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China blocks Skype, VoIP - but is it for the money? or the politics?

China Telecom is the country's largest wireline phone company, with the bulk of the broadband customers; and those customers are now finding they can't use Skype to call ordinary phones, using SkypeOut. But it may go further, and VoIP may be blocked generally.

Reports from the FT suggest that this "won't affect" PC to PC calls using Skype. According to Shanghai Daily, however, China Telecom is collecting the identities of those who attempt to use SkypeOut to call regular phone numbers from their PCs.

"Under the current relevant laws and regulations of China, PC-to-phone services are strictly regulated and only China Telecom and (the nation's other fixed-line carrier) China Netcom are permitted to carry out some trials on a very limited basis," said a China Telecom official, quoted by Reuters.

All the reports agree that this is a commercial, not a political move. Many world wide Web sites are blocked for political reasons: however, the chances are that this isn't a similar move, since the "termination charges" available to the monopoly telcos will look tempting, as other instant messenger  services like Yahoo! Messenger and MSN Messenger and AOL Instant Messenger all move to offer services to rival Skype.

Yahoo! has still-secret plans to become a telco itself, starting the a virtual network in Europe, probably over France Telecom mobile and wired networks - but using local wired carriers in individual countries, and doing deals with companies like British Telecom. Money changes hands in this sort of deal, and China will want its share.

Skype has already announced a deal with Tom Online (Forbes reported) in China; and in Germany, a deal with E-Plus. "China is a very important market for us," Skype co-founder Janus Friis told Forbes recently. "Broadband [penetration] in China is growing very quickly. We've had extremely good growth there, and we plan to launch many additional products in China. Tom has been a partner of ours for quite a long time -- and a very good partner. So we are just continuing in pursuing that successful partnership."

Friis said that E-Plus was "the first mobile network" and that there was "huge interest" from other mobile providers.

The E-Plus deal gives mobile users Skype access, billed to their normal mobile phone accounts.