MIIT Issues Revised Telecoms Licensing Measures

On 13 July 2017, the Ministry for Industry and Information Technology (“MIIT”) issued the Measures on the Administration of Telecommunications Business Operating Licences, which took effect 1 September 2017, replacing the old measures of the same name issued in 2009.

The new measures bring China’s telecommunications licensing regime into conformity with recent changes to the rules governing the establishment, administration and supervision of companies.

The measures include (among others) the following changes:

  • The MIIT will establish an online telecoms business administration platform to support the online telecoms licence application, approval and administration, as well as information publication and enquiry.
  • Telecoms operators are required to identify their network and information security management entities and personnel, establish systems for areas including network and information security, illegal information monitoring and disposal, new business security assessment, network security monitoring and early warning, emergency response and user information security protection, and have appropriate technical support measures.
  • The competent MIIT office will establish random sampling mechanisms on selected telecoms operators’ annual reports, business operations and compliance with relevant telecoms regulations. It will also compile, regularly update, and make public two blacklists (that is, a telecoms business operation abnormal list and telecoms business operation dishonest list).

The measures also impose penalties for various specific infractions of the measures ranging from official warnings to fines, revocation of telecoms licence and criminal penalties.

Market Reaction

Jeanette Chan, Partner, Paul, Weiss, Rifkind, Wharton & Garrison, Hong Kong

“The new measures follow the government’s policy of reducing red tape, most notably by removing the capital verification requirement and the requirement that telecoms operators carry out record-filing at the local level after obtaining a licence. The measures also facilitate market entry by permitting a licensed operator to authorise an indirectly majority-held affiliate to operate a licensed telecoms service and by eliminating restrictions on telecoms operators to authorise more than one affiliate to provide the same licensed telecoms service in the same region.”

Action Items

General Counsel for any company regarded as a telecommunications operator under Chinese law will want to compare the new measures with the old measures and work with business colleagues and external advisors to identify those changes that affect the company’s business operations and expansion plans, as well as its compliance mechanisms.