China would not be allowing paid for calls between computers and conventional telephones for at least two years. The Chinese government would not be issuing VoIP licences until 2008.

This news is certainly a shock for Skype which till now was negotiating with Chinese telecom operators hoping it would clear the way for the launch of its computer-to-computer telephone service, SkypeOut.

There was a fear among Chinese fixed line operators that SkypeOut which allows users to make calls from computer to phones at lower rates would undermine their business. Certainly this news must have come as a sigh of relief for these companies. This is a smart move by China which might be trying to ward off the dominance of American companies in their telecom sector. Certainly, the most affected by this decision would be the customers who would be deprived of making cheaper calls for two long years.

Is China trying to come up with an answer to SkypeOut in these two years? You never know!!!