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Since the foundation of the Shanghai Free Trade Zone， there are 11 governmental departments or institutions having issued the policies independently or jointly to support the development of the free trade zone （FTZ）. These departments and institutions included Ministry of Finance， China Securities Regulatory Commission， China Banking Regulatory Commission and the central bank.
This April， the Ministry of Industry and Information Technologies （MITT） also joined in the ranks as well.
The MIIT issued the Pilot Administrative Methods for Value-Added Telecom Service by Foreign Investors in Shanghai Free Trade Zone （hereafter “Administrative Methods” for short） on April 15. It is considered a strong guarantee for the opening-up of the value-added telecom service to foreign investors in the FTZ. If the pilot project could be carried out well， it will provide precious experiences for the reform to the examination and approval system for the foreign investment into the telecom industry.
Meanwhile， the “Administrative Methods” also delegates the approval rights to the Shanghai Municipal Administration of Communications， which greatly shortens the term of examination and licensing.
More Open to Foreign Investors
The value-added telecom services were not opened in one step. Before the“Administrative Methods”， the MIIT published on its website The Advices for Further Opening up the Value-Added Telecom Services in the Shanghai Free Trade Zone， a result of the joint research of the MIIT and Shanghai government.
This prequel to the “Administrative Methods” promised to open up the four services to foreigners in the FTZ， such as the Internet access services. Meanwhile， it mentioned about removing the cap for foreign investors in the shareholding structure in entities of information service and store-andforward services， allowing foreigners to have over 50% shares of companies of the two services.
“The MIIT respects and supports the ideas of Shanghai Free Trade Zone， showing that the telecom business， which has been monopolized for a long time， will be divided by the newcomers. The enterprises that have established their presence in this market will make overall arrangement with their previous advantages to take the new market，”said Guo Fanli， directive consultant at China Investment Consultancy.
In his opinion， the more openingup market is not only good for breaking down the monopolization， but also promising for better Internet access for the people. Presently， the Internet access is mainly paid monthly by consumers in the one-， two- or three-year package. This pattern dismisses some users’enthusiasm towards the Internet and fails to make the best of the network resources. The increasing competition in the market will boost the consummation of the service through the market and make more people willing to consume the networking resources. It is known that the value-added telecom service covers eight major fields according to the “Administrative Methods”. Apart from the data center， the foreign investors are also given a wider access to the information service， domestic VPN and so on.
Ma Jihua， a senior analyst in the telecom industry， once said that it is an unstoppable trend to open up the telecom industry， but it needs a pilot project to see the initial result. After all， the opening-up should be carried out step by step.
Delegate the Power to Shanghai
It is known that the “Administrative Methods” has 13 clauses， including the main contents of procedures of exam- ining foreign companies’ applications for the value-added telecom service， applicants’ conditions， materials， regulation， supervision and review of the pilot project.
Another important fact is that the“Administrative Methods” delegated the approval rights to the Shanghai Municipal Administration of Communications， which greatly shortens the term of examination and licensing.
According to the document， foreign enterprises that are going to apply for providing value-added telecom services in the FTZ must be legally registered and established in the FTZ； the functional facilities must be set up inside the FTZ and its main investors and operators shall have no records of violating the regulatory rules of telecom industry in recent three years.
Shanghai Municipal Administration of Communication， the administrative body to license foreign investors’ valueadded telecom services， will stage an examination over the application materials. According to the “Administrative Methods”， it shall give the applicants a notification about accepting the application. For unqualified applicants or those without all required files， the administrative body is obliged to inform the applicants of the truth （and ask them to submit missing files if necessary） within five days.
The examination will take 60 days to be completed. The applicants are to be licensed or not based on the results of the examination. Applicants that pass the examination will be given the Reply to the Pilot Project of Value-added Telecom Services by Foreign Investors in Shanghai Free Trade Zone. Those failing the examination are to receive a written letter with the detailed reasons of their futile applications.
Ma Jihua said： “In that way， the examination will take much less time and the efficiency is greatly improved. This is good news for foreign enterprises， enabling them to be more flexible when solving some local problems.”
Notably， the license will remain valid for three years and what it will go after that period depends on the results and the decisions of China’s State Council.
This April， the Ministry of Industry and Information Technologies （MITT） also joined in the ranks as well.
The MIIT issued the Pilot Administrative Methods for Value-Added Telecom Service by Foreign Investors in Shanghai Free Trade Zone （hereafter “Administrative Methods” for short） on April 15. It is considered a strong guarantee for the opening-up of the value-added telecom service to foreign investors in the FTZ. If the pilot project could be carried out well， it will provide precious experiences for the reform to the examination and approval system for the foreign investment into the telecom industry.
Meanwhile， the “Administrative Methods” also delegates the approval rights to the Shanghai Municipal Administration of Communications， which greatly shortens the term of examination and licensing.
More Open to Foreign Investors
The value-added telecom services were not opened in one step. Before the“Administrative Methods”， the MIIT published on its website The Advices for Further Opening up the Value-Added Telecom Services in the Shanghai Free Trade Zone， a result of the joint research of the MIIT and Shanghai government.
This prequel to the “Administrative Methods” promised to open up the four services to foreigners in the FTZ， such as the Internet access services. Meanwhile， it mentioned about removing the cap for foreign investors in the shareholding structure in entities of information service and store-andforward services， allowing foreigners to have over 50% shares of companies of the two services.
“The MIIT respects and supports the ideas of Shanghai Free Trade Zone， showing that the telecom business， which has been monopolized for a long time， will be divided by the newcomers. The enterprises that have established their presence in this market will make overall arrangement with their previous advantages to take the new market，”said Guo Fanli， directive consultant at China Investment Consultancy.
In his opinion， the more openingup market is not only good for breaking down the monopolization， but also promising for better Internet access for the people. Presently， the Internet access is mainly paid monthly by consumers in the one-， two- or three-year package. This pattern dismisses some users’enthusiasm towards the Internet and fails to make the best of the network resources. The increasing competition in the market will boost the consummation of the service through the market and make more people willing to consume the networking resources. It is known that the value-added telecom service covers eight major fields according to the “Administrative Methods”. Apart from the data center， the foreign investors are also given a wider access to the information service， domestic VPN and so on.
Ma Jihua， a senior analyst in the telecom industry， once said that it is an unstoppable trend to open up the telecom industry， but it needs a pilot project to see the initial result. After all， the opening-up should be carried out step by step.
Delegate the Power to Shanghai
It is known that the “Administrative Methods” has 13 clauses， including the main contents of procedures of exam- ining foreign companies’ applications for the value-added telecom service， applicants’ conditions， materials， regulation， supervision and review of the pilot project.
Another important fact is that the“Administrative Methods” delegated the approval rights to the Shanghai Municipal Administration of Communications， which greatly shortens the term of examination and licensing.
According to the document， foreign enterprises that are going to apply for providing value-added telecom services in the FTZ must be legally registered and established in the FTZ； the functional facilities must be set up inside the FTZ and its main investors and operators shall have no records of violating the regulatory rules of telecom industry in recent three years.
Shanghai Municipal Administration of Communication， the administrative body to license foreign investors’ valueadded telecom services， will stage an examination over the application materials. According to the “Administrative Methods”， it shall give the applicants a notification about accepting the application. For unqualified applicants or those without all required files， the administrative body is obliged to inform the applicants of the truth （and ask them to submit missing files if necessary） within five days.
The examination will take 60 days to be completed. The applicants are to be licensed or not based on the results of the examination. Applicants that pass the examination will be given the Reply to the Pilot Project of Value-added Telecom Services by Foreign Investors in Shanghai Free Trade Zone. Those failing the examination are to receive a written letter with the detailed reasons of their futile applications.
Ma Jihua said： “In that way， the examination will take much less time and the efficiency is greatly improved. This is good news for foreign enterprises， enabling them to be more flexible when solving some local problems.”
Notably， the license will remain valid for three years and what it will go after that period depends on the results and the decisions of China’s State Council.