Ⅰ.. Legal Regime on Telecommunications in China Ⅱ.. Background and Process for Making the Telecommunications Law Ⅲ.. Main Issues Addressed by the Draf

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1 China s Telecommunications Law in the Future By Zhao Xiaoguang Department of Industry, Transport and Commerce of the LAO October, 2009

2 Ⅰ.. Legal Regime on Telecommunications in China Ⅱ.. Background and Process for Making the Telecommunications Law Ⅲ.. Main Issues Addressed by the Draft Telecommunications Law Ⅳ.. Conditions and Procedures for Foreign Investment t in Telecommunications Enterprises in China 2

3 Legal Regime on Telecommunications in China Constitution Laws Administrative Regulations Departmental e ta Rules 3

4 Ⅰ.. Legal Regime on Telecommunications in China ⅰ. Laws Formulating Body:the National People s Congress and its Standing Committee. *The Standing Committee of the NPR adopted the Decision on Maintaining the Security of the Internet on December 28,

5 ⅱ. Administrative Regulations Formulating Body:the State Council *Regulations of the People s Republic of China on Telecommunications; *Regulations Concerning Radio Administration of the People s Republic of China; * Measures for Administration of Internet Content Provision Service; * Provisions on Administration of Foreign- invested Telecommunications Enterprises, etc. 5

6 iii. Departmental Rules Formulating Body:Ministry of Industry and Information Technology(the former Ministry of Postage and Ministry of Information Industry)and the relevant departments of the State Council. * Interim Measures for Supervision and Administration of the Telecommunications Service Quality * Provisions on Administration of the Interconnection of Public Telecommunications Networks * Measures for Administration of the Building-up up of Telecommunications * Measures for Administration of Domain Names of China s Interconnected Networks * Measures for Administration of the Business Licence of Telecommunication Business, etc. 6

7 Ⅱ. Background and Process for Making the Telecommunications Law ⅰ. status quo of the telecommunication industry in China * The State Council promulgated the Regulations of the People s Republic of China on Telecommunications on September 25, 2000, which is very important to pushing forward the telecommunications industry in China. * There are over 1 billion telecommunications users, 3 basic telecommunications service providers, more than 20,000 value-added added telecommunications service providers, over 300 million internet users, and over 2,880,000 7 websites in China.

8 ⅱ.. Making the Telecommunications Law to Maintain the Sound Development of Telecommunications Industry Promoting the integration of three networks in China, and upgrading the industrial structure. Preventing monopoly in telecommunications market, and maintaining order of the telecommunications market. Protecting the lawful rights and interests of telecommunications ti users. Safeguarding telecommunications networks and information security. 8

9 iii. Procedures for drawing-up and reviewing of the draft Telecommunications Law Drawn up by the Ministry of Industry and Information Technology (the former Ministry of Information Industry) Reviewed by the State Council (LAO LAO) Deliberated by the Standing Committee of the NPR (Specific Committee 9

10 Work made by the LAO of the State Council at the stage of reviewing the Draft Law 1. Studying foreign legislations on telecommunications and referring to foreign advanced experience. 2. Widely soliciting opinions as required by the China s legislative procedures. 3. Carrying out domestic survey and study to know the status quo of telecommunications industry and the major issues encountered in the process of development. 4. Commissioning scientific and research institutions with specific study on telecommunications ti legislation. 10

11 Ⅲ. Main Issues Addressed by the Draft Law ⅰ Promoting the integration of three networks in China The Draft Law provides, The State actively promotes the integration of networks, encourages to transmit voice, text, data, image, symbol as well as information in other forms by means of communications network, radio and television network, the Internet, etc. to meet the need of the public for information on education, science and technology, culture and entertainment. The State also encourages the radio and television transmission institutions to engage in telecommunications business by means of radio and television network, communications network, the Internet, etc., and encourages telecommunications service operators to engage g in radio and television business by means of radio and television network, communications network, the Internet, etc. 11

12 ⅱ. Categorization of Telecommunications Services and Access to Telecommunications Market Basic telecommunications services refer to the provision of public network infrastructure, public data transmission and basic voice communications. Value-added added telecommunications services refer to those telecommunications services provided by means of the public network infrastructure, except public data transmission i and basic voice communications services. 12

13 iii. Interconnection of Telecommunications Networks Defining the basic procedures, rules and requirements for interconnection. Making provisions on prohibiting acts that block interconnection. Defining the dispute settlement mechanism for interconnection. Making gp provisions on prohibiting acts that impair interconnection. 13

14 ⅳ. Administration of Telecommunications Charges The Draft Law provides, The charge rates and methods is set by telecommunications service operators on their own;the charge rates of basic telecommunications services that do not enjoy enough market competition or have close interests with telecommunications users shall, upon a hearing, be set by the competent telecommunications department jointly with the competent pricing department of the State Council. 14

15 ⅴ. Administration of Telecommunications Resources and Telecommunications-related Construction Under the principle of unified planning, concentrated administration, scientific allocation and efficient utilization, the Draft Law defines specific systems for administration and utilization of telecommunications resources. It also encourages the basic telecommunications service operators to co-use or co-build telecommunications ti facilities under the principle i of practical technology, saving resources and reasonable disbursement. 15

16 ⅵ.. Protecting the Rights and Interests of Telecommunications Users Safeguarding g the option right of users Telecommunications service operators shall not restrict or force telecommunications users to choose the category of telecommunications service and the telecommunications terminal equipment. Safeguarding the right to know of users The operators shall provide convenience to users for paying charges and inquiries. Safeguarding the privacy of users The operators shall strictly protect the information related to users. 16

17 ⅶ Telecommunications Networks and Information Security The telecommunications service operators shall, in the course of network planning, construction and operation, ensure that the networks and information security facilities are designed, constructed and put into use simultaneously. The operators shall develop and strengthen a internal safeguarding system for networks and information security. The Draft Law lists acts that jeopardize networks and information security and prohibits producing, reproducing, releasing or disseminating the information that jeopardizes national security, advocates terrorism or spreads obscenity or pornography. 17

18 Ⅳ Conditions and Procedures for Foreign Investment in Telecommunication Enterprises in China The State Council promulgated the Provisions on Administration i ti of Foreign-invested invested Telecommunications Enterprises on December, 2001, which specially specified the form, conditions and procedures for foreign investment in telecommunications enterprises in China. On September,2008, the State Council revised the mentioned Provisions,lowering the minimum registered capital of foreign-invested invested telecommunications enterprises and deleted Article 23 of the former Provisions, that is, Listing at shares overseas by domestic telecommunications enterprises must be subject to examination and consent from the competent information industry department of the State Council and be approved in accordance with the relevant provisions of the State. 18

19 ⅰ.. Conditions for Foreign Investment in Telecommunications Enterprises in China Article 10 of the Regulations on Telecommunications provides for general conditions for operating basic telecommunications service: 1. The operator shall be a legally established company that specializes in basic telecommunications services and in which the State s equity interest or shareholding is not less than 51%; 2. It shall have a feasibility study and technical plan regarding network formulation; 3. It shall have funds and specialized personnel commensurate with its proposed business activities; 4. It shall have s site and the corresponding resources to carry out its operations; 5. It shall have the reputation for, or be capable of, providing long-term services to its subscribers; and 6. Other conditions as stipulated by the State. 19

20 Article 13 provides for general conditions for operating value-added added telecommunications services : 1. The operator shall be a legally established company; 2. It shall have funds and specialized personnel commensurate with the business activities to be developed; 3. It shall have the reputation for, or be capable of providing long-term services to subscribers;and 4. Other conditions as stipulated by the State. 20

21 Special conditions for foreign investment in telecommunications ti enterprises in China Requirements for registered capital Requirements for proportion of foreign investment Requirements for qualifications of foreign investors 21

22 Requirements for registered capital The minimum registered capital shall be RMB 1 billion yuan for providing basic telecommunications services throughout the country or across different provinces, autonomous regions and municipalities directly under the Central Government, or shall be RMB 10 million yuan for providing value-added added telecommunications services. The minimum registered capital shall be RMB 200 million yuan for providing basic telecommunications ti services within a province, an autonomous region or a municipality directly under the Central Government, or shall be RMB 1 million yuan for providing value-added added telecommunications services. 22

23 Requirements for proportion of foreign investment t The proportion p of foreign investment in a foreign- invested telecommunications enterprise providing basic telecommunications services (excluding radio paging) shall not exceed 49% in the end. The proportion of foreign investment in a foreign invested telecommunications enterprise providing value-added added telecommunications services (including radio paging in basic telecommunications services) shall not exceed 50% in the end. 23

24 Requirements for qualifications of foreign investors The major foreign investor of a foreign-invested invested telecommunications enterprise providing basic telecommunications services shall meet the following conditions: (1)being qualified as an enterprise legal person; (2)having i obtained the license for providing basic telecommunications services from the registration country or region; (3)having the funds and professionals commensurate with its business operation; and (4)having a good performance record and experiences in providing basic telecommunications services. The major foreign investor in a foreign-invested invested telecommunications enterprise providing value-added added telecommunications services shall have a good performance record and experiences in providing value-added added telecommunications services. 24

25 ⅱ. Procedures for foreign investment in telecommunications ti enterprises in China 1. Obtaining the Examination Opinions on Foreign Investment t in Telecommunications Services Provision i from the competent communications department. 2. Obtaining the Approval Certificate for Foreign-invested invested Enterprise from the competent t commerce department. t 3. Undertaking the formalities with regard to License for the Telecommunications Services Provision at the competent communications department. 4. Undertaking the formalities for enterprise registration at the department for industry and commerce administration. 25

26 Thanks! 26