Skype’s Road to China

Although worldwide VoIP market is booming, and Skype got wooed by millions of users, its road to China is not so bright as in other world, especially its VoIP revenue.

We know there are four kinds of voip services: phone to phone, phone to PC, PC to phone, PC to PC. In China, the phone to phone and phone to PC is clearly defined as the basic telecom services that no cooperates besides those six services providers (China Mobile, China Telecom, China Netcom, China Unicom, China Railcom, China Satellite Com.) can touch.

As to the PC to phone market, there are still legal restrictioins from the specifications of the Ministry of Information Industry (MII). According to the notification no. 413(2005) at July 18, MII expressed their serious attitude on the ban of commercial PC-phone voip services, except the trial at four cities countrywide: two for China Telecom at South China(Shenzhen and ShangRao, Jiangxi Province), while two for China Netcom at North China(Changchun, Jilin Province and Tai’an, Shandong Province). During the service trial by Shenzhen Telecom(a subsidiary company of China Telecom), the price of IP phone is lowered to 0.20RMB/minute(~2.5cents per minute), no matter domestic or international calls.

The joint venture with TOM won’t help to walk around the restriction, unless it pursue another joint-venture with China Telecom or China Netcom. But without clear outlook to commercial benefits, joint ventures are not attractive to those two fixed line carriers at all.

Considering those disadvantages from legal restriction, most revenue of Skype’s SkypeIn and SkypeOut will be originated only from the international calls. So the marketing approaches shown below might be suitable for Skype into China:

  • the First, continuously fight for a increasing market share at IM and PC to PC VoIP market, competing against QQ, MSN, YIM, Google Talk, Sina UC, Netease PP and etc. Skype’s competitive advantages come from its voice quality, encryption, ease of use, and etc.
  • the Second, cooperation with those smartphone/handset/pda hardware vendors for solutions like USB-plugable PC phones.

11 Responses to Skype’s Road to China

  1. Boaz Zilberman says:

    Dear Richard,

    I am trying to explore regulatory problems in implementing VoIP technology over GPRS and UMTS networks.
    The ‘saying’ in Europe is that China is an example of a place in which telcom carriers do impose actual restrictions in using VoIP services.
    I understand from your article that the regulator in China do restrict PC-to-phone services. Do you know if there are restrictions, denial-of-services or blocking of PC-to-PC services as well?.

    Thanks, Boaz

  2. Richard says:

    Hi, Boaz,

    thanks for your interests at my blog. generally speaking, there are not restrictions from laws and technology filtering by telco operators for PC to PC voice communications. VoIP over 3G, GRPS, WLAN, WiMax, and etc. is technically feasible and allowed. FYI,


  3. […] At a previous post, “Skype’s road to China“, I introduced my view point of Skype at China, not bright as they are at other lands, due to the restrictions of the regulations and market circumstances. Along with the emerging technology/product from Verso, the “blocking of PC-to-phone”, ie. SkypeOut, was reported to be blocked at Shenzhen and other three cities at China. […]

  4. […] 如前面的预测,Skype果然开始了与国内运营商的合作谈判,但是谈判会如何进行呢?国际上,将会越来越多的大大小小的厂商会推出基于P2P技术的各种新产品,竞争地位的运营商推出相应的应用来挑战主导运营商,都会全力来赶这趟P2P大潮。电信和网通两大主导固网运营商在信产部条文保护时间内,必须尽快研究拿出战略性的、全局性的对策,并迅速执行落实,不能停留在试探性的、测试性的“控制”活动上。疏导不受控业务的同时,开拓可控的P2P业务平台,以及相应的计费运营模式。时间越来越紧迫了。 […]

  5. […] Sep 8: China bans Skype Out in Shenzhen. China Telecom fired a warning shot across Skype’s bow telling them they have chosen the wrong partner in China three days after Skype announced a joint venture with is China’s third largest Internet portal, but it is based in Hong Kong and lacks strong ties with the Chinese central government, crucial for obtaining telecom approvals. Skype refused to listen and went ahead with the joint venture anyway. Telecom, Security and P2P […]

  6. zhaol says:

    Skype 宣布七家合作伙伴

      Skype公司昨天宣布同七家消费电子产品公司签署协议,共同提供方便用户使用的Skype电话产品。这些公司和产品分别是Creative的无需电脑的Skype电话,D-link的USB口电话适配器,IPEVO Skype无绳电话,柯达的图像共享系统,NETGEAR的一款产品以及松下的Skype无绳电话。Skype公司表示通过和这些设备制造商以及零售商RadioShack的合作,他们将为用户打造全面的Skype电话解决方案。

  7. Xiu Juanni says:

    Skype using non-standard protocol and it’s not easy to be controlled by network admin. That’s something good or not good. Internet itself can not lost controll. If all software using that way to open back door, take as much as possible of bandwith, internet will be break down. For this case, I believe govenment more concern that the content of people using skype can not be mornitored. Most of other provider did not get banned even it’s not a small one like vbuzzer.

  8. hi2005 says:

    Hi, Juanni, thanks for your comment. I visited just now. at the first glance, i can master much of this product/technology. does it use some open standards, e.g SIP, or Jabber, or something? is it based on P2P tech?

  9. shawang says:

    Gentlemen and Ladies:
    This is China West Information Company; the national professional telecommunication has built long term corporation relationship with many basic running sales. There are: China Netcom, China Telecom Corporation limited, china Unicom, China Mobile, China Railway communication and so on.
    Our company supply China route, the price is 1.5c/min, now we supply Zimbabwe route, the price is 17c/min. Would you need these routes? If you need another route, please tell us your price that you can accept .Please let us know if there is any further information with which we can furnish you.
    Sincerely yours,
    West Information Company

  10. […] a previous post, “Skype’s road to China“, I introduced my view point of Skype at China, not bright as they are at other lands, due to […]

  11. […] 如前面的预测,Skype果然开始了与国内运营商的合作谈判,但是谈判会如何进行呢?国际上,将会越来越多的大大小小的厂商会推出基于P2P技术的各种新产品,竞争地位的运营商推出相应的应用来挑战主导运营商,都会全力来赶这趟P2P大潮。电信和网通两大主导固网运营商在信产部条文保护时间内,必须尽快研究拿出战略性的、全局性的对策,并迅速执行落实,不能停留在试探性的、测试性的“控制”活动上。疏导不受控业务的同时,开拓可控的P2P业务平台,以及相应的计费运营模式。时间越来越紧迫了。 […]

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