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.