By Doug Young

SHANGHAI, Sept 9 – China Telecom has started blocking access to a popular Internet telephone service that is threatening its long-distance revenue, according to local media reports and Internet postings.

Whether this has more to do with the Chinese Government trying to restrict communication access to the rest of the world, or whether it is a purely financial decision, I bet the rest of the worlds major phone companies wish they could do something similar.

In order to make a call from China to America so cheaply (2. cents/min as quoted in the above article), is to use one of Skypes premium services.

SkypeIn gives you a telephone number just like your normal PSTN that when dialed will actually ring which ever computer you are logged into that is running the Skype service. This allows users who do not have Skype (or even a PC) to call your Skype number. If your SkypeIn number is based in the UK, then the caller will get charged for calling the UK. If the caller is in the UK, then they get charge a local rate or National depending on where they are in relation to the SkypeIn number exchange.

But with Skype, you can have any number of SkyeIn numbers, so in my case I have one UK based and one US based SkypeIn number. The US one happens to be 817 xxx xxx which is Fort Worth area code where many of my friends and colleagues still live. So now anyone in the US who calls my SkypeIn number does not pay for a call to the UK, but to the 817 area code. So if the user is actually within (or near) the 817 area, they don’t pay a cent for calling the UK.

So as you can see, you don’t have to rely upon both ends of the conversation to have Skype in order to make a saving.

SkypeOut is a premium service that allows me to make calls TO the PSTN (i.e. the regular phone service). This is just a one off payment (for each period – currently 12months) that means I can make calls from any of my machines with Skype installed to any landline number.

And a thing to remember is say I go away from home, whether it be with my laptop, or via some internet cafe, or even from a PC in a friends house where we stay, if that PC has Skype installed, I simply log in to my account on that PC and all calls and voicemails are routed through to that PC. So it almost acts like a mobile phone in itself.

So now you understand why the Chinese authorities have jumped on this service because they no longer can charge the $1 per minute call rate. (It also makes it harder for them to monitor outgoing calls if you believe in the Big Brother theory).

It is also the reason why so many of the major phone companies worldwide are getting very nervous about this sort of service.

How long will it be before Telephone carries quit carrying telephone networks as their main business and become ISP’s (Internet Service Providers).

Lastly, there are rumours that Ebay are in negotiations to purchase the Swiss based Skype company. Now this one I wouldn’t object to, but a previous rumour had stated that Rupert Murdoch has also expressed an interest in purchasing the company.

If you stop and think about why someone would want to pay millions and millions for a company that gives away its software for free, lets people make free phone calls? And if everyone adopted Skype, then its Premium Services would also gradually be no longer required. In effect you would be buying a company in that the more sucessful it becomes, the less money it makes from its services. It will need to create new services in order to make money, say for example Video to Video calls, or for its Phone Answering Service, or for online directory access.

Instead of dialing number xxx-xxx-xxxx for a pizza, you just dial local-pizza and your call is routed through to a local pizza company.

Get used to the term VOIP, you’ll be hearing it a lot over the next 18 months.