1.1 Please describe the: (a) telecoms, including internet; and (b) audio-visual media distribution sectors in your jurisdiction, in particular by reference to each sector's: (i) annual revenue; and (ii) 3–5 most significant market participants.
Since its accession to the WTO, China has made tremendous progress in the telecoms, audio-visual media distribution, and internet infrastructure sectors in terms of market liberalisation, revenues, mobile phone and internet penetration rates, and innovation capability. In particular, the government established the China (Shanghai) Pilot Free Trade Zone ("SHFTZ") and relaxed several restrictions on foreign investment in the value-added telecommunications services ("VATS") sector in late 2013. Since the SHFTZ is a pilot zone set up to test reform initiatives that may significantly impact China's relevant markets, the new SHFTZ policies serve as an important signal that shows the government is moving towards liberalising the telecoms industry. In late 2014, three more pilot free trade zones (i.e. Tianjing, Fujian and Guangdong) were established. While Special Administrative Measures (Negative List) on Foreign Investment Access to Pilot Free Trade Zones was published by the State Council in May 2015, which is intended to be applicable to all of the four pilot free trade zones (i.e. SHFTZ, Tianjing, Fujian and Guangdong), the effect of implementing the policies on foreign investment in the telecom sector needs to be further assessed.
China initiated its triple-network (telecoms, internet, and broadcasting networks) convergence process in 2009 and issued the Promotional Program of Triple-network Convergence in August 2015. In May 2016, the Ministry of Industry and Information Technology ("MIIT") issued a Basic Telecommunications Services ("BTS") Licence to China Broadcasting Television and Internet Company (to operate Internet Domestic Data Transmission Services and Domestic Communication Facility Services), which is expected to further promote the triple-network convergence process and the involvement of cable television networks in general telecoms services.
In late 2013, the MIIT awarded 4G licences to three of China's telecoms giants (i.e., China Telecom, China Mobile and China Unicom) to establish 4G mobile networks that would operate under the TD-LTE standard championed by China. In February 2015, the MIIT awarded 4G licences, which would operate under the FDD-LTE, to China Telecom and China Unicom. With respect to basic telecoms infrastructure, on July 15, 2014, the three telecoms giants established the China Iron Tower Company to facilitate the co-construction and sharing of iron towers, base stations, and other basic telecoms facilities.
Telecoms sector and internet infrastructure
In 2016, revenue from the telecoms industry was estimated to be RMB 1,189.3 billion, an increase of 5.6% from 2015. Mobile phone subscribers in China have reached 1.32 billion. China Telecom, China Mobile and China Unicom, which are state-owned enterprises, are the three major players in the telecoms sector.
These areas are not fully liberalised and open to the private sector and are still subject to restrictive conditions for foreign investment. However, as part of the efforts by the Chinese government to introduce private investment into State-dominated sectors, China Telecom has announced that it will initiate a trial of a mixed ownership structure for telecoms business (public capital, private capital and foreign capital). In addition, in 2013, the MIIT issued the Notice Concerning the Implementation of Mobile Communication Re-sales Business, which opens up the mobile communication re-sales business to private capital. So far, the MIIT has awarded MVNO trial approvals to 50 private companies (including JD.com, Suning, Guomei, Xiaomi, and a subsidiary of Alibaba). In early 2016, the MIIT issued two instruments to set forth operational requirements for MVNO operators (e.g. regulating pricing and implementing a real-name system).
Audio-visual media distribution
In 2016, the coverage percentage of radio and television reached 98.4% and 98.9% respectively. The revenue for the distribution of audio-visual content via the internet reached RMB 107 billion (up 135% from 2015). However, broadcasting is still tightly regulated in China. Currently, only the General Administration of Press and Publication, Radio, Film and Television ("GAPPRFT") and certain education administrative departments are allowed to establish radio and television stations. China Central Television ("CCTV") is the largest national television station, but there are over 100 satellite television channels and thousands of local television channels spread throughout the different provinces of China. Youku, iQIYI, Sohu and LETV are the major internet audio-visual service providers.
Foreign shareholding is prohibited in this sector.
(Note: Revenue data sources of the telecoms sector and internet infrastructure are available at: http://www.miit.gov.cn/n1146312/n1146904/n1648372/c5498087/content.html; and audio-visual media distribution data is available at: http://www.stats.gov.cn/tjsj/zxfb/201702/t20170228_1467424.html.)
1.2 List the most important legislation which applies to the: (a) telecoms, including internet; and (b) audio-visual media distribution sectors in your jurisdiction.
The Chinese government has issued a great number of regulatory instruments in the form of administrative regulations of the State Council, which take precedence in the hierarchy of administrative provisions, and various ministerial rules with respect to these three sectors, including the following principal provisions:
Telecoms and internet
- PRC Telecommunications Regulations (last revised in 2016) ("Telecommunications Regulations"), which sets forth the general principles governing the telecoms market, construction, services and safety, including the internet sector.
- The Classification Catalogue of Telecommunication Services (2015) ("Telecommunications Classification Catalogue"), which contains the classifications of telecom services.
- Measures for Administration of Telecommunications Business Operating Licences (2009) ("Telecommunications Business Licence Measures"), which regulates the granting of, and administration of, telecoms business licences.
- Measures for Administration of Internet Information Services (last revised in 2011) ("ICP Measures"), which regulates the licensing and administration of services providing information via the internet.
- Opinions on Further Opening up Value-added Tele-communication Services to Foreign Investment in the China (Shanghai) Pilot Free Trade Zone (2014) ("SHFTZ Opinions") and Circular on Removing the Restrictions on the Foreign Equity Ratios in Online Data Processing and Transaction Processing Services (Operating E-commerce) in the China (Shanghai) Pilot Free Trade Zone ("SHFTZ Circular"), which set forth the fields to be liberalised to foreign investment and the safeguarding measures required to promote the further liberalisation of VATS within the SHFTZ.
- Cyber Security Law (2016), which regulates the standards, measures for internet environment and infrastructure security.
- Measures on Internet Product and Service Security Censorship (2017), which regulates the internet security censorship activities under internet security censorship committee.
Audio-visual media distribution
- Regulations for Administration of Radio and Television (last revised in 2013) ("Radio and Television Regulations"), which not only regulates the establishment of radio and television stations and the broadcasting and transmission of radio and television programmes, but also works as the fundamental instrument governing the audio-visual media distribution sector.
- Regulations for Administration of Audio-Visual Program Services through Oriented Transmission and Designated Networks (2016), which regulates the transmission of audio-visual programmes through VAN, IP/VPN, or certain oriented transmission channels on the internet in the form of IPTV, designated network mobile phone TV, internet TV, etc.
- Provisions on Administration of Internet Audio-visual Program Services (last revised in 2015), which regulate the transmission of audio-visual content via the internet.
- Interim Provisions on the Administration of Internet Culture Activity (last revised in 2011), which regulates the production and dissemination of "cultural products" (including online games and audio-visual contents) via the internet.
- Regulations for Administration of Network Publishing Services (2016) ("Network Publication Regulations"), which regulates publication activities via the information networks.
- Regulations on Internet-based Live Broadcast (2016), which regulates the users and providers of live broadcast service on the internet.
- Interim Provisions on Internet Advertising (2016), which regulates the internet advertisement service provider, advertisement owner and the issuer.
- Regulations on Internet News and Information Service Management (2017), which regulates the production and dissemination of news and information on the Internet.
Foreign investment in the three sectors is also subject to:
- Catalogue for the Guidance of Foreign Investment Industries (2017) ("FIE Industry Catalogue"), which classifies the industries into either: "prohibited", "restricted", "permitted" or "encouraged" for foreign investment.
- Provisions on Administration of Foreign-Invested Telecommunications Enterprises (last revised in 2016) ("FITE Provisions"), which regulates the establishment of FITEs.
- Opinions on the Introduction of Foreign Capital into Cultural Industry (2005), which provides guidance for foreign investment in China's cultural industry.
1.3 List the government ministries, regulators, other agencies and major industry self-regulatory bodies which have a role in the regulation of the: (a) telecoms, including internet; and (b) audio-visual media distribution sectors in your jurisdiction.
The following government authorities are the major industry regulatory bodies:
- The MIIT, which is responsible for the regulation of China's telecoms sector nationwide (e.g., granting of licences in the sector).
- The National Development and Reform Commission ("NDRC"), which has jurisdiction over project approval and pricing for telecoms services.
- The Ministry of Commerce ("MOFCOM"), which has the authority to approve foreign investment projects.
- The State Administration for Industry and Commerce ("SAIC"), which is responsible for industrial and commercial registration for enterprises and for the issuance of business registration licences.
- GAPPRFT, which has jurisdiction over the approval and administration of publication activities (including those via the internet), and over the administration of radio and television broadcasting, transmission of audio and video content, and also content censorship.
- The Ministry of Culture ("MOC"), which has jurisdiction over the cultural industry, including the responsibility for pre-approving online transmissions of "cultural products".
- The State Oceanic Administration ("SOA"), which regulates the laying of underwater cables and pipelines.
- The Ministry of Housing and Urban-Rural Development ("MOHURD"), which has jurisdiction over the approval process for construction and engineering design activities that relate to the telecoms sector.
1.4 In relation to the: (a) telecoms, including internet; and (b) audio-visual media distribution sectors: (i) have they been liberalised?; and (ii) are they open to foreign investment?
Foreign investment in these three sectors is subject to varying degrees of restriction.
Telecoms and the internet
At a national level, the ratio of foreign investment in Foreign Invested Telecommunications Enterprises ("FITEs") must not exceed 49% for the operation of BTS (excluding wireless paging services, very small domestic aperture terminal earth station communications services, fixed network domestic data transmission services, customer premise network services and network hosting services) and 50% for the operation of VATS (including wireless paging services, very small domestic aperture terminal earth station communications services, fixed network domestic data transmission services, customer premise network services, network hosting services, cellular mobile communications services provided by way of resale; and excluding e-commerce activities operated for profit (a subcategory of online data processing and transaction processing services), in which the ratio of foreign investment can reach 100%).
For a FITE that operates BTS services, the "major foreign investor" in the FITE (i.e., the investor who holds the largest investment amount among all foreign investors, accounting for 30% or more of the total contribution of all foreign investors) must hold a licence for operating basic telecoms services in the country or region where it is incorporated. For a FITE that operates VATS service, the major foreign investor must have a good business record and have experience in this area.
To promote reform and opening up to foreign investment, the MIIT issued the SHFTZ Opinions and the SHFTZ Circular, which only apply in the territory of the SHFTZ. They introduce a number of new initiatives that increase participation by foreign investors in the telecoms industry. More specifically, a FITE incorporated in the SHFTZ is authorised to provide:
- six kinds of telecoms services without any restrictions on foreign investment, i.e. the foreign investor can make up to 100% investment in the FITE, including in: (i) application store services; (ii) store-and-forward business services; (iii) call centre services; (iv) internet access services (provision of internet connection services to online users); (v) domestic multi-party communication services; and (vi) online data and trade processing services (operating e-commerce businesses); and
- one kind of telecoms service, subject to restrictions on foreign investment, i.e. domestic internet virtual private network (VPN) services, subject to a 50% investment restriction. All of the above-mentioned services can be provided on a nationwide basis, except internet access services, which are only allowed to be provided to customers within the SHFTZ. With certain exceptions (i.e. facilities used for providing call centre services, and edge routers for domestic internet protocol VPN services, may now also be installed within the Shanghai municipality area, and website acceleration server nodes are now permitted to be set up nationwide where the relevant website constitutes an essential part of the service provider's operation of the licensed VATS), a FITE incorporated in the SHFTZ must locate all its service facilities in the SHFTZ in order enjoy the benefits provided in the SHFTZ.
Audio-visual media distribution
In the context of electronic communications, the distribution of audio-visual content is not open to foreign investment.
2.1 Is your jurisdiction a member of the World Trade Organisation? Has your jurisdiction made commitments under the GATS regarding telecommunications and has your jurisdiction adopted and implemented the telecoms reference paper?
China has been a member of the WTO since December 10, 2001, and has made commitments under the GATS regarding telecommunications as set forth in Annex 9 (Schedule of Specific Commitments on Services) of the Protocol of Accession of the PRC, which includes the Telecommunications Reference Paper. China's WTO commitments are subject to certain restrictions on foreign investment. China has been making significant progress towards a pro-competitive, independent and transparent regulatory mechanism for the telecoms sector.
2.2 How is the provision of telecoms (or electronic communications) networks and services regulated?
The provision of electronic communication networks and services is regulated under two broad categories, namely BTS and VATS, in accordance with the Telecommunications Regulations and other related instruments (see question 1.2 above).
2.3 Who are the regulatory and competition law authorities in your jurisdiction? How are their roles differentiated? Are they independent from the government?
The key governmental regulators at the central level (or their delegates at the provincial level), as applicable, include the MIIT, NDRC, MOFCOM, SAIC, MOC, GAPPRFT, SOA and MOHURD. These authorities undertake responsibilities in their respective jurisdictions (see question 1.3 above).
Among them, three central government agencies are responsible for the enforcement of the Anti-Monopoly Law (2008): (i) the Anti-Monopoly Bureau of MOFCOM; (ii) the Bureau of Price Supervision and Anti-Monopoly of NDRC; and (iii) the Antimonopoly and Anti-Unfair Competition Enforcement Bureau of SAIC. MOFCOM is responsible for examining the concentration of business operators. NDRC and SAIC are both responsible for regulating monopolistic agreements, abuse of market dominance, and abuse of administrative power in limiting competition. Between the two, NDRC is responsible for price-related violations and SAIC is responsible for non-price-related violations.
2.4 Are decisions of the national regulatory authority able to be appealed? If so, to which court or body, and on what basis?
In accordance with the PRC Administrative Review Law (last revised in 2009) and the MIIT's Implementation Rules on Administrative Review (2002), specific administrative decisions of the MIIT (such as the MIIT decisions on network interconnection disputes) can be appealed through either administrative review or judicial review. Specifically, one can appeal against the decision of the MIIT's municipal counterparts at the MIIT or at the People's Court in accordance with the Law of the Procedure for Administrative Litigations (last revised in 2014). One can further appeal against the decisions of an administrative review of the MIIT through the judicial process if one is dissatisfied with such decisions, or apply for a final decision from the State Council in accordance with the PRC Administrative Review Law.
In principle, an administrative review will give attention to the "lawfulness" and "appropriateness" of the decision whilst a judicial review will be more focused on the "legality" and "fairness" of the case. However, neither procedure is conducted on a "merits review" basis.
Licences and Authorisations
2.5 What types of general and individual authorisations are used in your jurisdiction?
Telecoms services in China are subject to two broad licensing categories, "BTS" and "VATS". These two categories are not mutually exclusive. The BTS Licence applies to basic public network facilities, public data transmission and basic voice communication services. The VATS Licence covers telecommunications and information services which utilise basic public network facilities.
The BTS Licence and VATS Licence are further divided into several different sub-categories by business type (such as "fixed communication services" under BTS, and "domestic internet virtual private network services" under VATS) under the Telecoms Classification Catalogue and by regional coverage. The service provider can only operate within the respective sub-categorised scope and within the geographical territory of the licence as it was approved and granted by the MIIT or its provincial counterparts.
2.6 Please summarise the main requirements of your jurisdiction's general authorisation.
In addition to requirements on technical capabilities, the Telecommunications Business Licence Measures also set forth certain conditions on capital and equity ownership, including that: (i) the applicant must be a lawfully established company, and for a BTS Licence, the company should be at least 51% state-owned; and (ii) the minimum registered capital of the applicant must be RMB 100 million (RMB 1 billion for a cross-provincial business) for a BTS Licence, and RMB 1 million (RMB 10 million for a cross- provincial business) for a VATS Licence. Foreign ownership is subject to additional restrictions under the FIE Industry Catalogue and the FITE Provisions, including the ratio of foreign investment in FITEs (see question 1.4 above). In addition, the registered capital of a FITE incorporated in the SHFTZ must be RMB 1 million or more, which is only 10% of the registered capital required by a FITE (for providing VATS nationwide) under the FITE Provisions.
In practice, the regulatory authorities generally appear to have concerns about, and have imposed a moratorium on approving, foreign investment in the telecoms industry. This is especially true for certain types of businesses, such as for the provisioning of information services through the internet ("ICP") for profit.
2.7 In relation to individual authorisations, please identify their subject matter, duration and ability to be transferred or traded. Are there restrictions on the change of control of the licensee?
A BTS Licence and VATS Licence will specify the type(s) of permitted operations for the particular telecoms enterprise in line with the categories and classifications under the Telecommunications Classification Catalogue. The duration of a BTS Licence is five or 10 years (depending on the type of business) and five years for a VATS Licence (the duration of a Licence for Pilot Operation of Value-Added Telecommunications Business by Foreign Investors in China (Shanghai) Pilot Free Trade Zone is three years). No transfers or trading of licences is allowed.
Public and Private Works
2.8 Are there specific legal or administrative provisions dealing with access and/or securing or enforcing rights to public and private land in order to install telecommunications infrastructure?
Urban construction and construction in villages must include the establishment of corresponding telecoms facilities. BTS operators are generally empowered by the Telecommunications Regulations to lawfully engage in telecoms infrastructure construction without obstruction, with some exceptions for prohibited or restricted areas, as provided by state regulations. After filing the appropriate notice, and making payment for the appropriate usage fees, BTS operators may attach public telecoms facilities to civil buildings (so long as they do not affect the safety of the building).
Access and Interconnection
2.9 How is wholesale interconnection and access mandated? How are wholesale interconnection or access disputes resolved?
In principle, the Telecommunications Regulations and the Regulations for the Administration of Public Telecommunications Networks Interconnection (last revised in 2014) require that interconnection must be established among telecoms networks on a technically feasible, economically efficient, fair and justified, and mutually collaborative basis.
In particular, "principal telecom service operators" are not allowed to refuse a request for interconnection by other telecoms service operators, and must formulate their interconnection protocols and operate within the scope approved by the MIIT. "Principal telecom service operators" are defined under the law as operators who control vital basic telecoms facilities, who own a relatively large share of the telecoms service market (for the public telecoms networks, this ratio means exceeding 50% of the market for the same type of service within the scope of the local grid), and who are able to exert substantial inﬂuence over other telecoms service operators entering the telecoms service market.
According to the Measures for Resolution of Telecommunications Networks Interconnection Dispute (2002), any disputes arising out of network interconnection must be resolved through consultation first. If no agreement is reached, the dispute must be submitted to the MIIT or its provincial counterparts for mediation. If the mediation is unsuccessful, an administrative decision would be made. The administrative decision can be challenged either through administrative review or judicial review.
2.10 Which operators are required to publish their standard interconnection contracts and/or prices?
Telecoms service operators are not statutorily required to publish their standard interconnection agreements or prices, though it is required by relevant regulation that the standard interconnection contracts should include certain key provisions, such as, name and address of the operator, the service programme, basic fee charge standard, rights and obligations of the parties, representations of the operator on service quality, etc. Except where interconnection prices are subject to a government-set or government-guided price and, therefore, the price information is publicly available, operators are not obliged to publish actual interconnection prices.
2.11 Looking at fixed, mobile and other services, are charges for interconnection (e.g. switched services) and/or network access (e.g. wholesale leased lines) subject to price or cost regulation and, if so, how?
In general, interconnection prices for public telecoms networks must be in strict compliance with government-set prices as stated in the MIIT's Interconnection Settlement and Relay Costs Allocation Measures between Public Telecommunications Networks (2003) ("Settlement Measures"). However, in exceptional cases, such as for interconnection settlements between "satellite mobile communication networks and other telecommunication networks", the telecoms operator may negotiate interconnection prices by referring to the Settlement Table for telecommunications Interconnection, which is attached to the Settlement Measures. In 2009 and 2013, the MIIT respectively issued the Circular on the Adjustment of Interconnection Settlement among the Public Telecom Networks and the Circular of MIIT on Adjusting Interconnection Settlement Standards among the Public Telecom Networks, which added new settlement standards or replaced certain settlement standards that were provided in the Settlement Measures. In addition, with respect to the settlement standards related to the internet backbone networks which are interconnected through the internet exchange centre designated by the MIIT, the Interconnection Settlement Measures for Internet Exchange Centre (2007) will apply.
2.12 Are any operators subject to: (a) accounting separation; (b) functional separation; and/or (c) legal separation?
Currently, there is no regulation specifically dealing with operators' accounting separation, functional operation, or legal operation. However, the Anti-Monopoly Law may, in theory, potentially provide a legal basis for requiring an operator's functional or legal separation, if the relevant government authority determines that the operator's business may prevent necessary competition in the telecoms market. Historically, the separation of business lines, and the consolidation between key telecoms service operators in China, occurs from time-to-time. For example, this occurred in relation to China Telecom in 1999 when the Chinese government split it into smaller entities.
2.13 Describe the regulation applicable to high-speed broadband networks. On what terms are passive infrastructure (ducts and poles), copper networks, cable TV and/or fibre networks required to be made available? Are there any incentives or 'regulatory holidays'?
Presently, existing interconnection and regulatory conditions generally apply to next-generation (IP-based) networks. On January 21, 2010, the State Council promulgated the Overall Plan for Propelling the Integration of Three Networks to promote the construction of "fibre to the home" ("FTTH") and a national broadband network. The MIIT, together with other relevant government authorities, further issued a Notice Regarding Propulsion of Fibre Broadband Network Construction on March 17, 2010, which sets forth certain incentives, including preferential tax treatment, for enterprises engaging in the development and construction of fibre-based broadband networks. In addition, in 2012, the MIIT issued two national standards for the administration of the design, construction, and acceptance of communication engineering for the FTTH programme, including GB50846-2012 and GB50847-2012 ("FTTH Standards"). In May 2015, the Notice of Implementation of Broadband China Program for 2015 was issued. The Notice unveiled several goals for this year, including: (i) extending FTTH coverage by 80 million households and rolling out broadband services to 14,000 administrative villages; and (ii) with regard to 4G, the MIIT has set a target of 200 million new 4G subscribers by the end of the year, and will construct at least 600,000 4G base stations. According to the 2008 Urgent Notice and the 2014 Opinions, telecoms towers, poles, and ducts must be shared (for existing facilities) or co-constructed (for new facilities) by the relevant BTS operators. Other types of telecoms facilities (e.g., optical fibre cables) must be shared to the extent conditions permit. In addition, it has been reported that after the establishment of the China Iron Tower Company, some existing facilities (including base stations, ducts and poles) of the three Chinese telecoms operators may be operated under the China Iron Tower Company.
Price and Consumer Regulation
2.14 Are retail price controls imposed on any operator in relation to fixed, mobile, or other services?
Before May 10, 2014, telecoms service fees were divided into market-oriented prices, government-guided prices, and government set prices. However, with the implementation of the Circular of the MIIT and NDRC on Adopting Market-oriented Prices for Telecom Service Tariffs on May 10, 2014, telecoms operators are now permitted to autonomously set their telecoms service fees without obtaining regulators' approval.
2.15 Is the provision of electronic communications services to consumers subject to any special rules (such as universal service) and if so, in what principal respects?
In addition to the general obligations imposed on service providers under the PRC Law on Protection of the Rights and Interests of Consumers (last revised in 2013), telecoms service operators must also comply with several telecoms service standards and rules, including the Norms for Telecommunications Services (2005). These rules and standards are mainly intended to regulate the provision of information, non-discrimination of service, communication quality, handling complaints, privacy protection, billing processes, and execution of a written service agreement with consumers. With respect to privacy protection, the Standing Committee of the NPC promulgated the Decision of the Standing Committee of the NPC on Strengthening Network Information Protection in 2012, which contains several specific provisions concerning the acquisition, collection, use, and disclosure of personal information.
In 2012, the MIIT promulgated the Information Security Technology – Guideline for Personal Information Protection within the Information System for Public and Commercial Services ("Personal Information Protection Guideline"). Even though the Personal Information Protection Guideline is not legally binding on network service providers, it represented the current best practices of the industry and may potentially indicate likely legislative trends in the future. In 2013, the MIIT promulgated the Personal Information Protection Measures for Telecom and Internet Users, which set forth the methods for telecoms operators and internet information service providers to collect and use personal information, as well as the Measures for Registering the True Identity of Phone Users.
In 2014, the SAIC issued the Administrative Measures for Online Transactions (2014), which provides particular requirements that online sellers, third party online transaction platforms operators, and other parties relevant to online transactions must follow in the online transaction environment.
2.16 How are telephone numbers and network identifying codes allocated and by whom?
According to the Telecommunications Regulations and Measures for Administration of Telecommunication Network Number Resources (last revised in 2014) ("Network Number Resources Measures"), telephone numbers and network identifying codes belong to the State. The use of such number resources is subject to a compensatory use system and requires the approval of the MIIT or its provincial counterparts. Allocation is made by the regulatory authority by way of assignment, random selection, and auction (as applicable).
2.17 Are there any special rules which govern the use of telephone numbers?
According to the Network Number Resources Measures, a number holder must use the number within the prescribed time-frame and comply with the authorised scope and purpose. Allocated number resources may not be transferred or leased. Currently, the three Chinese telecoms operators (China Mobile, China Telecom and China Unicom) are permitted to allocate mobile phone numbers (starting with the digits "170") to the MIIT-approved MVNOs for resale to end-users.
2.18 Are there any obligations requiring number portability?
On May 17, 2014, the MIIT issued the Administrative Measures for Trial of Porting for Mobile Subscribers, which sets out the basic rules (e.g., relevant application and examination, fee and settlement, and supervision and management matters) for porting telephone numbers.
While number portability is not a mandatory requirement for the operators, trial projects for porting telephone numbers have been launched in several areas in China. The MIIT initiated trial projects for porting telephone numbers in the city of Tianjin and the Hainan Province in 2010 by issuing the Circular of the MIIT on Launching the Trial of Porting in Tianjin and Hainan for Mobile Subscribers. Later, on September 20, 2014, trial projects for porting telephone numbers in another three provinces (i.e., Jiangxi Province, Hubei Province and Yunnan Province) were launched.
3. RADIO SPECTRUM
3.1 What authority regulates spectrum use?
In accordance with the Measures for Administration of Radio Spectrum (1993), the Radio Regulatory Bureau under the MIIT ("RRB"), under the leadership of the State Council and the Central Military Commission, is responsible for the management of radio operations (including spectrum use) nationwide. In particular, the provincial counterparts of RRB and the relevant ministries of the State Council are responsible for the administration of civil use of the radio spectrum within their respective jurisdictions. The radio management organisation of the Chinese People's Liberation Army is responsible for the administration of the military's use of the radio spectrum.
3.2 How is the use of radio spectrum authorised in your jurisdiction? What procedures are used to allocate spectrum between candidates – i.e. spectrum auctions, comparative 'beauty parades', etc.?
A licence from RRB or its provincial counterparts (as applicable) is required for the use of radio spectrum (spectrum licence) and the user must submit an application to the regulatory authority for approval. Radio spectrum is allotted by RRB on a centralised basis. The relevant government authorities (such as GAPPRFT) may assign the allotted spectrum within its jurisdiction and file these assignments with RRB. RRB and its provincial counterparts are also responsible for granting two types of related licences, a licence to set up and use a radio (station), and a radio transmission equipment licence for the development and importation of radio transmission equipment.
3.3 Can the use of spectrum be made licence-exempt? If so, under what conditions?
The use of spectrum cannot be licence-exempt.
3.4 If licence or other authorisation fees are payable for the use of radio frequency spectrum, how are these applied and calculated?
China implements a compensatory use system for the use of a radio frequency spectrum. With exceptions for certain types of radio stations prescribed by law, frequency occupancy fees are payable on a yearly basis and must be calculated in accordance with the pricing standards listed in the Fees Collection Regulations for Administration of Radio (1998).
3.5 What happens to spectrum licences if there is a change of control of the licensee?
The Measures for Administration of Radio Spectrum and other related instruments concerning the regulation of spectrum licence do not specifically address rules for circumstances in which a change of control of a licensee occurs. In practice, the spectrum licence will stay valid and no special formalities will need to be followed just because the control of the licensee has changed.
3.6 Are spectrum licences able to be assigned, traded or sub-licensed and, if so, on what conditions?
Without approval from RRB or its provincial counterparts, spectrum licences may not be transferred. Spectrum rights are forbidden to be leased either directly or indirectly.
4. CYBER-SECURITY, INTERCEPTION, ENCRYPTION AND DATA RETENTION
4.1 Describe the legal framework for cybersecurity.
PRC Constitution Law (last revised in 2004) provides the basis for ensuring the security of private information and communications.
PRC Cyber Security Law (2016) provides in general that the cyber security should be guaranteed by the state and relevant authorities in respect to the internet establishment, operation, service delivery, the infrastructure, information and defines the monitoring and altering mechanism.
Management Provisions on the Computer Information Network and the Internet Security Protection (last revised in 2011) provides that the service providers and individuals have the duty to protect information and data on the Internet.
Provisions on the Computer Information System Security (last revised on 2011) provides the protection mechanism for the computer information system and the public security unit is responsible for the monitoring duty.
PRC Consumer Protection Law deals with cyber security and personal information issues arising out of consumer-operator relations.
Certain provisions in PRC Criminal Law provides the punishment for violating the cyber security laws and regulations.
4.2 Describe the legal framework (including listing relevant legislation) which governs the ability of the state (police, security services, etc.) to obtain access to private communications.
According to the PRC Constitution Law (last revised in 2004), the freedom and privacy of correspondences between citizens of the PRC are protected by law. No organisation or individual may, on any grounds, infringe upon the freedom and privacy of citizens' correspondences, except for the needs of national security or for investigations into criminal offences. In response to these needs, public security authorities, or the people's procuratorates, are permitted to censor correspondences in accordance with procedures prescribed by law. In addition, the Counterespionage Law of the People's Republic of China (2014) further provides that where counterespionage work requires, the national security authorities may inspect the electronic communication instruments, appliances, other similar equipment, and installations belonging to any organisation or individual. Moreover, the Telecommunications Regulations also provide that the public security authorities, national security authorities, or the people's procuratorates may conduct an examination of the content of telecommunications in accordance with the law.
In the new State Security Law of the PRC (2015), it is provided that the State must ensure the security and controllability of network and information core technologies, critical infrastructure and information systems and data in key areas. In order to do so, the State has published the Draft Cyber security Law for public comment, and provided regulations for comprehensive cyber security therein.
4.3 Summarise the rules which require market participants to maintain call interception (wire-tap) capabilities. Does this cover: (i) traditional telephone calls; (ii) VoIP calls; (iii) emails; and (iv) any other forms of communications?
There are no specific rules concerning telecoms service operators' interception capabilities currently available in China. However, according to the Telecommunications Regulations, generally, telecoms service operators must meet national security requirements. Particularly, operators are obliged to assist public security authorities, national security authorities, and the people's procuratorates in examining the content of telecommunications in accordance with the procedures prescribed by law for national security or criminal investigation purposes. Given that traditional telephone calls, VoIP calls, and emails can all be included within the meaning of "telecommunication" under the Telecommunications Regulations, the aforesaid operators' obligation of assistance will cover traditional telephone calls, VoIP calls, and emails.
4.4 How does the state intercept communications for a particular individual?
The ways and technical solutions that the State may apply to intercept communications for a particular individual are not publicly known.
4.5 Describe the rules governing the use of encryption and the circumstances when encryption keys need to be provided to the state.
To strengthen the administration of commercial encryption, and to ensure the safe ﬂow of information over the internet and through other media, the State Council and the State Encryption Administration Bureau ("SEAB") promulgated a series of instruments concerning the regulation of scientific research relating to the production, sale, use, import/export, transfer, repair and even the destruction of commercial encryption products. The regulations include the Regulations on Administration of Commercial Encryption (1999) ("Encryption Regulations"), the Regulations on Administration of Use of Commercial Encryption Products (2007), and the Measures on Administration for the Use of Encryption Products by Foreign Entities and Individuals in China (2007), which specifically relates to the use of encryption products by foreign entities and individuals in China.
When a foreign entity or individual applies to use commercial encryption products in China, the type of algorithm (such as "AES") and length of the key, together with other information of such commercial encryption products, must be provided to the relevant provincial SEAB for approval.
PRC Anti-Terrorism Law (2016) provides that telecom business operators and Internet service providers who provide encryption services or solutions to their users should provide the relevant decryption technology and other technical assistance to the public security organs and the state security organs for the prevention and investigation of terrorist activities.
4.6 What data are telecoms or internet infrastructure operators obliged to retain and for how long?
According to the Norms for Telecommunication Services, telecoms service operators are required to retain original information on the fees charged for fixed, mobile, IP phone calls, peer-to-peer text messaging services and internet information services for at least five months. On July 12, 2013, the MIIT issued the Norms for Internet Access Services, which state that the original information on the fees charged for Internet access services must be kept for at least five months. In addition, the Measures for Registering the True Identity of Phone Users requires that the identification information and materials provided by subscribers when they subscribe to telecoms services must be kept for at least two years after the subscriptions are terminated. On May 19, 2015, the MIIT published the Administrative Provisions on Text Message Services, in which it is provided that text message service operators must record the following information in their service systems for at least five months: sending and receiving time; telephone numbers or codes of the sending and receiving ends; user subscription and un-subscription information; and the content of messages (for port-type messages). Under the ICP Measures, ICP operators must keep records of the content and publishing times. Internet access providers must keep records of the log-in/out time, user account, IP address of users and initiating numbers for at least 60 days.
5. DISTRIBUTION OF AUDIO-VISUAL MEDIA
5.1 How is the distribution of audio-visual media regulated in your jurisdiction?
Generally, in the context of electronic communications, the distribution of audio-visual media is under strict control by the Department of Propaganda of the Communist Party and GAPPRFT.
Depending on the nature of the carrier or platform used for transmission, the distribution of audio-visual media is subject to different licensing systems (see question 5.3 below), which are primarily administered by GAPPRFT in accordance with the relevant instruments concerning the distribution of audio-visual media (see question 1.2).
5.2 Is content regulation (including advertising, as well as editorial) different for content broadcast via traditional distribution platforms as opposed to content delivered over the internet or other platforms? Please describe the main differences.
In general, the same content regulation principles will apply to the distribution of audio-visual media. For example, illegal or immoral content, such as that which "threatens national security, honour, or interest", or that is otherwise restricted by law or administrative regulations, shall not be distributed either via traditional distribution platforms (e.g., TV, radio and film) or via the internet. No matter whether transmitted via traditional platforms or the internet, the contents of advertisements distributed must all satisfy the rules provided in the Advertising Law of the People's Republic of China (last revised in 2015).
In the meantime, in order to distribute content via different platforms, a distributor may need to apply with different administrative authorities for different licences or permits (as discussed in question 5.3).
5.3 Describe the different types of licences for the distribution of audio-visual media and their key obligations.
To distribute audio-visual content through radio and television, a broadcaster (radio or television station) must obtain a Radio and Television Broadcasting Institution Licence and a Radio and Television Channel Licence granted by GAPPRFT. Only films, television dramas or animations, domestically produced or imported, which have obtained GAPPRFT approval for distribution in China (e.g., Television Drama Distribution Licence) are allowed. When delivering the content, the broadcaster must also ensure copyright issues have been resolved.
To engage in the distribution of audio-visual content via the internet, an operator must at least obtain three types of licences, including the MIIT's ICP Licence (applicable to for-profit audio-visual content), GAPPRFT's Operating Permit for Transmission of Audio-Visual Programs via Information Networks (in which the permitted business type, receiving terminal and transmission networks are specially prescribed), and MOC's Internet Cultural Operating Licence. If it involves certain specific business activities, additional licence(s) may be required. By way of example, for network publication activities, GAPPRFT's Certificate for Network Publication must also be acquired. And for delivering content involving any political news or commentaries, a licence from the State Council Information Office is necessary. Internet audio-visual media operators must comply with self-censorship obligations that are similar to those applying to broadcasters, in order to ensure the legality and morality of the content they deliver. If an operator notices that the content transmitted is "restricted information", it must terminate the transmission of the information, keep records, and report it to the relevant regulatory authorities immediately.
To engage in the distribution of audio-visual content, through VAN, IP/VPN, or certain oriented transmission channels on internet in the form of IPTV, designated network mobile phone TV, internet TV, etc., an operator must also obtain GAPPRFT's Operating Permit for Transmission of Audio-Visual Programs via Information Networks (in which the permitted business type, receiving terminal and transmission networks are specially prescribed).
5.4 Are licences assignable? If not, what rules apply? Are there restrictions on change of control of the licensee?
All the licences mentioned in question 5.3 are administrative licences, and Article 9 of the PRC Law on Administration of Licensing (2004) specifically provides that administrative licences obtained in accordance with laws must not be transferred, except where laws or regulations permit such a transfer according to the conditions and procedures prescribed by law. Therefore, the licences mentioned in question 5.3 are not assignable, either because it is expressly prohibited by certain regulations (e.g., the Telecommunications Business Licence Measures), or the relevant regulations do not provide that such a transfer of licences could be made.
Generally, when the equity structure of certain licence holders is changed, approval from the government authorities issuing such licences should be obtained prior to any equity changes (e.g., for an ICP Licence), or the alteration formalities with relevant competent government authorities shall be fulfilled (e.g., for MOC's Internet Cultural Operating Licence). More importantly, if change of control of the licensee happens, the various restrictions imposed on foreign investment in the telecoms, internet, and audio-visual media sectors must be strictly complied with (see questions 1.1 and 1.4 above).
6. INTERNET INFRASTRUCTURE
6.1 How have the courts interpreted and applied any defences (e.g. 'mere conduit' or 'common carrier') available to protect telecommunications operators and/or internet service providers from liability for content carried over their networks?
According to the Telecommunications Regulations, tele-communications users are responsible for the content they transmit via the use of a telecommunications network. The Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law on Trial of Civil Dispute Cases of Infringement of Information Network Transmission Right (2013) also provides that an ISP will not be jointly liable with the infringer if it only provided automatic access and automatic transmission services for the infringing content. Many Chinese courts appear to have adopted this rule and have applied the defence of "mere conduit" when determining the responsibility of internet access service providers for content carried over their networks. The benefits of safe harbour rules are available to ISPs, provided that they comply with certain statutory requirements. However, generally, ISPs do not have an obligation to actively monitor infringing content on their networks, with certain exceptions.
6.2 Are telecommunications operators and/or internet service providers under any obligations (i.e. to provide information, inform customers, disconnect customers) to assist content owners whose rights may be infringed by means of file-sharing or other activities?
According to the PRC Tort Law (2010) and the Regulations on the Protection of the Right to Network Dissemination of Information (last revised in 2013), ISPs are obliged to take necessary actions, including deleting or blocking infringing content or disconnecting the links, when they are fully aware of the infringement, or after being duly informed by the aggrieved content owner. In the case of receiving notification from the content owner, ISPs must duly inform the person providing the content in question either by forwarding the infringement notice or by publishing the notice on the information network (where the network address of the intended recipient cannot be identified). The ISP is also obligated to disclose the identity of the infringer to the aggrieved party.
6.3 Are there any 'net neutrality' requirements? Are telecommunications operators and/or internet service providers able to differentially charge and/or block different types of traffic over their networks?
Generally, telecoms service operators are required to ensure "fairness" and equality when delivering services under the Telecommunications Regulations. In addition, the PRC Price Law (1998) does not permit operators to implement price discrimination policies against other operators that provide similar services. Therefore, the operators are legally unable to differentially charge for different types of traffic over their networks. However, there is no requirement for the operator to respect "net neutrality" in China, and in practice occasionally operators charge differently certain traffics.
6.4 Are telecommunications operators and/or internet service providers under any obligations to block access to certain sites or content? Are consumer VPN services regulated or blocked?
If telecoms service operators discover that the content being transmitted is illegal or immoral (e.g., endangering national security or divulging state secrets), they must cease the transmission and block access to certain sites or content immediately.
The operation of VPN services requires either a Fixed Network Domestic Data Transmission Service Licence (a type of BTS Licence) or a Domestic Internet Protocol Virtual Private Network Service Licence (a type of VATS Licence). Customers can use certain VPN services which are permitted by the respective VPN service licences mentioned above.
Originally published by The International Comparative Legal Guide to: Telecoms, Media and Internet Laws and Regulations 2018, Global Legal Group.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.