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China: Pricing of Telecommunications Services Now Market-Based

(Aug. 19, 2014) On July 29, 2014, China’s State Council promulgated an amendment to the Telecommunications Regulations, allowing prices for telecommunications services to be determined by the market instead of by the government. (Guowuyuan Guanyu Xiugai Bufen Xingzheng Fagui de Jueding [Decision of the State Council on Amending Several Administrative Regulations] (State Council Decision), State Council Decree [2014] No. 653 (July 29, 2014), Central People’s Government of the People’s Republic of China website.)

Previously, in May 2014, the Ministry of Industry and Information Technology (MIIT), joined by the National Development and Reform Commission (NDRC), had made the new policy public. (Guanyu Dianxin Yewu Zifei Shixing Shichang Tiaojie Jia de Tonggao [Notice of Implementing Prices Regulated by the Market in Telecom Services Pricing] (May 5, 2014), NDRC website.) The amendment to the Telecommunications Regulations confirmed the policy change in the country’s primary legislation governing telecommunications.

The Telecommunications Regulations categorize telecom services into basic telecom services and value-added telecom services. Service providers must obtain different licenses according to the type of services they provide. (Dianxin Tiaoli [Telecommunication Regulations] (promulgated by the State Council, Sept. 25, 2000), arts. 8 & 9, Legislative Affairs Office of the State Council website; a partial English translation is available at CHINA.ORG.CN.) According to article 24 of the unamended Telecommunications Regulations, charges for basic telecom services could be fixed by the government, guided by the government, or regulated by the market. Charges for value-added services could be guided by the government or regulated by the market. (Id. art. 24.)

The amendment deletes article 24 of the Telecommunications Regulations and provides that all telecom charges are to be determined by market under article 23 of the new Regulations. (State Council Decision, supra.) In deciding prices, operators are required to consider their operational costs and market supply and demand, instead of “development requirements of the national economy and society” and “the affordability for telecom users” as provided by the 2000 Telecommunications Regulations. (Id.; Telecommunications Regulations, art. 23, supra.)

Under the Telecommunications Regulations, basic telecom services are services of providing public network infrastructures, public data transmission, and basic voice communications, which include fixed-line telephone services, mobile network telephone and data services, satellite communications and satellite mobile communications services, broadband leasing, Internet and other public data transmission services, and international communications infrastructures and international telecom services. “Value-added telecom services” refers to providing telecom and information services by utilizing public network infrastructures, which include email, voice mailboxes, online information database storage and search, Internet access services, Internet information services, and video conference services. (Telecommunications Regulations, art. 8 & Appendix, supra.)