China s Regulation of the Telecommunications Market

Transcription

1 2009 U.S./China Legal Exchange China s Draft Telecommunications Law Monday, October 12, 2009; 4:00 pm PST China s Regulation of the Telecommunications Market Presented by: Allan Marson Partner China Practice Group Baker & McKenzie LLP Allan K.A. Marson Baker & McKenzie LLP Palo Alto Tel: / Fax: akm@bakernet

2 Baker & McKenzie in China Baker & McKenzie - China Hong Kong Established Lawyers 260+ Fee Earners 600+ Total Staff Beijing Beijing Established Lawyers 80+ Fee Earners 150+ Total Staff Shanghai Established Lawyers 90+ Fee Earners 160+ Total Staff Shanghai Award-winning China Practice: What others say: China Client Choice Award International Law Office Awards 2008, 2007, 2006, 2005 A good relationship with a lot of strategic investors in China has given Baker & McKenzie s Beijing and Shanghai offices a distinct advantage in the Chinese market. Commentators praised the lawyers knowledge grasp of the PRC aspects of deals. Chambers Asia 2008 Hong Kong Leading Law Firm for China and Hong Kong PLC Which Lawyer? 2008, 2007, 2006, 2005 China Practice of the Year ALB Hong Kong Law Awards 2006, 2005 Baker & McKenzie acted on three of the Top 10 most influential M&A bids identified by the China Mergers and Acquisitions Association in

3 Advances of Draft Law Consolidates telecom regulations, measures and notices More clearly defines the rights and obligations of telecom operators Encourages network convergence Strengthens the rights of users for example: Chapter 6 protection of user rights and interests Article 49 protection of subscriber information Number portability 3

4 Foreign value-added telecoms service providers Providers of value-added telecoms services (VATS), such as Online business applications software Multi-user user management software, such as supply-chain management Network security services Internet Content Providers ( ICPs or Information Service Providers) on many topics, from information i for new mothers and tracing ancestry to online product technical support information Call centers, Internet data service centers and payment services Providers desire to comply with regulations but in practice find that compliance is difficult 4

5 Provisions of telecom law Article 8: Provides for the telecom authority to formulate and adjust the list of telecom services Most approvals for foreign investment are in one-area ICP (Information Services) Suggest to clarify in detailed regulations by reducing number of categories and defining i details Article 11: Continues requirement of 50% Chinese equity investment Generally WTO compliant, but 50% ownership is a very difficult business model in any industry 5

6 Provisions of telecom law (cont.) Recent capital requirement reduction in Operations Regulations ( 电信业务经营许可管理办法 ) very welcome but still difficult for many ICPs to justify for a 50% owned local operating entity Foreign Investment enterprise approvals and operating permits - 15 to 40 Experience suggests demand for ICP investments could be many more As noted in Article 2, there are permitting requirements MIIT, MOC, GAAP, PSB, SAIC and other agencies fully regulate VATS operators connection to Internet, publishing, security and other aspects of operations Suggest considering further loosening investment requirements: Allow majority foreign ownership or even eliminate Chinese equity requirement for ICPs and some other VATS operators Reduce or eliminate minimum capital requirements for same group 6

7 Provisions of telecom law (cont.) Article 14: Engaging in operations by utilizing telecom resources from outside China or telecommunications facilities outside China. The wording is very broad - does it reach Foreign websites on servers outside China with Chinese language content? Foreign providers that subcontract delivery of services to customers in China? May conflict with foreign jurisdictions 7

8 Thank you Allan Marson Partner China Practice Group Baker & McKenzie LLP Tel: / Fax: akm@bakernet 8