China bans SkypeOut for two years

— 11:29 AM on March 22, 2006

China has moved to ban Skype's SkypeOut service for "at least two years" in order to preserve its fixed telephone line industry. SkypeOut allows Internet-to-telephone calls at very cheap rates, and China's telecoms providers are worried that this will cut into their piece of the pie. China Telecom, the main phone line operator in China, also described Skype's online services as "illegal," and experiments to block it were undertaken in Beijing, Shanghai, Guangzhou, and Shenzhen last year. Surprisingly, US technology group Verso Technologies has admitted to selling software for this purpose to an "unnamed major Chinese telecoms firm." It is not clear whether China Telecom plans to block Skype's free Voice over IP service in addition to SkypeOut, but its definition of legality is certainly interesting.

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