In a setback for the likes of VoIP pioneers such as Skype Technologies, the Chinese government is reportedly close to banning paid-for calls between computers and conventional telephones for at least two years.
The Chinese government is reportedly set to block computer-to-phone VoIP services until 2008.
Speaking to the Financial Times, Wang Leilei, the chief executive of Tom Online, a Chinese internet portal that has a joint venture with Skype, said China is not going to issue VoIP licenses until 2008.
The news, if confirmed by the authorities, will be a blow for Skype and its SkypeOut service. The Luxembourg-based company has been speaking to Chinese telecom operators since last November in an effort to overcome regulatory blocks against its SkypeOut computer-to-phone calling service.
SkypeOut allows Skype users to purchase airtime upfront, and then use their computer to call a conventional telephone or mobile phone using VoIP at much cheaper rates than traditional fixed-line calls.
The big fear for Chinese carriers is that the SkypeOut service would undermine their core earnings. China has two major fixed-line telecoms carriers, China Telecom and China Netcom Corporation. It also has two major mobile operators, China Mobile and China Unicom, as well as two minor players, China Satcom and China Railcom. The Chinese government has majority ownership of all of these players.
For the Chinese telecom operators however, voice is still their principle revenue earner and, due to the relatively high cost of telephone calls in China, combined with the low average wage, VoIP has been viewed as potentially a hugely attractive technology for the country.
China Telecom has already blocked Skype in Shenzhen, and has told customers there that the SkypeOut service is illegal. There were also reports late last year that a US-based company, Verso Technologies, was about to sell or had already sold an anti-Skype filtering system to a leading Chinese operator, although Skype denied that this was the case.
At the moment Skype is said to have approximately nine million users in China, and, while its users can use its free computer-to-computer telephony service, calls are limited to only five minutes.