MIIT: Broadband Access Market Opens to Private Capital, First Batch of 16 Pilot Cities
On the afternoon of December 25, the Ministry of Industry and Information Technology (MIIT) issued the "Notice on Opening the Broadband Access Market to Private Capital" (hereinafter referred to as the "Notice"), announcing that the broadband access market is open to private capital, encouraging private capital to enter the broadband access market through multiple models, including building infrastructure required for broadband access network services, cooperating with basic enterprises and sharing revenues, and leasing access network resources from basic telecommunications enterprises.
The first batch of pilot cities totals 16: Taiyuan, Shenyang, Harbin, Shanghai, Nanjing, Hangzhou, Ningbo, Xiamen, Qingdao, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Chongqing, and Chengdu. The pilot period is three years, and the "Pilot Plan" will be implemented from March 1, 2015. The pilot entities are private enterprises established in accordance with the law, and private enterprises with experience in residential network operations are encouraged to participate in the pilot.
The full text of the Pilot Plan is as follows:
"Notice on Opening the Broadband Access Market to Private Capital"
I. Pilot Objectives
To encourage and guide private capital to further enter the basic telecommunications sector, participate in broadband network infrastructure construction and service operations, promote the development of broadband network infrastructure and competition in the broadband service market, enhance the innovation capability and service level of broadband services, explore development models for broadband access services, and gradually establish and improve a regulatory system that integrates pre-event, in-process, and post-event management, laying the foundation for formal commercial use.
II. Pilot Service Scope
In accordance with the national standards for fiber-to-the-home and the relevant principles of co-construction and sharing, pilot enterprises may build all or part of the wired communication network facilities within the range from the user end to the network access server, and may carry out corresponding leasing and sale of network elements. Pilot enterprises that have obtained the license for Internet access service operations may also provide broadband Internet access services to end users under their own brands.
Broadband access network services fall under basic telecommunications services.
III. Pilot Cities and Pilot Duration
The first batch of pilot cities is: Taiyuan, Shenyang, Harbin, Shanghai, Nanjing, Hangzhou, Ningbo, Xiamen, Qingdao, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Chongqing, and Chengdu. The Ministry of Industry and Information Technology will expand the pilot scope in due course based on the pilot progress.
The pilot duration is 3 years.
IV. Pilot Entities
The pilot entities are private enterprises established in accordance with the law, and private enterprises with experience in residential network operations are encouraged to participate in the pilot. The specific requirements are as follows:
(1) The applicant must be a private company established in accordance with the law.
(2) It must have funds appropriate for the business activities, with a minimum registered capital of RMB 20 million (subscribed).
(3) It must have more than 3 years of experience in the telecommunications industry.
(4) It must have professional personnel appropriate for the business activities.
The enterprise's technical director shall have more than 8 years of experience in broadband network construction and operation management, and hold a senior technical title in information and communications or a related field, or an equivalent professional level; the enterprise's financial director shall hold a professional technical qualification of accountant or above, or have more than three years of experience in accounting work; the enterprise shall have no fewer than 20 technical and management personnel with junior (including junior) or above professional titles in information and communications and management-related fields, or an equivalent professional level.
(5) It must have the capability to provide long-term services to users.
The applicant must establish a dedicated customer service department and customer service personnel, establish a sound service quality management system in accordance with service specifications and relevant requirements, publish user complaint and service supervision hotlines, accept user complaints, and have service assurance measures and market exit after-sales handling plans.
(6) It must have necessary premises and facilities.
The applicant shall have a fixed office location, and business premises or marketing channels appropriate for broadband access network services. It must establish a customer service system, billing management system, and business management system, and be able to ensure the security of system operations.
(7) It must have the capability to ensure network and information security.
The applicant shall establish a security management department, designate a security responsible person and contact person, establish network and information security management systems and emergency response mechanisms, and establish sound network and information security technical safeguard measures in accordance with relevant requirements and technical standards.
(8) Other conditions stipulated by laws and regulations such as the "Telecommunications Regulations of the People's Republic of China" and the "Measures for the Administration of Telecommunications Business Operation Licensing."
V. Approval Authority
The Ministry of Industry and Information Technology entrusts the communications administration bureaus of the provinces (autonomous regions, municipalities directly under the central government) where the pilot cities are located to accept and review applications for local broadband access network service pilots and issue pilot approval documents. Private enterprises applying for the pilot shall submit applications to the communications administration bureaus of the provinces (autonomous regions, municipalities directly under the central government) where the pilot cities are located.
VI. Pilot Requirements
(1) Basic telecommunications enterprises shall not sign agreements containing exclusive clauses with pilot enterprises.
(2) Basic telecommunications enterprises shall provide pilot enterprises with uplink metropolitan area network bandwidth resources for access networks that are not lower than the quality of their own services.
(3) Basic telecommunications enterprises and pilot enterprises shall negotiate and determine the access price for uplink broadband resources based on the principles of fairness, reasonableness, and equal consultation.
(4) When pilot enterprises construct wired communication network facilities, they shall strictly comply with national regulations on communication engineering construction, including the "Notice on Implementing National Standards for Fiber-to-the-Home," the "Construction and Acceptance Specifications for Fiber-to-the-Home Communication Facilities in Residential Areas and Residential Buildings," and the "Engineering Design Specifications for Fiber-to-the-Home Communication Facilities in Residential Areas and Residential Buildings." At the same time, they shall comply with policy regulations on infrastructure co-construction and sharing and communication facility protection, and are prohibited from signing agreements containing exclusive clauses with third parties such as real estate developers, property management companies, or owners' committees, to safeguard users' freedom of choice.
(5) When pilot enterprises provide services to users, they shall strictly comply with relevant industry standards and management requirements and sign service agreements with users. The agreements shall clearly specify access rates, tariffs, and the handling methods for prepaid fee refunds and dispute resolution in the event of early termination of business. If the pilot operation is terminated early, the enterprise shall report to the telecommunications regulatory authorities and notify users in advance in accordance with the "Telecommunications Regulations," the "Measures for the Administration of Telecommunications Business Operation Licensing," the "Telecommunications Service Specifications," and other relevant requirements and the content of user agreements, and properly handle after-sales matters such as prepaid fee refunds, fee settlement, and dispute resolution, effectively safeguarding the legitimate rights and interests of existing users.
(6) Pilot enterprises must access the Internet backbone network via the metropolitan area network of basic telecommunications enterprises. Business nodes in different cities shall not be directly connected. Leased access network resources are strictly prohibited from being subleased or resold. The scope of access network construction and the location of connection (aggregation) nodes shall be reported to the communications administration bureaus of the provinces (autonomous regions, municipalities directly under the central government) where they are located, and the enterprises shall cooperate with relevant departments in carrying out all network and information security work.
(7) Service quality issues arising between pilot enterprises and users shall be handled by the complaint acceptance centers under the communications administration bureaus of the provinces (autonomous regions, municipalities directly under the central government) where the pilot cities are located.
VII. Other Matters
(1) Pilot enterprises shall report their business operation status on a monthly basis in accordance with the requirements of the communications administration bureaus of the provinces (autonomous regions, municipalities directly under the central government). The communications administration bureaus of the provinces (autonomous regions, municipalities directly under the central government) where the pilot cities are located shall report the progress of the broadband access network service pilot work to the Ministry of Industry and Information Technology on a monthly basis.
(2) Pilot enterprises may participate on an equal footing with basic telecommunications enterprises in the Broadband China project, broadband demonstration projects, universal service, and other work, and enjoy relevant policies.
(3) Pilot enterprises that violate relevant laws and regulations during the pilot period shall be subject to corresponding penalties in accordance with the law.
(4) The Ministry of Industry and Information Technology will adjust relevant policies in due course based on the pilot progress and study matters related to the formal commercial use of broadband access services.
(5) This "Pilot Plan" will be implemented from March 1, 2015.