Regulator cements role in first comprehensive regulations for booming sector
The Ministry of Information Industry (MII), the country's chief industry regulator, has submitted the much-anticipated telecommunications rules for State Council approval, according to Baker & McKenzie partner Nancy Leigh.
The 11-chapter, 82-article Telecommunications Regulations will become the mainland's first comprehensive set of telecoms rules and principal legal framework for the industry. Promulgation is expected this year.
The rules are expected to legitimise the MII's role as the country's regulatory authority with specific powers and responsibilities.
MII is referred to in the proposed rules as 'the State Council department in charge of [the] telecom sector', Ms Leigh, said citing the draft telecoms regulations. She said Beijing would continue to enforce a licensing system in the sector and would determine the number of telecoms licences to be issued every year.
Beijing will divide telecoms service providers into two categories. Proprietary network operators who own their telecoms network infrastructure - from fixed line to Internet and satellite services - and those providing services on others' networks.
Requirements are more stringent in the first category.
For example, mainland companies must have three billion yuan (about HK$2.8 billion) of annual revenue for the past two years, while their foreign partners must be telecoms firms with at least two years of annual revenue at more than US$10 billion and must have had representative offices in the mainland for three years.
To apply for a second-category licence, mainland firms are required to have two billion yuan of annual revenue or have assets worth three billion yuan, while their foreign partners must have US$500,000 in annual revenue or assets worth at least US$1 million.
Beijing would make room for the introduction of a tendering process for awarding licences and auctioning radio spectrums, Ms Leigh said.
To allow foreign participation in the mainland's telecoms industry, MII has drafted separate rules called 'Regulations on Foreign Invested Telecommunications Enterprises'. No timetable was given on its announcement.
The timing is determined by the mainland's World Trade Organisation entry. Beijing has pledged to allow 25 per cent foreign stakes in mobile-phone companies on WTO accession, rising to 49 per cent after three years.
