Skype Banned in China? Not So Fast

Media reports over the past week have raised that prospect in relation to a government clampdown on “illegal” voice-over-Internet-protocol, or VoIP (Voice over Internet Protocol), telephone services.

Skype's service is, clearly, VoIP-based, nevertheless it's far from the only one in China, where numerous smaller operations are using the innovation to try to compete with the big state carriers.

On Dec. 30, the Beijing Morning Post ran a short article citing MIIT Vice Minister Xi Guohua elaborating on the VoIP issue at a government event, saying 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.” Mr. Xi, according to the report, explained that there are different kinds of VoIP services: those that enable calls from one personal computer to another, which he said have been allowed for a long time; and those that connect PCs to phones, or phones to phones, which are limited to China's major telecom carriers. The Beijing Morning Post article as well didn’t mention Skype.

That same day, another brief article-in the English-language Shanghai Daily, not known as authoritative-did mention Skype, with a headline declaring “VoIP decision means Skype nevertheless illegal.” Nevertheless the 190-word article named no sources and never substantiated the headline claim–other than to reiterate it in other words less emphatically in its first paragraph, saying the crackdown “is expected to make services like Skype unavailable in the country.”

It’s undoubtedly possible that the PC-to-phone parts of Skype’s service could be caught in a government sweep of VoIP. Beijing has long struggled with how to handle the Skype. And all Internet services exist in China in accordance with the threat of regulatory earthquakes. Skype, which is planning an initial public offering in the U.S.–one reason the Chinese reports have gained so much attention–acknowledges the uncertainty in its preliminary prospectus, dated Nov. 2:

The other hand

On the other hand, in spite of Web headlines however stating “China Declares Skype Illegal,” there’s no evidence but that the government’s regulatory radar has locked onto Skype. The official language around the VoIP crackdown suggests that it could just as so then be focused on the small domestic services, which are tough to regulate, as some analysts have recommended. China’s government isn’t afraid of taking on foreign companies, nevertheless it as well has a history of announcing “crackdowns” that it enforces unevenly.

Three weeks afterwards the initial VoIP crackdown notice, Skype says it hasn't seen any change. “Users in China currently can access Skype via TOM Online,” a Singapore-based spokeswoman for Skype said last week. A Tom Online marketing official as well said that “all operations and user access are normal, and operations in China conform with national regulations.” On Monday, the Skype spokeswoman said, “Nothing has changed.”

The effect the Internet has had on Chinese society

While debate swirls around the effect the Internet has had on Chinese society, it's impact on one important arena is clear and instructive.

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