On September 28, 2008, The PRC Ministry of Industry and Information Technology (MIIT) and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) jointly issued an urgent circular to aggressively promote the sharing and joint construction of telecom infrastructure in light of the current consolidation in China’s telecom sector and the next wave of network constructions. The urgent circular is entitled the Urgent Circular on Promoting Coconstruction and Sharing of Telecommunication Infrastructure.
According to the Urgent Circular, which took effect on October 1, 2008, the existing telecommunication towers, pole lines, base stations, and transmission lines must shared or jointly constructed when possible. If an operator plans to build new telecommunication towers, pole lines or other base station facilities, it must inform the other operators, who will then have 10 days to notify the proposing operator if they already have such facilities to share or if they want to coconstruct the new facilities. The Urgent Circular states that no exclusive agreements are allowed when operators rent facilities from a third party.
Under the Urgent Circular, the government will supervise and examine the co-construction and sharing of new base station facilities and transmission lines. The MIIT and the SASAC will administer punishments and disciplinary actions against parties that violate the Urgent Circular’s mandates.
In September, the National Audit Office issued a report on the implementation of the Central Government’s budget in 2007. The Report highlighted the problem of redundant investments in telecom infrastructure between 2002 and 2006, during which the five major telecommunication operators spent RMB1.1235 trillion in building telecommunication infrastructure while only one-third of available cables was being put to use. The Urgent Circular therefore emphasizes that China Telecom, China Mobile and China Unicom, the three remaining carriers after the recent consolidation of telecom carriers, need to cooperate in the effort to minimize excessive construction of telecommunications infrastructure.
On November 12, 2008, the Qinghai branches of China Telecom and China Unicom signed a framework agreement to carry out the sharing and co-construction of telecom infrastructure, marking the first of such agreements after the issuance of the Urgent Notice.