The internet telephone company Skype faces the possibility that the world's most populous nation, watchful over how its citizens communicate, may pull the plug on its service - just as it prepares for a $1bn initial public offering, writes Daniel Bardsley, foreign correspondent
Last year certainly had a sting in the tail for Skype, the VoIP company favoured by many who want to stay in touch with family, friends and clients without breaking the bank.
Just as the voice over internet protocol (VoIP) company was solving a technical glitch that disrupted services for millions of users over the festive period, it faced an even more serious threat: a ban in the world's most populous nation.
It was revealed that China's ministry of industry and information technology was looking to snuff out "illegal VoIP services".
In a country with 450 million internet users, this is a serious problem, especially as Skype is preparing for an initial public offering this year that is likely to value the company at US$1 billion (Dh3.67bn).
Any ban would also hit the pockets of the estimated 20 million VoIP users in China, who would see some call charges go up more than 10 times if they had to put aside their PCs and use a standard landline when dialling overseas.
The ministry's move to clamp down on Skype appears designed to protect local telecommunications companies such as China Telecom, China Unicom and China Mobile, all of which are losing revenue to the much cheaper VoIP services. China Telecom and China Unicom are currently running trials of their own PC-to-telephone services in four cities before possibly going nationwide, making a ban on alternative providers especially timely.
Commercial factors may not be the only reason Skype is in the firing line, says Ning Liu, an internet analyst in Beijing. There have been many reports of scammers using VoIP because tracing calls made with the service can be difficult.
"They use VoIP to call me and ask me to transfer $10,000 to my account. That happens a lot in China," he says. It's very difficult to trace the number. They can hide themselves."
The practicality of banning services such as Skype, which has been available in China since 2007 through a joint service with the Hong Kong company TOM Online, has been the subject of much discussion since the proposal was revealed.
One suggestion is that, to enforce the ban, the major telecoms operators could stop internet users logging on to Skype's server, or sever internet connections when they are being used to make calls with Skype.
Kan Kaili, a professor at Beijing University of Posts and Telecommunications, says the local telecoms operators in China, even if they are branches of China Telecom and China Unicom, will not be keen to co-operate with any ban by refusing to connect calls made using Skype. This is because they are paid by Skype for connecting calls.
"Overall … if there's no Skype, China Telecom will make much more money, but the local operators, when they're at the receiving side, they don't care about the whole. They care about their own local operations," Mr Kan says.
"The local operators just accept and connect the call to make money for themselves."
If China does eventually join the handful of countries that already ban Skype - the UAE, Kuwait, Oman and North Korea are the others - there may also be other factors at play. While Skype has attracted criticism for allegedly monitoring messages about sensitive subjects, its high level of encryption - making it harder for the authorities to monitor communications - leads Mr Kan to speculate that political control is another motive behind the Chinese government's move.
If political factors are involved, the ban on "illegal" VoIP will have much in common with the blocking in China of popular websites such as Facebook, Twitter and YouTube.
The perceived potential for these sites to be breeding grounds for dissent is thought to be the main reason that they come up against the Great Firewall, as China's internet restrictions are called.
"On these websites, there is a lot of anti-government content, so the government does not want the Chinese people to find this," Mr Ning says.
Yet, as with the VoIP restrictions, it is not clear whether there is just one reason for the sites being blocked. By banning popular overseas social networking and microblogging sites, the Chinese authorities not only keep a lid on potential sources of discontent, but they also do a big favour for these sites' local equivalents. Some may see the policy as protectionism.
In place of YouTube, China offers Youku and Tudou, instead of Facebook, the local social networking site Renren (ren is the Chinese word for person) is popular, while microbloggers can log on to Sina instead of Twitter. Users of these local sites are monitored more closely than if they use an international equivalent, so political concerns are less of an issue.
Mirroring scepticism over the practicality of a VoIP ban, many of these supposedly banned sites can be accessed by savvy web users with the right software.
Google's decision to turn off its Chinese servers and redirect users to its Hong Kong site can also be seen as an interplay of commercial and political interests. The US company's move out of the mainland may have been the result of a disagreement over censorship - Google no longer wanted to enforce Beijing's filtering rules - but it was a boon to China's home-grown search engines such as Baidu, the market leader in China.
With Skype and its ilk, it remains to be seen what the future holds in China. With many sceptical about whether the proposed ban is workable, users might be able to continue to make cut-price telephone calls.
"It's hard to say," says Mr Kan. "This kind of policy is highly unpopular in China. The government might take action against a few major VoIP operators, but to [what] extent that will work is really in doubt."
There has recently been speculation that China's internet might be opened up slightly.
A recent visit to China by the Facebook founder Mark Zuckerberg led to feverish speculation that the multi-billionaire was looking to secure a re-entry into the market as his website aims to clock up 600 million users.
Possibly Mr Zuckerberg, who has a Chinese-American girlfriend and says he is learning Chinese, was here largely for cultural reasons. Either way, Mr Kan believes Facebook is not going to be allowed back soon.
"If you are saying that Facebook will be negotiating with the current government and asking them to allow Facebook in China, I don't think that will happen," he says.
"If you talk about the long term - 10, 20, 30 years later - well, [who] knows?"
[ business@thenational.ae ]