Verso Technologies blocks Skype

Verso Technologies, Inc. today announced the introduction of its new carrier-grade application filter, which enables carriers to restrict peer-to-peer traffic, including Skype calls, P2P messaging, streaming media and instant messaging. Sound familiar?

Packeteer is another company offering the capability to not only identify and classify Skype traffic, but they can also "throttle" Skype packets by assigning them low priority or even block Skype packets. So while Verso Technologies is not the first or even the only company to offer "application-level" filtering and blocking of Skype packets, what really makes this news interesting is that China Telecom is a customer of Verso Technology. (Source: TMCNet's Ted Glanzer)

This is the same China Telecom that started an uproar when they announced plans to ban Skype. Ted theorized that China Telecom is using Verso's technology but Verso did not confirm (nor deny) this to be true.

According to Ten Glanzer's well-written article, Verso's new application provides cable and Internet protocol service providers a means to optimize bandwidth and manage "undesirable" network traffic. "Undesirable" in this case is defined as network traffic that takes up large amounts of bandwidth without generating any revenue for the carrier, such as Skype calls.

Verso Technologies president and chief operating officer Monty Bannerman told TMCnet that the filter application should be "particularly welcomed by VoIP companies with revenue-based models."

The Atlanta-based company,which claims that the technology is the first of its kind for the carrier marketplace, is working with carriers to conduct the first production field trial for the application. "This application should be of great interest to any facilities-based carrier in the world,"Bannerman said in a prepared statement. "We believe that the application has tremendous market opportunity because it addresses an increasingly critical carrier requirement as P2P traffic continues to grow worldwide."

Ted also accurately opines "China Telecom's ban on Skype calls, today's news may have EBay Inc. rethinking the $2.6 billion that it shelled out to acquire the Luxemborg-based Internet telephone company.

"They (Skype) aren't happy," Bannerman told TMCnet's Ted Glazner in an interview today. "Neither is EBay."

Though China Telecom is a customer of Verso, Bannerman insisted that the China Telecom/Skype news and today's announcements were not related.

"The [China Telecom] announcement is coincidental to ours," Bannerman said. "[Verso's announcement has] been completely under wraps until today."

SkypeBay is looking like a pretty bad deal to me. I think it's time to short my eBay shares... if I had any.

Update:
If the carriers decide to deploy something similar in the U.S. to block Skype, no doubt this would result in an "unfair restraint of trade" lawsuit. It will be interesting to see if any ISP or carrier does take this step. So far there hasn't been any major ISP that has filtered any Internet application. Although some ISPs block SMTP to prevent spam, so I guess that qualifies. And some smaller ISPs have temporarily blocked Vonage and then got fined by the FCC. So other than that, the Internet in the U.S. has been pretty much unblocked. It will be interesting to see if the FCC or the legal system would allow something like Verso to block Skype.