China Telecom blocks Skype

Chinese government deems internet telephone services 'illegal' under a 2004 regulation

China Telecom, the nation's biggest fixed-line telephony provider, is blocking computer-to-telephone call services including those from Skype, according to state press reports.

Customers have reported that they cannot use the SkypeOut service to call ordinary phones. The service allows users to make calls from their computers to fixed line or mobile telephones at significantly lower rates that traditional services.

The Financial Times reported that this will not affect PC to PC calls using Skype.

Shenzhen Telecom, a local arm of China Telecom, is experimenting with blocking computer-to-telephone and computer-to-computer services in the major urban centres of Beijing, Shanghai, Guangzhou and Shenzhen, according to Chinese newspaper Beijing Business Today.

Skype does not offer SkypeOut to mainland Chinese users of its software, and the block therefore affects those who have registered for the service outside China, such as in Hong Kong.

According to the Financial Times an employee of Shenzhen Telecom had been told to tell customers that internet telephone services are illegal under a 2004 regulation because they would "destroy market order".

Ron Cowles, vice president of research at Gartner, said: "VoIP is really disrupting the existing telecoms services in many countries. The Chinese government can try to stop it but it will just drive it underground.

"We advised telecoms providers about Skype and Vonage last year and they were shocked. They did not realise how disruptive it was, so I am not surprised that this is happening now."

Cowles expects many countries to adopt licensing schemes similar to those operating in Mexico to ensure that existing providers can profit from VoIP more effectively. But the analyst warned that this will need the regulatory bodies to act.

Skype, which has just been acquired by eBay, was unavailable for comment.