China may hurt VoIP services to guard competition

China may have broadcast intentions to discourage VoIP services such as Skype today with a warning on Thursday. The Ministry of Industry and Information Technology warned online that it would target "illegal Internet phone services," but didn't say which ones were involved. Government officials have previously argued that only government-backed carriers have the right to join Internet connections to their phone networks.

The move could effectively shut out services like Skype as well as some of the smaller local companies that have sprung up providing equivalents. Any measure could similarly shut out any plans for Google Voice in the country. Ministry agents haven't taken action against Skype and might not have any choice other than to block direct Skype traffic, but it wouldn't completely stop use of the service through proxies or other workarounds.

Critics have already interpreted the move as an anti-competitive attempt to protect China's incumbent carriers from incursions by cheaper and more flexible VoIP options. US carriers haven't had legal authority but have followed similar practices, often banning Skype from using Internet access while on 3G and having it tap into more profitable voice minutes. The FCC's net neutrality rules may require that American carriers open up to traffic that competes with voice.

By Electronista Staff

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