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China threatens to ban Skype

China SkypeThe country has blocked sites like Facebook and YouTube (and of course famously struggled with Google), and now it looks like China will add Skype to the list of digital companies on its bad side. An article from the Shanghai Daily featured on the Chinese Ministry of Industry and Information Technology website reports that seeing as the service utilizes VoIP technology, it is illegal. According to the publication, the only Internet phone services allowed in the country are China Telecom and China Unicom. China is attempting to support only state-run and regulated telecommunication carriers, and Skype (not to mention Google Voice and MSN) is treading on this territory.

The measure has been met with criticism, as some argue it clearly results in complete Chinese control of the market. “It’s ridiculous, VoIP is a popular technology worldwide” said Beijing University professor of posts and telecommunications Kan Kaili. He went on to say he doubts Skype will actually be banned.

From 2006 to 2008, China used this same strategy in order to promote the growth of its own VoIP companies. After allowing Western competition to re-enter the market after the two year ban, China is once again considering ridding itself of outside adversaries. Nothing’s official yet, but the outlook isn’t good. Skype stated that “Users in China currently can access Skype via Tom Online, our partner.” UK publication The Telegraph claims that while uses in Shanghai are able to use Skype, Twitter shows that some Chinese residents have lost access to the service.

If the move to block Skype and similar sites succeeds, it could be incredibly damaging. China is easily the largest market for Internet phone service in the world, and it was announced yesterday that its number of Internet users rocketed to 450 million over 2010 – an increase of 20 percent from last year. Still, the regulations would only ban Skype from making calls from a computer to a landline, and PC-exclusive VoIP activity could still be available.  It’s possible that Skype’s recent addition of video calling via iOS devices was the last straw with the Chinese government and motivation to reissue the nearly three year old ban. Whether or not it’s permanent this time is another matter. Regulators may simply want to give homegrown businesses a chance to develop an answer to Skype’s latest iPhone update.

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