Skype illegal in China? Not so fast

China Telecom and China Unicom started the year with a ruling by The Ministry of Industry and Information Technology (MIIT) declaring that “all VoIP [voice over Internet protocol] phone services are illegal on the Chinese mainland, except those provided by telecommunications carriers China Telecom and China Uniom,” reports state media.

There was no timetable given for when the ruling would take effect.

Many in the local press decreed this to be the end of popular services such as Skype, while others criticized the ruling as protecting state-owned telecom carriers.

"It's ridiculous," says Kan Kaili, a professor at Beijing University of Posts and Telecommunications to Shanghai Daily. "VoIP is a popular technology worldwide."

One reason the technology is so popular is the significant savings it offers mainland users on international calling.

If Skype ends up being another victim of the Great Fire Wall, it will be in good company, as sites such as Facebook, YouTube, Twitter, Blogspot and Hulu are already on the net nanny's watch list.

It's ridiculous. VoIP is a popular technology worldwide.— Kan Kaili, professor at Beijing University of Posts and Telecommunications

Many of these companies are blocked from China's 450 million Internet users as a result of state protectionism. If affected, Skype will just be the latest.

China has developed Youku and Tudou, both YouTube competitors and both preparing for IPOs in the United States. 

Getting Google out of China was a boon to China's main search engine, Baidu.

As for Facebook, it has been replaced by domestic clones, Renren and Kaixin001, which together have about 100 million users.

Maybe not as bleak as it looks

Although it’s easy to see this new policy as targeting Skype specifically, the Wall Street Journal notes that the company might actually not be the end goal at all, but a mere casualty of Internet warfare.

The paper reports that the MIIT has been working against VoIP services in China for some time, and this new ruling is an extension of these activities. Skype, far from a fringe operation in China, entered the Chinese market in a joint venture with a Hong Kong-listed company, Tom Online, in 2004.

An article in the Beijing Morning Post cited MIIT Vice Minister Xi Guohua speaking on the VoIP issue, saying that the ministry “recently has received many reports and complaints of criminals using Internet telephony to swindle people” and that such crooks “have harmed the interests of consumers.” 

Although Skype could be caught up in the sweep, the official quotes do give pause to those alarmists who saw the ruling with the international company’s name all over it. 

With no timetable and the government seemingly zeroing in on smaller, unregulated domestic firms, it seems Skype’s fate is yet to be determined.

A marketing representative for Tom Online, Skype China's joint venture partner, said in a statement last week, “All operations and user access are normal, and operations in China conform with national regulations.”

On Monday, the Skype spokeswoman said to reporters, “Nothing has changed.”