Ministry tries to clear up VoIP confusion

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In a move that has confused China's telecom industry as well as Skype users in the nation, the Ministry of Industry and Information Technology said it has always been supportive of Internet-based telephone services, a remark that contrasts with a Dec 10 notice by the ministry.

Last month, the ministry issued a notice calling for a crackdown and ban on illegal voice over Internet protocol (VoIP) telephone services in China. The announcement, which many believe was designed to protect the interests of State-owned telecom carriers, has sparked concerns that companies such as Skype will be forced out of China.

But during a recent telecom industry conference, Wen Ku, director of the ministry's technology department, told China Daily that the ministry is not against Internet-based telephone services, "but only those operating illegally in the country".

"VoIP phone service is a world trend in the telecom industry. We are not against that technology," Wen said.

Industry experts told China Daily that Wen's remark is a possible sign that the ministry may not execute its crackdown or ban.

Wang Lijian, ministry spokesman, told China Daily on Wednesday that the "whole issue is over". He refused to comment on whether the ministry will adopt any measures to crack down on Skype.

But what constitutes a legal or illegal VoIP service is hazy at best. The ministry on Dec 10 called for a crackdown "on illegal VoIP telephone services" and said it was collecting evidence against them.

At the conference, Wen would not define what an illegal VoIP service is but noted that the crackdown is mainly to fight online crimes and fraud done through VoIP services.

Since 2005, Chinese authorities have permitted only China Telecom and China Netcom, which merged with China Unicom, to conduct trial VoIP services in four cities. Experts say that this rule technically means that all VoIP phone services provided by other companies are illegal, said Wang Yuquan, senior consultant with research firm Frost & Sullivan in China.

The pilot programs by China Telecom and China Unicom never happened, while so-called illegal VoIP services have grown rapidly over the years.

"I think the Chinese authorities will be extremely cautious in dealing with the regulations to avoid raising international concerns," said Kan Kaili, a professor at the Beijing University of Posts and Telecommunications.

Kan, a former official in China's telecom regulation agency, said Chinese telecom regulators don't want to see another foreign firm forced out of China, especially after the Google debacle.

That doesn't mean Chinese State-owned telecom carriers are not worried. Many carriers, experts said, fear that the rapid expansion of third-party VoIP providers will threaten their revenue from long-distant calls.

Skype's partner in China, TOM Group, said earlier this week that the Web-based calling service complies with the Chinese law.

A TOM Group spokeswoman said that "the operation of Skype in China is compliant with local laws and regulations" and "it is business as usual".

Chinese users currently have no problems accessing Skype.

Hong Kong billionaire Li Ka-shing owns 51 percent of the TOM Group. In 2004, the company launched a partnership with Skype to provide a customized, simplified Chinese version of Skype in China. The two companies established a 51-49 joint venture in 2005 to expand their partnership.

The two announced in 2005 that the co-branded software attracted over 3.1 million registered users in China, making the country one of Skype's top three markets.

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