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China – New Telecoms Business Catalogue Published. What This Means To Japanese Businesses.
28 August, 2013
 
 

On 23 May 2013, the Chinese Ministry of Industry and Information Technology (“MIIT“) published a new draft Telecommunications Business Classification Catalogue for consultation. This marks the first revision to the previous catalogue since its last amendment in 2003. The consultation period ended on 24 June 2013.

 

Background

 

As many Japanese TMT clients who have a presence in China will be aware, the Telecommunications Business Classification Catalogue is an important document as it sets out the list of telecommunications businesses that a PRC service provider may operate upon the granting of a relevant licence from the MIIT.

 

A revised catalogue has long been expected by Japanese companies in light of recent technology, industry and regulatory developments in the PRC telecommunications industry, including the convergence of the telecom, broadcasting and internet networks, emergence of a new telecommunications business model, and the gradual opening of the telecommunications sector to private investments. Importantly, the latest amendment will also mark the first revision of the classification catalogue in the last decade. 

 

Key changes in the revised catalogue 

 

LTE communications

 

As an additional sub-category of a Type I Basic Telecom Business (“BTB“), this primarily encompasses businesses which adopt the Long Term Evolution (LTE) standard to provide voice, data and multi-media services.

 

Mobile Communications Resale Business

 

In line with the MIIT’s proposal on the provision of mobile virtual network services on a trial basis (officially implemented on 17 May 2013), Japanese TMT companies will be interested to know that the revised catalogue will now include the resale of mobile telecommunications services. In particular, this refers to the business of acquiring mobile communication services from BTB operators and repackaging and rebranding such services for sale to end-users.

 

New categories of telecom business

 

New forms of telecommunications business are also introduced in the revised catalogue, which include the following Value-added Telecom Business (“VATB“):

 

  • Internet-based Resources Collaboration Business (“Type I VATB”)
  • Content Distribution Network Business (“Type I VATB”)
  • Internet Domain Name Resolution Business (“Type II VATB”)

 

Classifying existing telecom business

 

Japanese companies should also note that various telecommunication services will be re-categorised under the revised catalogue. In particular, the following business will become a Type II VATB (which previously were Type I VATB):

 

  • Online data and transaction processing
  • Domestic multi-party real-time communication

 

It remains to be seen whether this re-classification will mean a relaxation of the regulatory treatment for these services in China.

 

Expansion of the scope of information service business

 

Perhaps the most significant development under the revised catalogue that Japanese companies should be aware of is the expansion of the scope of information service businesses, which is a Type II VATB. Under the revised catalogue, the definition of information services will also specifically include the following:

 

  • Information Publishing and Distribution Service: this includes providing an online platform for distribution of information and application, such as news websites, electronic noticeboards, client-services terminals or application stores.
  • Search Engine Service: this includes providing an internet-based search service for website information, articles, images or audio-visual files.
  • Information Community Platform Service: this covers the provision of an internet-based platform for information exchange amongst multiple end-users, such as social community website, blogs, chat rooms or online gaming platform.
  • Information Real-time Exchange Service: this includes the provision of information exchange, real-time communication (voice or audio-visual) or interactive voice response services through the use of end-user software or browsing applications.
  • Information Protection and Processing Service: this includes providing virus protection or information protection services (for example, anti-spamming functions) through end-user software applications.

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