Solving The Bad Line: New Telecom Construction Measures

In addition to the five-year plan, enterprises are required to compile ongoing plans or interim reports on an annual basis. The ongoing projections can be for three or five years depending on the business requirements of the enterprise. The annual report seems to serve as a progress report summarizing what the enterprise has achieved during the specified period. The contents must include the current status of the construction projects and how the funds have been utilized during the course of the year.

Route Maps and Bandwidth

A five-year plan for the construction of transmission networks should include relevant route maps, current and projected service demand, development targets, transmission capacity and the level of investment.

In keeping with the SDPC's role as China's central planner, the Procedures require the enterprises to submit their five-year plans for review prior to the commencement of the government's own five-year plans. Presumably, this will provide government officials with the necessary information to map out their strategic plans for the industry. In contrast, the submission of ongoing plans is required before the end of January each year.

Cross-provincial and Single Province Networks

The Procedures require enterprises constructing cross-provincial telecom networks to submit their plans to MII and the SDPC. Networks that do not cross provincial boundaries need only submit their plans to the local telecom bureau. If the relevant authorities do not raise any objections, the submitted plan will be deemed to be effective within 30 working days after submission.

The Procedures provide that MII or the local telecom bureau will evaluate the ongoing plans and may invite the input of specialists in the industry. The relevant government department is obliged to carry out examination and approval within 45 days of the receipt of the plan.

Has it Been Built?

The construction of public telecom networks and radio and television transmission networks is subject to specific procedures, including the drafting and approval of project proposals and feasibility reports. The industry regulator has the obligation under the Procedures to see if the construction has been completed as stated in the written submissions.

Enterprises carrying out the construction are not permitted to break up the project into parts so as to avoid the more vigilant scrutiny of the central government. The Procedures also reiterate that the examination and approval of projects should be based on the scope of business set out in the business licences of the proprietors.

Microwave Transmissions

Notably, the new approval system extends MII's regulatory authority to cover the construction of radio and television transmission networks, thus heading off the aspirations of the State Administration for Radio, Film and Television (SARFT) in that area. However, the Procedures stipulate that the construction of microwave communications facilities and mobile communications base stations must not interfere with the communications flow of existing facilities. The local SARFT bureau is authorized to order the relevant parties to rectify their activities if the construction causes interference to other telecom facilities. In addition, the Procedures require the construction of new telecom lines to be at a safe distance from existing lines.

Approval for International Networks

The Procedures stipulate that the construction of international transmission networks and international communications channels are subject to central planning and approval. Major infrastructure projects or technology transformation projects must first obtain the consent of MII and undergo additional examination and approval procedures formulated by the SDPC or the State Economic and Trade Commission. Relevant government departments also have the option of referring such projects to the State Council for examination and approval. The Procedures stipulate that no other department or unit has the right to approve international telecom construction projects except those departments specified in the Procedures. Further, only entities authorized to operate international communications infrastructure can undertake investment in or construction of international telecom projects; thus the Procedures effectively limit the number of enterprises that can engage in such activities.

As the building of telecom networks is expected to gather pace in the next few years, the release of the new rules is a timely reminder that all telecom infrastructure construction in the PRC is subject to the overall control of the Chinese government. Foreign companies supplying financing, equipment or consultancy services to such projects should be mindful of these ongoing requirements.

By Nancy Leigh,
Baker & McKenzie,
Hong Kong