According to the Financial Times, the Chinese Ministry of Information and Industry Technology called for a crackdown "on illegal VoIP (voice over Internet protocol) telephone services" and is collecting evidence for legal cases against them.

China is a big player in most markets; however, when it comes to technology, powerful local companies hold sway. Last year Google (GOOG) fought a battle to keep its website in China. A couple of years ago, China set rules whereby all Internet content had to pass through censors before being approved.

eBay's (EBAY) purchase of Skype for over a billion dollars years ago was seen by many as obtuse and strange. Did eBay really expect its auction buyers and sellers to want to speak over the Internet (or video conference, for that matter)? Part of the allure of online auctions is the relative anonymity both sellers and buyers have. No "meeting in the parking lot" Cragislist-ish type of meetings in most cases.

But Skype has not paid off like eBay would have hoped. While the purchase of PayPal was the best acquisition eBay ever made, the planned synergies never materialized with Skype. While still a popular voice and video service around the world (ultra-cheap as well), Skype may be posed to bring voice and video calling direct to flat-panel television sets near you soon. The "videophone" concept has never really been that popular, mostly due to the kludgy ways past products have been designed and marketed.

AT&T Inc. (NYSE: T) has seen massive negative publicity come in from earlier in the summer to know in regards to its policies on the Apple Inc. (NASDAQ: AAPL) iPhone it currently has an exclusive on. After all, that $99 or $199 purchase was not giving customers complete control over over the freedom to do what they wanted with those precious iPhones.

When the AT&T/Google/Apple situation flared up recently, it caused the microscope on AT&T's strict controls on the iPhone to become even more intense.

Verizon (NYSE:VZ) has decided to eat its own young. The company will introduce a wireless internet phone aimed at the home market. Verizon has been seeing its landline business shrink as consumers move to VoIP and wireless handsets.

According to The Wall Street Journal, "The new home phone, called the Hub, aims to retain existing landline customers and attract other carriers' customers, the company said." Why go to all the trouble of switching people from a phone with a cord to one that is wireless?

Verizon has been losing home customers to cable VoIP for years. And, many wireless customers have been using cellphones at home and killing their landline service. The new "Hub" has features including streaming video capacity and the ability to access data over the internet. But, the unit costs $195 and subscribers must take out a two-year, $35 a month contract to get the new product.

That service contract is why the product will be a failure. As 3G networks get better, the cellphone becomes an excellent alternative to a landline phone. Buying a second phone, which is essentially another wireless product is unnecessary and expensive. Current wireless handsets can already get video and data. Another product with similar capacities is just redundant.

For the first time in a long time, the future at Vonage (NYSE: VG) is brightening. According to The Wall Street Journal, "Vonage said Thursday that it had entered into a commitment letter with hedge fund Silver Point Finance LLC for as much as $215 million in financing." The company is about to bring in a new CEO to replace founder Jeffrey Citron.

The new money will allow Vonage to pay down a significant part of its debt.

A better balance sheet does not necessarily make for a better operating business, but it does buy the company time to prove that there is room in the market for an independent VoIP company. Fortunately for Vonage, there probably is.

While cable companies now dominate the voice-over-IP market because they can deliver the product as part of their broadband and TV offering, not all customers want their eggs in one basket. Cable companies often score low on customer satisfaction surveys. Vonage can use this to its advantage.

By positioning itself as the better service alternative, Vonage has a reasonable chance to build a decent business. Over time, that should get the stock up from $1.59.

Douglas A. McIntyre is an editor at 247wallst.com.

Verizon (NYSE: VZ) had decided that customers do not have to be landline clients to get the company's new fiber broadband and TV service. In other words, it is willing to walk away from its core business to move into the future.

According to the AP, "Surveys point to about one in seven U.S. households now lacking landlines." More people are using their cellphones instead of the traditional home phone connection.

The announcement points to the lengths to which Verizon will go to get customers away from cable companies like Comcast (NASDAQ: CMCSA). Cable does not require that people use its voice system, VoIP, to get cable television or broadband connections. If Verizon wants to match cable packages, it has to do the same.

To a large extent, the news is an indication that Verizon is not really a traditional "phone company" any more. The revenue from that part of its operations is shrinking. Its growth comes from cellular customers, home fiber subscribers, and DSL.

Alexander Graham Bell is turning in his grave.

Douglas A. McIntyre is an editor at 247wallst.com.

Get ready for the price of making phone calls to drop, probably a lot. T-Mobile is introducing a product to replace most home landlines with internet-based phone service. According to The Wall Street Journal, "The service will be available only to T-Mobile cellphone customers. To sign up, they must buy a $50 Internet router from T-Mobile and pay $10 a month for unlimited local and long-distance domestic calling."

It is a good bet that the service will be rolled out to reach customers that T-Mobile does not have as cell subscribers or that AT&T (NYSE: T) and Verizon Wireless will have to match the program. In the case of AT&T and Verizon (NYSE: VZ), they will be competing with the shrinking but profitable landlines businesses which are being eroded by VoIP, especially from cable companies.

AT&T and Verizon Wireless have already announced flat-rate unlimited calling plans for $99.99 a month. The price war in the cellular market is cutting these stocks down to 52-week lows, but the deal for consumers is outstanding. And, that pricing pressure is about to move into the consumer home phone market.

A cellular price war. A home phone price war. For shareholders in major telecoms, it's bad news For consumers, it doesn't get any better.

Douglas A. McIntyre is an editor at 247wallst.com

For several years, Comcast (NASDAQ: CMCSA) was considered one of the most successful companies in America. It used its cable franchise to build a huge broadband, VOD, and VoIP cash machine. The so-called "triple play" of voice, TV, and broadband could not be matched by telecom competitors, so Comcast took hundreds of thousands of phone customers away from them each quarter.

From mid-2003 to early 2007, Comcast shares rose close to 100%. During the last three months, they are down 27%.

It finally occurred to Wall Street that competition from satellite TV and the new fiber-to-the-home products from telecom companies like Verizon (NYSE:VZ) were eating into Comcast's customer base. The company recently announced that its growth and cash flow would be less than expected. Customer growth was slowing and the firm had to put more money into infrastructure so that it could improve offerings for products like HDTV.

An influential cable analyst, Benjamin Swinburne of Morgan Stanley, says the slide in Comcast shares is over. According to Barron's the analyst "notes that the stock's multiples have been compressed to historic lows." He also thinks EPS and free cash flow could grow as much as 20% a year, if Comcast can keep adding voice and HDTV customers.

The logic for Comcast making a comeback may be a little thin. Verizon's FiOS is taking customers from Comcast and it is only in a small fraction of the 18 million homes that will eventually have access to the service.That means that the head-to-head competition for the cable company will actually increase. And satellite TV companies continue to ramp up their programming and HDTV offering.

The worst is probably not over for Comcast.

Douglas A. McIntyre is an editor at 247wallst.com.

Cable shares were beginning to get back on track. FCC plans to further regulate the industry never made it off the ground. It looked like the the industry had clear running.

But, Comcast (NASDAQ: CMCSA) issued a profit warning saying that its cash flow in 2007 might be only 80% of what it was last year. The number of subscribers it expected to sign up would fall from previous forecasts and capital spending on new infrastructure would rise. Barron's reports "the company now sees revenue generating units up about 6 million, to 57 million, rather than previous guidance of 6.5 million unit growth. Comcast now sees cable revenue growth of about 11%, down from previous guidance of at least 12%."

It appears that Wall Street was right when it began to fear the worst about fiber-to-the-home competition from telephone companies. The new technology allows them to offer fast broadband, HDTV, and voice service in one package. For several years only cable could do that. Now the telecoms, lead by Verizon (NYSE: VZ), are aggressively offering their own packages.

For investors, the problem is that new competition is likely to keep cable stocks down for a long time. That means that the lows that they hit recently may be as good as it gets.

Douglas A. McIntyre is an editor at 247wallst.com.