Skype received a booting from China today, the same day the company announced the addition of video calling to its iPhone app (and iPad and iPod Touch). The ban says that only China Telecom and China Unicom are allowed to operate VoIP services in the country--all private carriers are now deemed illegal.

      The Chinese government has announced that any VoIP service administered outside of China Telecom and China Unicom are now deemed illegal, effectively making Skype and other VoIP services banned from use in China. The news comes on the same day that Skype announced the addition of video calling to its iPhone app, as well as the iPad and iPod Touch.

      The decision points to an increasing monopoly on the part of the two state-run players, securing revenues for them and them only and of course ensuring state-watch over all VoIP communications. The addition of video calling is likely to be cause for extra concern for the tightly controlled media environment of China.

      China previously banned all private carriers until 2008, the year of the Beijing Olympics, in an effort to give the government time to think about how to compete with players such as Skype. So this time the ban appears to be another stalling tactic--giving the country time to either beef up its own VoIP video calling capabilities to compete or plan strategies to stifle on-the-ground video reports (think if Nobel Peace Prize winner Liu Xiabo's wife, Liu Xia, was able to make Skype video calls with the outside world from an iPhone just prior to her house arrest).

      Thomas Crampton, a former Asia-based correspondent with the New York Times who now strategizes social media campaigns for Ogilvy clients in Asia says that what's happening in China, though, is more of a "step in the direction of making a decision," he tells Fast Company. Crampton, based in Hong Kong, is cautious to glean China's news as an all-out ban. Skype is still accessible in China, after all, despite being pronounced illegal.

      "Skype and other VoIp services have become a mainstay of the Chinese economy," says Crampton.

      As for Skype's response?

      "Skype is tied in with [Skype's China partner] Tom.com--I don't see Skype taking a Google-like stance. I see them trying to resolve this behind the scenes because of their ties."

      Netizens are already raising the question of how, exactly, China will go about enforcing the ban. Pornography is also illegal in China, relying on firewall blocks, but that is only so effective. The creator of China's largest porn site was actually sentenced to life in prison in 2006, so who knows what would happen to a corporate customer dependent on Skype for large volumes of calls, for example.

      "It's ridiculous," Kan Kaili, a professor at Beijing University of Posts and Telecommunications told the People's Daily Online. "VoIP is a popular technology worldwide."

      We'll post more updates here in the coming days and weeks as it becomes clearer what exactly China is up to.

Source from Fast Company