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NOTICE OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THE VIEWS ON FURTHER ENHANCING TELECOM SERVICE MARKET MANAGEMENT BY THE MINISTRY OF POSTS AND TELECOMMUNICATIONS

    The State Council has endorsed the "Views on Further Enhancing Telecom
Service Market Management" by the Ministry of Posts and Telecommunications, which is hereby
transmitted to you for conscientious implementation.
VIEWS ON FURTHER ENHANCING TELECOM SERVICE MARKET MANAGEMENT

    To adapt to the needs of reform, openness and socialist modernization
drive, facilitate and serve the central task of economic construction, the
Ministry of Posts and Telecommunications (MPT) must work hard to build a
unified, complete and advanced national communications network, while fully
tapping the potential of all the dedicated networks and bringing into play the
initiative of all sectors, in an effort to expedite the development of
communications.

    China has in recent years opened to public some of the telecom services
which include radio paging, 800 MHz trunking telephone service, 450 MHz radio
mobile communications, domestic VSAT communications, telephone information
service, computer information service, E-mail, electronic data interchange,
videotex and other telecom services approved by the State Council or the MPT.

    It is necessary to enhance the management over the market of the telecom
services opened to competitive operation, in order to safeguard the normal
order of communications, ensure the communications security and service
quality of the state and users and create an environment of fair competition.
For this purpose, the following views are proposed:

    1.Application and operation license systems shall be introduced for the
deregulated telecom services. All the applications for services operated
within provinces, autonomous regions and municipalities directly under the
Central Government shall be handled and approved by the local P&T
administrations which will verify and issue operation licenses and enter them
into the records of the MPT. The MPT is responsible for the application
handling and approval as well as license issuance for the inter-provincial
operations, inter-autonomous regional, inter-municipality operations directly
under the Central Government. No institutions and individuals are permitted to
operate the above services on their own without verification and
authorization. The MPT will formulate and promulgate detailed regulations
governing the enforcement of the application and operation license systems in
accordance with the above views. The institutions already engaged in the
operations of the above-mentioned services shall retroactively go through
relevant formalities as stipulated.

    2.The institutions applying for the operation of radio communications
services shall apply to the MPT or the local P&T administrations within the
terms of reference whichever is appropriate as stipulated, for the operation
licenses with which they will obtain the frequencies from the radio
administrations before the start of operation.

    3.Not permitted to establish regional blockade, the departments and
institutions with permission to operate above services shall abide by the
state policies and regulations on communications and be subject to the sector
management, supervision and examination exercised by the state communications
administration to ensure service quality. They should strictly follow the
state tariff policies and relevant standard on charges, pay taxes according to
law and safeguard the legitimate rights and interests of the users. Their
operations shall not impede the normal operations of the state public telecom
networks and communications construction, nor shall they hamper the normal
operations of other dedicated communications networks.

    4.The state communications administration shall create an environment of
fair competition between the P&T enterprises and other enterprises also
engaged in communications services. Following the principle of use on a paid
and mutually beneficial and reciprocal basis, the P&T enterprises at all
levels should cooperate with each other in the light of supply and demand,
providing the institutions with telecom service operation licenses approved
and issued by the state communications administration with the basic trunking
equipment, lines, etc. necessary for service provision, in a bid to ensure
that they supply good telecom services to society at large.

    5.Foreign enterprises are not allowed to operate or participate in the
operation of communications services within China. No organizations,
enterprises and individuals outside China nor the enterprises operating solely
with foreign investment, Sino-foreign joint ventures and cooperative
enterprises inside China are permitted to operate and participate in the
operation of wired and wireless communications services on the public and
dedicated communications networks within China. Neither shall foreign capital
be introduced in any way into the operation on a shareholding basis.

    6.Supervision and inspection shall be conducted by the MPT and the P&T
administrations of all provinces, autonomous regions and municipalities
directly under the Central Government. The P&T enterprises and other telecom
service operators which violate the above regulations shall be given such
punishment as a warning, a notice of criticism, a deadline to correct the
wrong doing, an order to suspend operation, confiscation of the income from
illegal operations, an administrative fine and finally revocation of operation
licenses. The P&T administrations at all levels are by no means allowed to
take advantage of the right of license issuance for private gains and
back-door dealings which will result in stern punishment once discovered.