City limits set for last mile
Beijing has issued new rules to regulate the Internet industry by allowing only 13 cities to operate 'last-mile' broadband services.
Only approved entities in the 13 cities are allowed to participate in the business, according to the rules recently issued by Ministry of Information Industry (MII).
Other last-mile broadband networks established outside these cities, no matter whether they are under construction or already in service, are required to cease construction or operation, according to the rules known as 'Framework regulations on liberating the last mile broadband business'.
Analysts said the MII was attempting to crack down illegal foreign investment in China's telecommunications business.
Last mile refers to the Internet access services that connect end users to the public telecoms network.
The 13 test cities are Beijing, Shanghai, Guangzhou, Shenzhen, Jinan, Qingdao, Wuhan, Nanjing, Hangzhou, Ningbo, Xiamen, Chongqing and Chengdu.
The trial-run in these cities would allow the regulator to tackle problems more easily and draft a better set of regulations to govern the sector.
It is also the regulator's attempt to ensure that consumers have better services and to create a level playing field for telecoms services providers, MII said in its announcement.
MII said all the last-mile operators were required to register with the local Post and Telecom bureau within a set time frame and apply for permission to operate.
No broadband service provider is allowed to connect to any Internet-protocol backbone without relevant regulatory bodies' approval, according to MII.
However, metropolitan area networks are excluded in this framework regulations.
MII said one important criterion in assessing whether to grant a licence to a last-mile operator was its share structure.
Under present telecoms law, before China's entry into the World Trade Organisation, foreigners - including Hong Kongers - were prevented from directly investing in and operating telecoms networks.
However, many Hong Kong-listed companies invested in China's broadband industry through joint ventures or partnerships with local players.
One is tycoon Charles Ho's Global China Technology, which has partnered with Shandong provincial government-backed Internet infrastructure provider San Lian Group. It is uncertain whether the partnership would be affected. The company was unavailable for comment last night.