Telecommunications Regulations of the People’s Republic of China

The PRC Telecommunications Regulations (the “Telecoms Regulations”), first issued by the State Council on 25 September 2000(and subsequently revised on 29 July 2014 and 6 February 2016), covers licensing, fee collection, interconnectivity, operation and regulation of telecoms services in Mainland China. The Classified Catalogue of Telecommunications Services (the “Telecoms Catalogue”) (effective from 1 March 2016) sets out the specific and sub-categories of services that are regulated under the telecoms licensing regime. The licensing requirements and application process differ depending on the type(s) of licenses required. The Administrative Measures for the Licensing of Telecommunication Business (effective from 1 September 2017) further sets out the eligibility criteria for applying for a telecoms license.

(Adopted at the thirty-first regular meeting of the State Council held on September 20, 2000, and promulgated by Premier Zhu Rongji on September 25, 2000)

Chapter 1 General Principles

Article 1. These Regulations are formulated in order to regulate the order of the telecommunications market, safeguard the legitimate rights and interests of telecommunications subscribers and telecommunications operators, ensure the safety of telecommunications networks and information, and to promote the sound development of the telecommunications industry.

Article 2. Any parties that engage in telecommunications activities or telecommunications-related activities in the People’s Republic of China must obey these Regulations.

“Telecommunications” as referred to herein shall mean the transmission, emission or reception of voice, text, data, images and any other form of information using wire or wireless electromagnetic or photoelectric systems.

Article 3. The supervisory department for the information industry under the State Council shall supervise and regulate the telecommunications industry nationwide in accordance with the provisions of these Regulations.

The telecommunications administration authorities of provinces, autonomous regions and municipalities directly under the central government shall, under the leadership of the supervisory department for the information industry under the State Council and in accordance with the provisions of these Regulations, supervise and regulate the telecommunications industry within their respective administrative jurisdictions.

Article 4. The supervision and regulation of the telecommunications industry shall be based on the principles of separation of government administration from enterprise management, elimination of monopoly, encouragement of competition and promotion of development, as well as the principles of openness, fairness and impartiality.

Telecommunications operators shall conduct their businesses in accordance with law, comply with business ethics and accept legal supervision and inspection.

Article 5. Telecommunications operators shall provide telecommunications subscribers with telecommunications services that are fast, accurate, secure, convenient and reasonably-priced.

Article 6. The security of telecommunications networks and information shall be protected by law. No organizations or individuals may use telecommunications networks to engage in activities that jeopardize national security, the public interest of society or the legitimate rights and interests of others.

Chapter 2 The Telecommunications Market

Section 1 Telecommunications Permits

Article 7. The State shall implement a licensing system for the operation of telecommunications businesses, pursuant to which telecommunications businesses shall be divided into categories.

Operators of telecommunications businesses must obtain operating permits for telecommunications businesses issued by the supervisory department for the information industry under the State Council or the telecommunications administration authorities of provinces, autonomous regions and municipalities under the central government in accordance with the provisions of these Regulations.

No organizations or individuals may undertake telecommunications business operation activities without an operating permit.

Articles 8. Telecommunications businesses shall be divided into the categories of basic telecommunications businesses and value-added telecommunications businesses.

Basic telecommunications businesses shall mean businesses that provide public network infrastructure, services for public data transmission and basic voice telephony services. Value-added telecommunications businesses shall mean businesses that provide telecommunications and information services using public network infrastructure.

The specific categorization of telecommunications businesses is set forth in the “Catalog of Classes of Telecommunications Businesses” attached to these Regulations. Depending on actual circumstances, the supervisory department for the information industry under the State Council may make incremental adjustments to the categorization of telecommunications businesses set forth in the catalog and reissue the catalog.

Article 9. An operator of a basic telecommunications business must be examined and approved by the supervisory department for the information industry under the State Council and obtain an “Operating Permit for Basic Telecommunications Business”.

If an operator of a value-added telecommunications business has a scope of coverage constituting two or more provinces, autonomous regions or municipalities directly under the central government, it shall obtain an “Operating Permit for Inter-Regional Value-Added Telecommunications Business” upon the examination and approval of the supervisory department for the information industry under the State Council. If an operator of a value-added telecommunications business has a scope of coverage of one province, autonomous region or municipality directly under the central government, it shall obtain an “Operating Permit for Value-Added Telecommunications Business” upon the examination and approval of the telecommunications administration authority of the province, autonomous region or municipality directly under the central government.

Trial operations of new telecommunications businesses not listed in the “Catalog of Classes of Telecommunications Businesses” and using new technology shall be filed for the record with the telecommunications administration authorities of provinces, autonomous regions and municipalities directly under the central government.

Article 10. An operator of a basic telecommunications business must fulfill the following conditions:

(1) the operator shall be a sole purpose company that is legally established to engage in basic telecommunications businesses, and State-owned equity interest or shares in the company shall not constitute less than 51%;

(2) it has a feasibility study and a technical plan for network construction;

(3) it has appropriate funds and professionals required for its business activities;

(4) it has premises and appropriate resources required for its business activities;

(5) it has the reputation or capability of providing long-term service to subscribers; and

(6) other conditions stipulated by the State.

Article 11. An applicant for operating a basic telecommunications business shall submit its application and the relevant documents set forth in Article 10 hereof to the supervisory department for the information industry under the State Council. Within 180 days from the receipt of the application, the supervisory department for the information industry under the State Council shall complete its examination and decide whether to approve or reject the application. If the application is approved, an “Operating Permit for Basic Telecommunications Business” shall be granted; if the application is rejected, a written notice stating the reason for such rejection shall be given to the applicant.

Article 12. When examining an application for operating a basic telecommunications business, the supervisory department for the information industry under the State Council shall consider factors such as national security, security of the telecommunications network, continued usability of telecommunications resources, environmental protection and the situation with regard to competition in the telecommunications market.

An “Operating Permit for Basic Telecommunications Business” shall be issued by means of bidding in accordance with the relevant provisions of the State.

Article 13. An operator of a value-added basic telecommunications business must fulfill the following conditions:

(1) the operator shall be a legally established company;

(2) it has appropriate funds and professionals required for its business activities;

(3) it has the reputation or capability of providing long-term service to subscribers; and

(4) other conditions stipulated by the State.

Article 14. An applicant for operating a value-added telecommunications business shall, in accordance with Article 9(2) hereof, submit its application and the relevant documents set forth in Article 13 hereof to the supervisory department for the information industry under the State Council or the telecommunications administration authority of the province, autonomous region or municipality directly under the central government. If the examination and approval of relevant departments is required as stipulated by relevant provisions of the State, an applicant for operating a value-added telecommunications business shall also submit approval documents to such relevant departments. Within 60 days from the receipt of the application, the supervisory department for the information industry under the State Council or the telecommunications administration authority of the province, and autonomous region or municipality directly under the central government shall complete its examination and decide whether to approve or reject the application. If the application is approved, an “Operating Permit for Inter-Regional Value-Added Telecommunications Business” or an “Operating Permit for Value-Added Telecommunications Business” shall be granted; if the application is rejected, a written notice stating the reason for such rejection shall be given to the applicant.

Article 15. If in the course of its operations a telecommunications operator changes a material part of its operations or changes its scope of business or ceases to operate, it shall apply to the authority that originally issued the permit and handle the appropriate procedures 90 days in advance. If it ceases to operate, it shall also properly handle matters arising as a result thereof in accordance with the relevant provisions of the State.

Article 16. If an operator is approved to operate a telecommunications business, it shall handle registration procedures with the enterprise registration authority by presenting the legally-acquired operating permit for the telecommunications business.

If an operating entity of a private telecommunications network seeks to operate a telecommunications business in its own locality, it shall submit an application in accordance with the terms and procedures provided herein and obtain an operating permit for telecommunications business upon approval, and it shall also handle registration procedures as provided in the preceding paragraph.

Section 2 Telecommunications Network Interconnection

Article 17. Interconnection among telecommunications networks shall be carried out based on the principles of technical feasibility, economic reasonableness, fairness, impartiality and mutual cooperation.

Major telecommunications operators shall not reject interconnection requests from other telecommunications operators and private network operators.

“Major telecommunications operators” as referred to in the preceding paragraph shall mean operators that control essential telecommunications infrastructure and have a large share of the telecommunications market, and that therefore may have a material effect on the entry of other telecommunications operators into the telecommunications market.

Such major telecommunications operators shall be determined by the supervisory department for the information industry under the State Council.

Article 18. Based on the principles of non-discrimination and transparency, major telecommunications operators shall formulate rules covering topics such as the procedures and time limits for the interconnection of networks and a catalog of unbundled network elements. The interconnection rules shall be submitted to the supervisory department for the information industry under the State Council for examination and approval. Such interconnection rules shall be binding with respect to the interconnection activities of major telecommunications operators.

Article 19. With respect to interconnection between two public telecommunications networks or interconnection between a public telecommunications network and a private telecommunications network, the two interconnecting parties shall negotiate with respect to the interconnection and enter into an interconnection agreement in accordance with the provisions on the administration of network interconnection stipulated by the supervisory department for the information industry under the State Council.

Such interconnection agreement shall be filed with the supervisory department for the information industry under the State Council for the record.

Article 20. If the two interconnecting parties fail to reach an interconnection agreement through negotiation within 60 days from the date on which a party requests interconnection, either party may, based on the scope of coverage of the interconnection, apply for coordination of the matter by either the supervisory department for the information industry under the State Council or the telecommunications administration authority of the province, autonomous region or municipality directly under the central government. The authority that receives such application shall conduct such coordination in accordance with the principles set forth in Article 17(1) in order to encourage agreement by the interconnecting parties. If an agreement still cannot be reached within 45 days from the date on which a party or both parties apply for such coordination, the coordinating authority shall have the discretion to invite telecommunications technology experts and experts in other related fields to present publicly their arguments and propose an interconnection plan. The coordinating authority shall make a decision based on the arguments and the interconnection plan of the experts and impose mandatory interconnection.

Article 21. The two interconnecting parties must carry out interconnection within the stipulated time limit or as determined in the agreement. Without the approval of the supervisory department for the information industry under the State Council, no interconnecting party may unilaterally discontinue interconnection. If there are obstacles to interconnection for reasons of telecommunications technology, the parties shall immediately take effective measures to eliminate such obstacles. A dispute between the parties arising with respect to interconnection shall be handled in accordance with the procedures and measures set forth in Article 20 hereof.

The quality of telecommunications with respect to interconnection must comply with relevant standards of the State. The quality of service with respect to interconnection provided by major telecommunications operators to other telecommunications operators may not be lower than that for the same category of business in the network or that provided to their subsidiaries or branches for the same category of business.

Article 22. Fee settlement and apportionment in connection with interconnection shall comply with the relevant provisions of the State, and no additional fees shall be charged other than those stipulated.

Technical standards, measures for fee settlement and specific administrative provisions for interconnection shall be formulated by the supervisory department for the information industry under the State Council.

Section 3 Telecommunications Charges

Article 23. The standards for telecommunications charges shall be adopted according to the pricing principle that such charges shall be based on cost. Furthermore, other factors shall also be taken into consideration, including requirements of the national economy and social development, the development of the telecommunications industry and affordability for telecommunications subscribers.

Article 24. Telecommunications charges can be divided into the categories of market-adjusted prices, government-guided prices and government-fixed prices.

The charges for basic telecommunications businesses may be determined according to market-adjusted prices, government-guided prices or government-fixed prices. The charges for value-added telecommunications businesses may be determined according to market-adjusted prices or government-guided prices.

With respect to telecommunications businesses in which there is ample market competition, telecommunications charges shall be determined according to market-adjusted prices.

The administrative catalog for the classification of telecommunications charges that are determined according to government-fixed prices, government-guided prices and market-guided prices shall be formulated and promulgated for implementation by the supervisory department for the information industry under the State Council after consultation with the pricing department under the State Council.

Article 25. Standards for charges of important telecommunications businesses to be determined according to government-fixed prices shall be proposed by the supervisory department for the information industry under the State Council, and such standards shall be promulgated for implementation after consultation with the pricing department under the State Council and upon the approval of the State Council.

The range for telecommunications charges determined according to government-guided prices shall be determined and promulgated by the supervisory department for the information industry under the State Council after consultation with the pricing department under the State Council. A telecommunications operator may independently determine its charges within such range and shall notify the telecommunications administration authority of the province, autonomous region or municipality directly under the central government for the record.

Article 26. In determining the telecommunications charges determined according to government-fixed prices and government-guided prices, hearings shall be held to obtain the opinions of telecommunications operators, telecommunications subscribers and other relevant parties.

Telecommunications operators shall provide accurate and complete business cost data and other relevant information as required by the supervisory department for the information industry under the State Council or the telecommunications administration authority of the province, autonomous region or municipality directly under the central government.

Section 4 Telecommunications Resources

Article 27. With respect to telecommunications resources, the State shall carry out uniform planning, centralized administration and reasonable allocation and shall implement a system of use with compensation.

“Telecommunications Resources” as referred to in the preceding paragraph shall mean resources that have telecommunications functions and are limited in amount, including radio frequencies, satellite orbit locations, telecommunications network codes, etc.

Article 28. A telecommunications operator that occupies or uses telecommunications resources shall pay telecommunications resource fees. The specific measures for fee collection shall be formulated by the supervisory department for information industry under the State Council jointly with the finance and pricing departments under the State Council and shall be promulgated for implementation upon the approval of the State Council.

Article 29. The allocation of telecommunications resources shall be made taking into consideration telecommunications resource planning, usage, and expected service capability.

The allocation of telecommunications resources may be made using either by designation or by auction.

An operator that obtains the right to use telecommunications resources shall start to use the allocated resources within the stipulated time limit and achieve the stipulated minimum utilization scale. Without the approval of the supervisory department for the information industry under the State Council or the telecommunications administration authority of the province, autonomous region or municipality directly under the central government, the operator may not unilaterally use, transfer or lease out telecommunications resources or change the use of telecommunications resources.

Article 30. After a user of telecommunications resources obtains a telecommunications network code, major telecommunications operators or other relevant parties shall be obligated to take the necessary technical measures to cooperate with such user of telecommunication resources to allow it to achieve functionality of its telecommunications network code resource.

If other laws and administrative regulations have special provisions on the administration of telecommunications resources, such provisions shall be followed.

Chapter 3 Telecommunications Services

Article 31. Telecommunications operators shall provide services to telecommunications subscribers in accordance with the standards provided by the State for telecommunications services. The type, scope, rate and term of service provided by telecommunications operators shall be announced to the public and filed with telecommunications administration authorities of the provinces, autonomous regions and municipalities directly under the central government for the record.

Telecommunications subscribers shall have the right to use as they may choose the various types of telecommunications businesses operated in accordance with law.

Article 32. With respect to applications for the installation or movement of telecommunications terminal equipment by telecommunications subscribers, telecommunications operators shall guarantee the installation and connection of equipment within the time limit announced by them. In the case of failure to install and connect the equipment within the scheduled time due to the fault of a telecommunications operator, default penalties shall be paid to the telecommunications subscriber for each day in the amount of 1% of the amount of the installation fees, moving fees or other expenses charged.

Article 33. In the case of a complaint of telecommunications service breakdown by a telecommunications subscriber, the telecommunications operator shall repair or reroute connections within 48 hours in cities and towns and 72 hours in rural areas, from the time of receipt of the complaint. Where the breakdown cannot be repaired or connections cannot be re-routed, the telecommunications subscriber shall be notified promptly and the monthly rental fee shall be waived during the breakdown period. However, this shall not apply to breakdowns in telecommunications services caused by telecommunications terminal equipment.

Article 34. Telecommunications operators shall facilitate payment and inquiries made by telecommunications subscribers. If a telecommunications subscriber requests a bill of charges for domestic long-distance telecommunications, international telecommunications, mobile telecommunications or information services, a telecommunications operator shall provide it without charge.

If a telecommunications operator becomes aware of that an extraordinary amount of charges has appeared on a telecommunications bill of a telecommunications subscriber, it shall inform the telecommunications subscriber thereof as soon as possible and shall carry out relevant measures.

An “extraordinary amount of charges appearing on a telecommunications bill” as referred to in the previous paragraph shall mean fees of a telecommunications subscriber that are more than five times the average telecommunications fees for the previous three months.

Article 35. Telecommunications subscribers shall make full and timely payment of telecommunications fees in accordance with the time limits and methods agreed. If a telecommunications subscriber fails to pay telecommunications fees on time, a telecommunications operator shall have the right to demand payment of overdue telecommunications fees as well as to charge a default penalty for each day in an amount based on 0.3% of the fees due.

If a telecommunications subscriber does not pay telecommunications fees after the agreed 30-day payment deadline, a telecommunications operator may suspend telecommunications services provided to it. If the telecommunications subscriber still fails to pay overdue telecommunications fees and penalties within 60 days after suspension of service by the telecommunications operator, the telecommunications operator may terminate the provision of services and demand the amount payable and the penalties in accordance with law.

Mobile telecommunications operators may agree with telecommunications subscribers on the time and manner of payment of telecommunications fees without reference to the restriction of deadlines set forth in the previous paragraph.

Suspended telecommunications services shall be resumed within 48 hours after the telecommunications subscriber (who has delayed payment of telecommunications fees) has paid in full the telecommunications fees and penalties due.

Article 36. If normal telecommunications services are affected or may be affected by construction projects or the construction of networks of telecommunications operators, subscribers shall be notified promptly in accordance with the specified time limit and reports shall be submitted to the telecommunications administration authorities of the provinces, autonomous regions and municipalities directly under the central government.

In the case of suspension of telecommunications services due to reasons set forth in the previous paragraph, telecommunications operators shall reduce or waive the relevant fees paid by subscribers during the period of suspension of telecommunications services accordingly.

If any conditions set forth in the first paragraph of this Article occur and telecommunications operators fail to inform subscribers promptly, they shall indemnify the subscribers against the losses suffered by them as a result thereof.

Article 37. Telecommunications operators engaging in the domestic telephone business and the mobile phone business shall provide their subscribers with free telecommunications services of a public welfare nature such as phone numbers for reporting fire-related accidents, bandit-related incidents, medical emergencies and traffic accidents, and the availability of telephone lines shall be guaranteed.

Article 38. Telecommunications operators shall promptly provide connection services to group subscribers who require connection to their telecommunications networks through a trunk line on a fair and reasonable basis.

Without approval, telecommunications operators shall not suspend connection services on its own.

Article 39. Telecommunications operators shall establish sound internal service quality control systems, and they may formulate, announce and implement enterprise standards higher than the telecommunications service standards set forth in provisions of the State.

Telecommunications operators shall, using various means, listen extensively to the advice of telecommunications subscribers, accept supervision by the public and constantly enhance the quality of telecommunications services.

Article 40. If telecommunications services provided by a telecommunications operator fails to reach the standards of telecommunications services set forth in provisions of the State or the enterprise standards announced by such operator, or if a telecommunications subscriber raises objections to the payment of telecommunications fees, the telecommunications subscriber shall have the right to demand that the telecommunications operator resolve the matter. If the telecommunications operator refuses to resolve the matter or if the telecommunications subscriber is not satisfied with the resolution, the telecommunications subscriber shall have the right to lodge a complaint with the supervisory department for the information industry under the State Council or the telecommunications administration authorities of the provinces, autonomous regions and municipalities directly under the Central Government or other relevant departments. Departments receiving a complaint must handle it promptly and shall respond to the person lodging the complaint within 30 days from the date of receipt of the complaint.

If a telecommunications subscriber has an objection to the payment of domestic telephone fees, the telecommunications operator shall also provide without charge, at the request of the telecommunications subscriber, the basis for the domestic telephone charges and shall be obliged to carry out the necessary measures to assist the telecommunications subscriber in discovering the reasons.

Article 41. Telecommunications operators shall not commit the following acts in the course of providing telecommunications services:

(1) Restricting telecommunications subscribers in any manner in the use of services designated by them;

(2) Restricting telecommunications subscribers to purchasing telecommunications terminal equipment designated by them or rejecting the use of telecommunications terminal equipment with which telecommunications subscribers have equipped themselves and for which network access licenses have been procured;

(3) Altering without authorization or changing by means of disguise the fee rates, and increasing without authorization or increasing by means of disguise the fee rates in violation of the provisions of the State;

(4) Rejecting, delaying or terminating the provision of telecommunications services to telecommunications subscribers without a proper reason;

(5) Failing to perform undertakings made publicly to telecommunications subscribers or carrying out false promotion that is easily misleading;

(6) Causing difficulties for telecommunications subscribers by improper means or retaliating against telecommunications subscribers who lodge complaints.

Article 42. Telecommunications operators shall not commit the following acts in the course of conducting telecommunications businesses:

(1) Restricting telecommunications subscribers in any manner in selecting telecommunications services run by other telecommunications operators in accordance with law;

(2) Cross-subsidizing in an unreasonable manner the various businesses they conduct;

(3) Engaging in improper competition by providing telecommunications businesses or services at a price lower than the cost.