calls will be allowed as always. This would indicate that the move was more an economical one than a political one.

Skype's encryption of all calls has made several governments around the world take notice or demand that they are allowed access to monitor the communications.

However, in this case it looks like the economical threat was the biggest factor. The low rates VoIP services offer, especially for international calls, threatened to cut into the revenues of China's large telcos.

China already bans several foreign web services like the popular Facebook, YouTube and Twitter. Skype has managed to thrive though because it offers its services through a local company, as many foreign business do.

Skype operates in China through Hong Kong-based TOM. It is currently the market leader in the country which is actually the largest market for VoIP calls in the world. Skype has not commented on the issue.