Skype now illegal in China

china bans skype Just as the dust settles from eBay’s $2.6B buyout of this Dutch VoIP company, Skype’s made the headlines once again. You know how pervasive Skype is when the Chinese government today deemed Skype illegal for use.

According to SinoCast China IT Watch, subscribers to China Telecom’s broadband access service in Shenzhen, Guangdong Province, found that they could not log on Skype any more. When they complained to China Telecom, the carrier said that Skype was not allowed. An executive from the technical department of China Telecom disclosed that, from now on, customers of China Telecom that use Skype to make long-distance calls will be fined and even cut off from their connection to the Internet. The executive added that the contracts signed by the broadband users of China Telecom when they initially subscribed to the service indicated that any kind of Internet telephones are prohibited.

The news article goes further to explain that once the Chinese telecom regulators give the green light to network voice communications software, there will be a fight between telecom carriers and network telephone vendors. China Telecom and China Netcom have been used to dominating the long-distance call businesses. However, they have been losing ground. Last year, China Telecom’s domestic long distance call sector was down 1.2 percent. Market watchers attribute the recession largely to the rise of Internet telephony.

In other words, Skype is seen as an immediate threat to China’s local telecommunication market. Using typical strongarm tactics, the Chinese government simply said no to non-approved VoIP use for end-users. Case in point, one has to wonder if protecting one’s national interest at the cost of denying “leap-and-bound” communication technology is something that is truly for the improvement or detriment of a nation’s progress.

UPDATE: USA Today yesterday reported a similar story, but mentioned that besides Shenzhen Telecom, a branch of China Telecom in the southern city of Shenzhen, operators at Beijing Telecom and Shanghai Telecom, the other China Telecom branches, said they had heard of no such restrictions. Also, they said that China Telecom expects these controls will be ready in 2006 or 2007.