US company hopes to block Skype in China

Verso Technologies Inc., of Atlanta, Georgia, hopes to soon win a contract to block Chinese Internet users from using eBay Inc.'s Skype VoIP (voice over Internet Protocol) software, the company said Monday.

A Chinese telecommunications operator has begun a paid trial of Verso's NetSpective M-Class filter, a product that is designed to block VoIP calls made using Skype, as well as other peer-to-peer applications, Verso said in a statement. If the paid trial now underway in one Chinese city goes well, the operator will purchase the NetSpective M-Class application filter before the end of the year, it said. Financial terms of the deal were not disclosed.

"The trial is representative of the significant opportunities for Verso's products in the Chinese market, where VoIP is highly regulated and the use of Skype software has been deemed illegal," said Yves Desmet, Verso's senior vice president of worldwide sales, in a statement.

Verso did not provide additional details of the trial to block Skype or name the Chinese operator behind the project.

In September, China Telecommunications Corp. (China Telecom), one of two major fixed-line operators in China, began blocking SkypeOut calls made from Shenzhen, a southern Chinese city that lies along the border with Hong Kong. SkypeOut is a service that allows someone with the Skype software installed on their PC to make international phone calls at a fraction of the cost that a telecommunications operator would charge.

The blocking of SkypeOut calls from Shenzhen started several days before Verso announced on Sept. 14 the availability of the NetSpective M-Class application filter, which the company billed as "carrier-grade Skype filtering technology."

While Verso said in its release that the use of Skype is illegal in China, the situation is more nuanced.

Chinese government officials have been generally tolerant of VoIP software, such as Skype, that is used to make calls from one PC to another. But the ability of Skype users to make calls to a phone via the SkypeOut service is more sensitive, because this directly affects the revenue that operators such as China Telecom earn from international phone calls.

On the one hand, the Chinese government owns the carriers and will act to defend their interests, said Duncan Clark, managing director of BDA China Ltd., a telecommunications consultancy in Beijing. However, the Chinese government also wants to see the price of making phone calls come down, he said.

"It's a question of bureaucratic politics," Clark said.

In China, Skype has made an effort to show its sensitivity to the concerns of operators. The Chinese-language version of the Skype software made available through a partnership with Tom Online Inc. only permits calls from one PC to another; SkypeOut calls are not permitted. However, Chinese users can access SkypeOut by downloading the software directly from the Skype Web site.

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