These regulations are limited in geographical scope to the Guangzhou Municipality (ie. Guangzhou City and its environs in the Southern China) and supplementing existing national and provincial regulations passed by the relevant departments of telecommunications. They replace earlier regulations passed in 1988.
Since 1993, telecommunications in China has undergone far-reaching regulatory and industry transformation. The telecommunication sector has been targeted for priority investment by China's State Council. In 1994, with State Council approval, a second international telecommunications operator, Unicom, was approved to develop a complementary nationwide telecommunications infrastructure using existing private networks, in conjunction with other ministries. The Ministry for Post and Telecommunications (MPT) has also been reorganized, retaining a regulatory role but hiving off its operational role to separate entities.
Within this overall scheme, the provincial MPTs have retained power to operate as well as to regulate public telecommunication services, but have been encouraged to grant licences to non-government entities for value-added services such as paging, mobile phone, and data services.
During 1996, there has also been a flurry of regulations seeking to control the content of various information services.
Within this overall scheme, one constant has been a blanket prohibition on direct foreign participation in any telecommunication operations. Creative ways have been found to permit some degree of operational or investment involvement, using structures which have been approved by relevant authorities, particularly in the Guangzhou area, but the basic prohibition remains.
WHAT THE REGULATIONS SAY
The principal focus of the regulations is:
To confirm that the Municipal Telecommunications Authority is responsible for licensing essentially local services such as radio paging, mobile telephones and VSAT.
To confirm that information services licensed by the Municipality must nevertheless also be licensed at a higher level (see for example regulations governing (a) Internet use and (b) the activities of foreign news agencies).
To require specific approval from the Municipal Authority for certain activities (spelt out at Article 12) which essentially relate to the accessing of public services. This is to avoid private networks being used to bypass basic public telecommunication services, still predominantly state-controlled.
To prohibit any transfer of rights or equipment, so as to avoid undesirable licensees taking over operations without the blessing of the regulator.
To stipulate requirements for the inclusion of adequate telecommunication facilities in any new construction projects, and the sharing of telecommunication facilities so as to avoid duplication and re-construction.
To set out minimum service standard requirements, most notably for compliance with subscriber requests for telephone connection (to be done within three months) and for repairs to be carried out (within 15 days). Failure to comply entitles the subscriber to free service for a period corresponding to the delay, plus compensation.
To stipulate sanctions for non-compliance with these and other more egregious abuses such as interception of messages, tampering with telecoms equipment and unauthorized dealings in mobile phone equipment.
These regulations appear to reflect the current trend within China for restructuring telecommunication services. The increased competition for value-added services is already having an effect in Guangzhou, with waiting times for telephone service connection reducing significantly.
For foreign investors with aspirations to share profits or otherwise participate in telecommunication activities, the regulations provide no new glimmers of hope. Whilst joint ventures with foreign participation have been successfully implemented in recent years, their legal basis remains uncertain. The best prospects for radical change in this area lie with the current discussions for China to join the World Trade Organization, in which the opening up of China's telecoms sector to foreign investment is a key issue.
FURTHER INFORMATION on the above may be obtained via Linklaters & Paines Hong Kong office or via any of the other nine Linklaters & Paines offices world-wide, located in Singapore, Tokyo, London, Brussels, Paris, Frankfurt, New York, Washington D.C. and Moscow. Contact details for the various L&P offices worldwide are available via the Linklaters & Paines corporate listing c/o Business Monitor Online - http://www.businessmonitor.co.uk
c Linklaters & Paines 1996 - Tel +852 2842 4888
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