On 26 April 2013, the PRC Ministry of Industry and Information Technology ("MIIT") published a set of draft measures for the administration of a pilot project concerning new telecommunications business (试办新型电信业务管理办法) (the "Measure"). The Measure will formalise the procedure for the trial of new forms of telecommunications business which do not fall within the current regulations. The public consultation of the Measure will end on 28 May 2013.

Background

Under the current licensing regime in PRC, a service provider may operate a telecommunications business that falls within the Telecommunications Business Classification Catalogue (the "Catalogue"), upon being granted the relevant licence from MIIT. The PRC Telecommunications Regulation also provides that the trial operation of any telecommunications business beyond the scope of the Catalogue will require filing with the relevant authority.

The Measure will now formalise the procedure for existing operators to provide, on a trial basis, new telecommunications business which is not referred to in the Catalogue ("New Business"). In particular, this will cover any commercial activities involving the provision of a telecommunications service not listed in the Catalogue through public telecommunications network.  

Key features of the Measure

  1. Permitted scope

Basic telecom business ("BTB") licensees may seek to provide a New Business involving public network facilities, public data transmission or voice communications service.

Value-added telecom business ("VATB") licensees may seek to provide a New Business involving telecommunications and messaging services through public network facilities.

  1. Filing

Operators should file the required information relating to the New Business (in the prescribed form) with the relevant communications authority (provincial or municipal) 30 working days before the intended trial date.

  1. Duration

The trial period for each New Business is 2 years and if required, operators should apply for an extension from the relevant authority (to which the filing was initially made) 30 working days before the date of expiry.

  1. Incorporation into the Catalogue

Upon completion of the trial period, MIIT will incorporate a New Business into the Catalogue if MIIT considers that the relevant activities are mature, and such New Business would be licensed accordingly.

  1. Pre-existing operations

Operators who are running a pre-existing New Business before the Measure takes effect should file the relevant information within 6 months from the commencement of the Measure. The pre-existing New Business may continue to operate during the filing process.

Our observations

  1. Given the continuing convergence of different networks (eg, telecom and internet), the Measure will be an important step in expanding the general regulatory scope for the provision of telecommunications services in PRC and for ensuring that the Catalogue keeps up with technological advancement and new business models.
  2. It should be noted that the Measure was issued shortly after the recent MIIT consultation on the provision of mobile communications resale business on a trial basis (as discussed in our previous article), which has now been implemented since 17 May 2013 (the "Proposal").
  3. The Proposal encourages domestic participation (ie, non-state-owned operators) in providing mobile resale business in China for the very first time. Importantly, the Proposal sets out the criteria for providing mobile resale business on a trial basis (including the cooperation between BTB and VATB operators), which will last until the end of 2015.
  4. As a result, it is expected that the Catalogue will be revised in due course not only to include the provision of new forms of telecommunications business in light of the Measure, but also the provision of mobile resale business (ie, MVNO services), which is now open to trial by domestic operators under the Proposal. This development is also consistent with the views of the Minister of the MIIT (as discussed in our previous article mentioned above), which indicate that changes will be made to the Catalogue this year – the first time since its last revision in 2003.