"Skype 
is currently not doing business in Korea, nor does it have a telecoms operation in Korea. Should Skype begin to conduct business in Korea, either directly or with a local partner, all applicable laws will of course be followed." This on Monday from DongChol Beh, Skype Market Manager for Korea. Parsing carefully, this means you cannot buy Skype credits if you are in South Korea (or is it if Skype believes you are in South Korea? or you can't buy it with a South Korean credit card?). You can spend Skype credits if you have them on SkypeOut to South Korea land lines.
It's in response to headlines like:
- ZDNet Korea: Skype, new memberships halted!
- VoIP news: Skype in trouble with South Korea government
- The Korea Times: Skype Probed for Unregistered Marketing
- 21talks: Skype accused (again) of illegal practices
- Strategy Page: South Korea Puts the Screws to U.S. Troops
- Jan in Malaysia: South Korean government held off on its plan to ban the use of VOIP
Hmmm.
It's a story of growing pains, of Skype moving in to a country, running into an obstacle, and backing off to re-enter correctly.
It's also about large local phone companies lobbying hard with government regulators to restrict competition from VoIP. (Sound familiar?)
UPDATE:
- Auction, formerly IAC, the Internet Auction Company, was purchased by eBay and has been eBay's Korean subsidiary for five years.
- Korean laws and regulations require foreign VoIP providers to partner with a local carrier. This provides a channel for government contact about taxes, fees, and policy.
- Auction registered as a carrier with the communications ministry, MIC. That was the first step coming into compliance with an MIC order.
- Now Skype and Auction are filing their carriage agreement with MIC, showing Skype in compliance with that rule.
- The MIC was fast at approving Auction's registration, so everyone is hopeful they will also quickly approve the Auction-Skype agreement.
Follow-up questions unanswered by press time.
- Was Skype doing business in Korea before?
- When, for which products, and in what manner?
- When and why did Skype stop?
If Skype or its partners are subject to fines for infractions, then we may not get answers for a while.
Skype clearly plans to serve the South Korean market with SkypeIn and SkypeOut. What about PayPal? At the moment, PayPal only lets South Koreans withdraw money, not send money. This must be tough for eBay since South Korea is eBay's fourth largest market, after the United States, Germany, and the UK. More than 34 million Koreans use the Internet, about 70% of the population.
The regulatory embarassment, customer inconvenience, and deferred cash flow must be difficult for Skype's portal partner, Auction. It's unclear if Auction-Skype is a joint venture, an Auction project, a Skype project, or a Skype subsidiary. UPDATE: It is an Auction project, working on behalf of Skype, its sister company.
A translation from ZDNet Korea:
Skype, new memberships halted!
by Hyang-Seon Lee (ZDNet Korea), June 28th, 2006
Internet phone company 'Skype' ordered by MIC to stop receiving new memberships to its 'Skype Out' services due to violating domestic Korean e-communications business codes.
On June 23rd, South Korea's MIC (Ministry of information and communications) said the Skype has not met the e-business codes 19 (special business license) and 59.2 (international connection) for internet phone service (VoIP) and was ordered to stop offering new memberships immediately.
Skype offers unlimited free phone calls between PC to PC service 'Skype' and wire/wireless phone accessible 'Skype Out' and regular phone line service 'Skype In' as the main business products since last February.
The violations were with failing to register for special communications business (code 2) and starting the business (international phone services) without the approval from MIC's director. Especially requiring consumers to prepay for the services were in questions for the violations too.
To comply with the MIC's new order, Skype must submit its subsequent corrective actions to the MIC. In order for the Skype to continue with regular 'Skype out' operations, it must first register to meet the special business code 2 and obtain approvals from the director of MIC to operate international phone services.
Because of these new orders, Skype plans to sublease Wintel's '070' (code class 1 license) number to continue the operations.
Auction-Skype operations director Dong-Chul Bae said, "At this time, we are discussing the current situation with MIC to satisfy all their regulation codes.We will proceed with new memberships as soon as the all the regulations are in accord with the MIC."
An affiliate from MIC commented, "Domestic Skype subsidiaries auction now have registered with special code 2 and putting effort to meet all the regulations and subsequent penalties or fines should get waived."
This resulted because foreign firm started the business without checking with the domestic authorities beforehand.
Meanwhile, Skype had to postpone services to 'Skype In' early February due to the regulations. It's ready for regular service presently but the company announced it will begin the services from this July.
. Nov 7-9. San Francisco. 
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