Skype could be illegal in China

China will crack down on what it is calling illegal Internet telephone providers, according to a circular from the Chinese government that could potentially affect Internet calling service Skype.   

The statement, from the powerful Ministry of Information and Industry Technology, did not mention any carriers by name.   

It called for a crackdown "on illegal VoIP (voice over Internet protocol) telephone services" and said it was collecting evidence for legal cases against them.   

Skype, partly owned by web retailer eBay Inc (EBAY-Q), has been growing in popularity among Chinese individuals and businesses to make cheap or free international phone calls.   

The circular, dated Dec. 10, did not say what amounted to illegal services and did not name any VoIP providers it considered to be breaking the law.   

Spokespeople for the ministry and the ministry's office gathering information for the campaign did not answer telephone calls on Friday.

Skype is still available in China through its joint venture partner TOM Online and, as of Thursday, Skype had not been contacted by Chinese government officials, a Skype spokesman said.

The move appeared to be aimed at protecting three government-controlled Chinese phone carriers -- China Telecom China Unicom and China Mobile -- which provide the bulk of China's telephone services.   

The Hong Kong-based South China Morning Post on Thursday quoted an unidentified ministry official as saying VoIP services could only be provided by the big three Chinese operators.   

Spokespeople for China Telecom and China Unicom did not answer phone calls on Friday. A spokeswoman for China Mobile, reached in Beijing, referred calls to the firm's Hong Kong office. Attempts to reach the Hong Kong office were not successful.   

In 2005, Skype was blocked in parts of China as the government sought to ban phone calls made over the Internet

VoIP calls allow users to make international calls for much less than commercial providers, or even for free if both parties are using VoIP. Many businesses that use VoIP services to cut down on their international telephone costs could lose access to the cheaper alternative.   

"Nearly 1 in 6 people in the world live in China, and a great many of them rely on Skype to connect with families and friends, run businesses, and call people around the world," wrote Skype's Josh Silverman in an October blog post about Chinese privacy.
   
Skype, which has about 124 million users worldwide, hopes to raise about $1 billion US in an initial public offering expected next year.