Legal News & Analysis – Asia Pacific – China – TMT

4G

The Ministry of Industry and Information Technology (MIIT) issued 4G licences to China Mobile, China Telecom and China Unicom for adopting Time Division Long Term Evolution (TD-LTE) technology, a Chinese technology, at the end of 2013 and is reported to have made plans to grant 4G licences for LTE-Frequency Division Duplex (FDD) network in 2014. The PRC government reportedly allocated the relevant spectrum as follows:

The purpose of the issuance of the 4G licences is to promote consumer spending on information technology. In accordance with the policy issued by MIIT, the PRC government aims to increase consumer spending on information technology to RMB 3.2 trillion by 2015. MIIT believes the adoption of 4G technology will accelerate the procurement of network equipment, upgrading of mobile phones and development of new applications with wide economic benefits.

VATS In Shanghai Pilot FTZ

The Shanghai government and MIIT will implement a more open policy in the value-added telecoms services (VATS) industry in the new pilot free trade zone in Shanghai region in 2014 (the Shanghai Pilot FTZ).

According to the new policy, foreign investors will not be subject to the 50% cap on foreign investment in two types of the VATS: (1) information services (limited to application stores for this purpose); and (2) store and forwarding services (voice mails, emails, facsimiles, etc.). Note that online data processing and transaction processing services (limited to business e-commerce) are still subject to a 55% cap on foreign investment.

The new policy also proposes to open up certain other types of VATS, such as call centres, domestic multi-party telecommunications services, Internet access services and domestic Internet virtual private network services. Of these types of VATS, only domestic Internet virtual private network services will be subject to a 50% cap on foreign investment.

VATS providers shall be required to register and base their service facilities in the Shanghai Pilot FTZ but can provide their services nationwide (except the Internet access service, which can only be provided within the Shanghai Pilot FTZ).

Although the implications of this new policy remain to be seen, foreign companies seeking to establish new or expand VATS in China may consider investing in the Shanghai Pilot FTZ in order to take advantage of these new initiatives.

For further information, please contact:

Marcus Vaas, Partner, Bird & Bird
marcus.vass@twobirds.com

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