Chinese Telco Wants to Block VoIP Calls

A U.S. maker of network management systems said Wednesday it had received an order from Shanghai Telecom Co. for a system that can detect and block telephone calls placed over the Internet.

Shanghai Telecom, which has 6.2 million landlines, plans to use Narus Inc.'s system to improve its ability to block "unauthorized" Internet calls that connect to its phone system, bypassing its toll structure.

Use of Internet calling, also known as Voice over Internet Protocol, or VoIP, is growing quickly across the world, threatening the business models of some telephone companies.

In the United States, the Federal Communications Commission fined a small telephone company that prevented its Internet subscribers from accessing competing VoIP service, but some countries with state-owned telecommunications companies are taking a different tack.

In China, the government has sided with carriers and allowed them to block VoIP services that compete with the carrier's own products.

A recent report in the Financial Times quoted an executive with a Hong Kong company as saying that the government would not issue new licenses for computer-to-phone calling services until 2008.

The Chinese government and major phone companies have refused to confirm that account.

Steve Bannerman, a spokesman for Mountain View, Calif.-based Narus, said carriers in several countries, including Egypt, are using its software to block gateways that connect VoIP calls to the phone network.

VoIP-blocking software from another U.S. company, Verso Technologies Inc. (VRSO), is being tried out by an unidentified Chinese carrier.

Narus' and Verso's software can be configured to block the use of Skype, eBay Inc.'s (EBAY) popular VoIP application.

However, Shanghai Telecom has not bought the module from Narus that blocks Skype calls, Bannerman said.

The Chinese version of Skype does not connect to the phone network, unlike the international version.