Regulating Quality: New Telecom Measures

The telecommunications authorities are responsible for formulating and promulgating relevant standards, appraising the quality of services, investigating and dealing with quality problems, enforcing penalties imposed on telecommunications service operators, promoting good customer service, and supervising the cost structures adopted by telecom operators.

The Quality Measures also permit the relevant telecommunications authorities to inspect service quality and handle user complaints, to carry out site investigations and to remove or reproduce all necessary documents related to the investigation. However, the Measures impose an obligation on officers conducting the investigation to preserve the confidentiality of the relevant parties.

Standard Clauses

Article 15 is perhaps one of the more interesting provisions in the Quality Measures. It requires that standard clauses used by telecommunications service operators be filed with the telecommunications authorities for reference purposes. The provision stipulates that such clauses must comply with the provisions of relevant state laws and regulations. Guidelines on standard clauses are contained in the PRC Contract Law (中华人民共和国合同法) (Contract Law). Typically, standard clauses are not negotiated but are usually presented by one party to the other when the occasion calls for such contract terms, and generally, these standard contracts or clauses are drafted to protect the interests of the party providing the standard clause.

Restricting Liability

Under the Contract Law, a standard clause can be rendered void if, among other things, it exempts the party providing it from liability, increases the liability of the other party or deprives the other party of a major right. The Quality Measures require that standard clauses clearly delineate the rights and obligations arising between operators and users, and that operators should attempt to draw the attention of users to clauses that exclude or restrict the liability of telecommunications service operators.

In practical terms, telecom operators will need to pay particular attention to the drafting of exclusion clauses that appear in standard customer agreements, and especially those involving large corporate clients in the PRC. As the country's commercial sectors become more dependent on technology to run manufacturing processes and operate financial services, foreign investment enterprises and large Chinese corporations will have no qualms about seeking legal redress in cases of significant network failure which may seriously impact their business operations.

Information Overload

The Quality Measures also impose a requirement on the telecommunication authorities to provide customers with a wide range of information on the quality of telecom services. According to reports, the MII will release to the public the service quality records of telecom operators. The Telecom Consumer Complaints Handling Centre, established last year under the auspices of MII, will be responsible for publicizing on a regular basis the complaints received against telecom operators. The MII will also make the following information public:

(a) How complaints are dealt with by telecom operators;

(b) Reports on service quality submitted by telecom operators to the MII;

(c) Surveys on and evaluations of customer satisfaction;

(d) Results of quality checks carried out by the telecommunications authorities; and

(e) Penalties imposed on telecom operators for violations of relevant regulations.

The Big Picture

Consumer rights considerations aside, the quality of the telecommunications network is also an important aspect of China's future industrial and economic growth. In his recent outline of the Tenth Five-Year Plan delivered at the National People's Congress, Premier Zhu Rongji focused on the IT industry as a necessary tool for industry reform and further economic development. The central government is calling for the creation of an IT infrastructure which will necessitate, among other things, the expansion of the basic network and the provision of faster, more ubiquitous internet access. MII officials are fully aware that the quality of China's telecommunications network must be improved significantly before it is possible to achieve Zhu's goal to deliver the convergence of telecom, computer and cable networks to the Chinese people.

By Nancy Leigh,
Baker & McKenzie, Hong Kong