The Chinese regime is threatening to ban internet phone services like Skype. The Ministry of Industry and Information Technology announced on its website that it’s going after (quote) "illegal Internet phone services."The notice didn’t name any specific companies, but claims the ministry is gathering evidence for a legal case. The move seems to be aimed at protecting their own. Chinese authorities have said, only the state-owned companies - China Telecom, China Unicom and China Mobile - are allowed to offer VoIP services where people can make calls from their computers.

The Luxembourg-based company, Skype is one of several offering cheaper VoIP services. If banned in China, Skype could face a major setback in one of the world's largest markets. It could dampen investor enthusiasm for Skype as it prepares a 2011 initial public offering. China has about 450 million Internet users and Skype has often been used by activists to communicate information freely with the outside world.