TELECOM OPERATORS FACE THE CHALLENGE OF INTERNET TELEPHONY.

The rapid growth of internet telephony which prompted eBay to buy Skype on September 12 presents a very real challenge for telecoms operators desperately trying to make their fixed networks profitable for as long as possible before switching to new technologies. The service offered by Skype means that internet users can make phone calls via their PCs, by converting their voices into internet transmittable data (voice over IP, commonly known as VoIP). These calls are then practically free once the internet subscription has been paid.

In the ten years since IP telephony was launched, enormous progress has been made in terms of quality, while accessibility has been improved by many countries forcing their operators to "degroup" - to share the copper wire linking the subscriber to the telephone exchange. According to the investment bank Lehman Brothers, VoIP service providers can expect their turnovers to double by 2007 to around US$6.5 billion. This may well be a drop in the ocean compared to telephone companies' global revenues, but the latter are only too aware that the days of the traditional telephone are numbered.

China Telecom, fearful that revenue generated from urban calls would disappear as a result of VoIP, has reacted by blocking outright all access to internet telephony services. The company has already established a blacklist in...