New laws in China threaten the functioning of Skype

Skype's partner in China, TOM Group, claims that the Internet communication service is in full compliance with Chinese laws, even if the functioning of Skype in that country may be disrupted by illegal phone providers.

TOM Group, majority-owned by Hong Kong billionaire Li Ka-Shing, are potential investors in Skype's billion-dollar project that seeks to improve Skype's operations in the country and prevent the company from being shut out of the world's biggest market.

How the government will deal with Skype this year is a big question, especially after the Google issue last year and international relations issues, so the Chinese government will have to balance trying to maintain a monopoly and market competition in the telecommunications field.

On December 10, the Ministry of Technology drew attention to the collapse of "illegal VoIP phone services" and said it was gathering evidence for a lawsuit against such organizations, but did not release their names. It could affect services that work on that principle, such as Skype, but analysts say they are not sure whether such an action is aimed directly at Skype and whether it will have an impact on that service at all.

The government has to balance

Chinese regulatory agencies have not responded to numerous questions raised, nor have they issued any official statements. Many believe that these regulations are directed against local companies, while a service like Skype is completely safe.

However, it is suspected that the Chinese government is trying to protect the government phone agencies - China Telecom, China Unicom and China Mobile - which have been losing money in the long-distance calling business. Skype allows such calls to be made much cheaper, or even completely free for both parties.

In 2005, Skype was blocked in parts of China after the government banned Internet calls, while at the same time the government allowed its companies to test services that functioned similarly to Skype.

How the government will deal with Skype this year is a big question, especially after the issue with Google last year and the problems of international relations, so the Chinese government will have to balance between trying to maintain a monopoly and market competition in the field of telecommunications.