China may ban SkypeOut

Shanghai Daily is reporting that China may block use of VoIP use, including SkypeOut:

A SERVICE which allows Chinese mainlanders to enjoy cheap long-distance calls from a personal computer to a fixed-line or mobile phone will probably be banned in China by telecommunications firms and government bureaus.

Shenzhen users of SkypeOut, a popular VoIP (Voice over Internet Protocol) software that allows people to make calls through computer terminals with microphone and earphones, found themselves unable to connect to the service.

China Telecom's Shenzhen branch has already blacklisted SkypeOut users and will fine them if they are caught using it or other VoIP products...

Only six Chinese telcos, including China Telecom, China Mobile, China Unicom and China Netcom, are allowed to operate such VoIP services, according to Shanghai Communications Administration.

The advent of VoIP, a low-priced but good sound quality system, made China Telecom lose a large number of users, industry insiders said.

Mainland users need only pay 0.3 yuan (4 US cents) per minute to make international calls via VoIP to anywhere under SkypeOut but they have to fork out 8 yuan per minute to New York if they dial through China Telecom...

"All mainland users who make PC-to-Phone calls via SkypeOut downloaded the software directly from the foreign Websites because the Chinese version we offer only provides free PC-to-PC voice service," Wang Yibei, a Tom Online spokeswoman said..

Shanghai Telecom hasn't blocked SkypeOut yet, but it could at any moment.

China is Skype's number 3 market, wonder how much this political risk is being factored into the ongoing eBay negotiations.

Seems eBay is swimming upstream in China.

UPDATE: more coverage of this story...
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