China Battles with VoIP Legality

By Neil Zawacki
Updated: September 23, 2011

China Battles with VoIP Legality

Skype has quickly spread from North America to the rest of the world. The phone technology provides a means for travelers to keep in touch with their families and coworkers over the internet. The People’s Republic of China, however, has begun to crack down on the IP-based phone service.

On December 30, 2010, China’s Ministry of Information and Industry Technology sent out an official ruling that declared the state-owned China Mobile, China Telecom, and China Unicom were the only organizations allowed to provide the phone service. All other use of VoIP (Voice over Internet Protocol) phone service in the country is thus now considered illegal.

Wang Yuquan, a consultant at Frost and Sullivan who resides in Beijing, spoke about the decision shortly after it was made. He stated: “If the ministry hadn’t made this announcement, I think Skype would have offered its service in a very large scale. Now, with the announcement, it can’t.”

Kan Kali, a professor at the University of Posts and Technology, seems to agree with this sentiment. He also declared, “The regulator’s mindset will never change. The officials are obsessed on how to protect the state giants, rather than considering the interest of the masses.”

Another problem with the official ruling is that it doesn’t just undermine phone technology, but all foreign operators in the country. Microsoft Corporation has tried to find common ground with Beijing in order to sell its products, but the decision has negatively impacted its ability to do so. Google has experienced similar difficulties with trying to bring Google Plus into China.

The ones who are hit the most, however, are the local providers. There are around a hundred companies in China that offer VoIP service to their users. They now have to obtain an official license if they don’t want to be shut down. The process of getting a license is widely considered to be difficult, so the state-owned companies will be well protected from competition.

The move also has some industry analysts worried that China is adopting an increasingly regressive mindset. Back in 2009, China’s Ministry of Information and Industry Technology sent out an edict which required all websites to register with the state. The whitelist was meant to create a country-wide intranet that would fully sever China from the rest of the internet. The provision has not been enforced for the most part, but it’s a good example of the current Ministry mindset.

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