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Dec 31 (Reuters) – China will crack down on what
it called illegal Internet telephone providers, according to a
circular from the Chinese government seen on Friday that could
potentially affect Internet calling service Skype.

The statement, from the powerful Ministry of Information
and Industry Technology, did not mention any carriers by name.

It called for a crackdown "on illegal VoIP (voice over
Internet protocol) telephone services" and said it was
collecting evidence for legal cases against them.

Skype, partly owned by web retailer eBay Inc , has
been growing in popularity among Chinese individuals and
businesses to make cheap or free international phone calls.

The circular, dated Dec. 10, did not say what amounted to
illegal services and did not name any VoIP providers it
considered to be breaking the law.

Spokespeople for the ministry and the ministry’s office
gathering information for the campaign did not answer
telephone calls on Friday. Skype could not immediately be
reached for comment.

The move appeared to be aimed at protecting three
government-controlled Chinese phone carriers — China Telecom
, China Unicom and China Mobile
— which provide the bulk of China’s telephone services.

The Hong Kong-based South China Morning Post on Thursday
quoted an unidentified ministry official as saying VoIP
services could only be provided by the big three Chinese

Spokespeople for China Telecom and China Unicom did not
answer phone calls on Friday. A spokeswoman for China Mobile,
reached in Beijing, referred calls to the firm’s Hong Kong
office. Attempts to reach the Hong Kong office were not

VoIP calls allow users to make international calls for
much less than commercial providers, or even for free if both
parties are using VoIP. Many businesses that use VoIP services
to cut down on their international telephone costs could lose
access to the cheaper alternative.

Skype, which has about 124 million users worldwide, hopes
to raise about $1 billion in an initial public offering
expected next year.
(Reporting by Terril Yue Jones and Sui-lee Wee; Editing by Benjamin Kang Lim and Alex Richardson)