Legislative outlook for the Telecom Law

When the first draft of the Telecom Law was circulated in 1980, there was substantial interest surrounding this would-be bedrock telecom legislation. Although never finalized in the decades since, this piece of legislation was included in the legislative plans of the Standing Committee of the National People’s Congress in 2006 and 2014. This year, the Telecom Law was included as a “project under research” in the State Counsel’s annual legislative work plan, indicating that no substantial developments have occurred.

Telecom industry regulations. Key regulations in the PRC telecom industry include the following: (1) Telecom Regulations (2000, amended in 2014), often referred to as the “mini Telecom Law”; (2) Catalogue of Classification of Telecom Services (2003, amended in 2015) – key guidance in the categorization, approval and administration of the telecom industry; (3) Administrative Provisions on Foreign-Invested Telecom Enterprises (2002, amended 2008) – fundamental provisions for the approval regime and review standards for foreign-invested telecom enterprises; and (4) Measures for the Administration of Telecom Business Licensing (2009) – regulations on the approval process and documentation requirements for telecom licences.

Many telecom industry-related issues are also dealt with through other rules and regulations, including the Measures on Settlement of Disputes on the Interconnection between Telecom Networks (2001), Telecom Services Standards (2005), Mechanism on Adjustment of Telecom Rates (2015), and Administrative Measures for the Network Access of Telecom Equipment (2001, amended 2015).

Recent legislative developments. In recent years, the rapid expansion of the telecom and internet industries has led to new businesses, as well as a range of emerging issues. As a result, China’s regulators have been impelled to develop new legislation, including:

1. The Decision of the Standing Committee of the National People’s Congress on Strengthening Network Information Protection (2012), the Provisions on Protection of Personal Information of Telecom and Internet Users (2013), and Amendment IX to the Criminal Law (2015). These are the first series of laws and regulations intended to regulate information protection in the telecom and Internet industries;
2. Cyber Security Law (Draft) (2015), which focuses in part on telecom infrastructure security;
3. Anti-terrorism Law (2015), which places specific anti-terrorism obligations on telecom business operators and internet service providers; and
4. Circular of the Ministry of Finance, the Ministry of Industry and Information Technology on Carrying out Pilot Universal Telecom Services (2015) and the 2016 Guide on Application for Pilot Universal Telecom Services. Both aim to solve the universal telecom service issue.

LEGISLATIVE OUTLOOK

Expectations for the promulgation of an all-encompassing Telecom Law have dwindled, as many of the above regulations have filled the gaps left by its absence. In fact, some scholars and industry experts believe that the current legislative framework has sufficiently adapted to the rapidly developing telecom industry, and there is no longer a pressing need for a Telecom Law.

In practice, however, some underlying core issues have yet to be properly clarified and regulated by legislation. The resulting regulatory uncertainty continues to be a source of consternation within the industry. Clarification on these issues in the pending Telecom Law would do much to ensure the robust development of the industry. Such issues include:

1. Market access. Since its World Trade Organization accession in 2001, China’s telecom industry has been reformed and has gradually opened up to foreign investors (e.g., pilot programmes in foreign trade zones, and preferential policies provided to service providers in Hong Kong and Macau under the Closer Economic Partnership Arrangement). The Telecom Law should define and improve market access policies and encourage competition.
2. Tri-networks integration. The integration of telecom networks, cable TV networks and the internet has been an important public-policy goal in China for some time. To this end, the State Council issued the Proposals for Popularizing the Integration of the Telecom Networks, Cable TV Networks and the Internet in 2015. Nevertheless, the Telecom Law is widely considered to be essential to successfully achieving this goal. Accordingly, the pending law should lay the groundwork for tri-networks integration by making clear the obligations and liabilities of key industry segments and actors.
3. Telecom infrastructure security. As the national-level Regulations on Protection of Telecom Facilities have yet to be released, telecom infrastructure security is currently governed by provincial-level regulations. Given the national campaign for “Internet +”, driven economic growth and the investment in and construction of broadband networks and telecom facilities, the Telecom Law could serve an important unifying role in bringing these efforts together.
4. Telecom security and information protection. As mentioned above, China has promulgated a series of regulations that variously cover telecom security and information protection. The Telecom Law could build on the above-mentioned regulations by defining the legal rights and obligations of telecom users and operators.
5. Other major issues. The Telecom Law could also address a range of additional issues, such as universal telecom service, the protection of user rights and the interconnection of telecom networks.

Contrary to the view that the current telecom regulatory regime is sufficient, the Telecom Law remains central to accomplishing key public policy goals and bringing certainty to the industry. The law is needed on a number of burgeoning fronts in an inherently innovative industry, and its publication would provide substantial industry assurance and spur further market development.

Ben Chai and Cloud Li are associates at DaHui Lawyers