2009 CHINA/U.S. LEGAL EXCHANGE

Review of Telecommunications D l t d R f i ChiDevelopment and Reform in China

Shi YuchunShi YuchunDepartment of Policies, Laws and Regulations

MIIT China

ContentContent

I. Telecom Development

II. Telecom Reform

III. Trends Analysis

22

I Telecom DevelopmentI. Telecom Development

1.Telephone subscribers increase continually

– Total number:1.37 bln., 1/5 of the world subscribers

• Fixed subscribers: 326 mln., 4 times of those in 1998

• Mobile subscribers: 711 mln., 28 times of those in 1998

33

Development of Chinese Telephone S b ib i 1998Subscribers since 1998

120000

82889. 4

91273. 4

98203. 4

80000

100000

64726. 7

74386. 1

60000

80000

bers

(x10

000)

42103. 5

53199. 8

40000

Subs

rib

11128. 414876. 8

22936. 2

32599

20000

44

11128. 4

01998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年

Year

• Telecom sector develops as a fundamental and pleading industry

F 1st t l h i t ll d i 1882 t 10 l– From 1st telephone installed in 1882 to over 10 mln. subscribers in 1992: 110 years

– From 10 mln. subscribers to 100 mln. subscribers in 1998: 6 years

– From 100 mln. subscribers to 200 mln. subscribers in 2000: 2 years000: yea s

– Since 2001: increased by 100 mln. new subscribers annually

55

annually

2. Telephones penetration rate increases significantly

– Penetration rate: 77.4 subscribers per 100 inhabitants

• Fixed-telephones: 24.9 subscribers per 100 inhabitants

• Mobile-telephones: 52.5 subscribers per 100 inhabitantsp p

– Telephone-connected villages: 99.7%

– Telephone-connected natural villages (villages with more

66

than 20 households): 92.5%

Growth of Chinese Telephones Penetration Rate since 1998Penetration Rate since 1998

69 4

74. 3

70

80

57. 3

63. 4

69. 4

60

42. 1

50. 8

40

50

ion

Rate

（%）

25. 9

33. 74

30Pene

trat

10. 5313

20. 1

10

20

770

1998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年Year

3.Substitution of mobile telephones to fixed telephones continuestelephones continues– Mobile Subscribers

• Oct 2003: overtook fixed subscribers• Oct. 2003: overtook fixed subscribers• Up to Aug. 2009: 2.2 times of fixed subscribers

– Fixed Subscribers– Fixed Subscribers• Aug. 2007: decreased monthly• Up to Aug 2009: decreased by 46 47mln Subscribers• Up to Aug. 2009: decreased by 46.47mln. Subscribers

– Margin between mobile and fixed subscribers: 400 l

88

400 mln.

Substitutive Effect of Mobile Telephonesto Fixed Telephonesto ed e ep o es

64123

70000

54728. 6

50000

60000

35043. 336781. 2 36544. 8

34080 433482 4

39342. 8

46108. 2

40000

ers（

x100

00）

固定电话移动电话f

21441. 9

26330. 5

31244. 334080. 4

20661. 6

26869. 3

33482. 4

20000

30000

Subs

crib

e 移动电话f

8742. 110871. 6

14482. 9

18036. 8

8453. 3

14522. 2

10000

20000

99

2386. 34005. 2

01998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年

Year

4. Internet develops rapidly

– Internet users: 338 mln., 160 times of those in 1998

– Penetration rate: 23.9 users per 100 inhabitants

– Broadband internet users: 270 mln over 90% ofBroadband internet users: 270 mln., over 90% of

internet users

– Websites: over 2.88 mln. , 543 times of those in 1998

1010

Development of Chinese Internet Users since 1998

2980030000

35000

25000

2100020000

rs（

x100

00）

9400

11100

13700

10000

15000User

3370

5910

7950

9400

5000

1111

210890

2250

01998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年

Year

5. Competition framework farther optimizes

Basic telecom sector– Basic telecom sector

• China Telecom 249 mln. subscribers

• China Mobile 490 mln. subscribers

• China Unicom 243 mln. subscribers

– Value-added telecom sector

• Over 20 thousand service providers

• Over 94% providers contain private or foreign capital

1212

Subscribers Share ofBasic Telecom Operatorsas c e eco Ope ato s

Chi na Tel ecom25%

Chi na Uni com25%

1313

Chi na Mobi l e50%

6. Telecom tariff drops steadily

Telecom tariff level of Aug 2009 drops 8 41% as– Telecom tariff level of Aug 2009 drops 8.41% as

compared with July 2008

– Telecom tariff level drops 60% accumulatively from

1998 to 20081998 to 2008

– One-way charge of mobile telephones basically

achieves

1414

Telecom Tariff Level since 1998

0. 89 0. 90. 9

1

0. 78

0. 68

0. 81

0. 680. 7

0. 8

volu

me

0. 56

0. 50. 5

0. 6

reve

nue/

sevi

ce

0. 44

0. 390. 36

0. 3

0. 4

Tele

com

serv

ice

0. 1

0. 2

1515

01998年 1999年 2000年 2001年 2002年 2003年 2004年 2005年 2006年 2007年 2008年

Year

II Telecom ReformII. Telecom ReformTelecom liberalization deepens continuously

O 9 VAS

Telecom liberalization deepens continuously

Open 9 VAS todomestic investors

Entry into WTOOpen to foreign investors Issue 3 3G licenses

1993 200220011994 2000 2009

New round of telecom restructureEstablish China Unicom Establish China Tietong

1616

New round of telecom restructure,Further breaking up fixed monopolyBreaking up mobile monopoly

gBreaking up fixed monopoly

2 Telecom enterprises restructure2. Telecom enterprises restructure

中国卫星集团公司

DirecT

中国电信集团公司

铁道通信责任公司

ctorate GTelecom

,

中国网络通信中国网络通信Former China Telecom Group

中国移动通信集团公司中国移动通信集团公司

General oM

PT

中国移动通信集团公司中国移动通信集团公司

中国联合通信有限公司中国联合通信有限公司

of

1717

20021994 1999 20012000

Telecom enterprises restructure in 2008

Basic telecom services

p

CDMA network

1818

2002 2008

3.Regulatory authority gradually consummates

MII established, separation of Post and

Local telecom d i i t ti t bli h d

Dept. of Telecom d i i i

MIIT establishedpTelecom administrations established

compe

Administration, MPT

1993 1998 2000

Create fair

etition environ

2008

Separation from enterprisesSeparation from enterprises

nment

1919

p pp p

Establishment of MIIT

• MIIT was established according to “The Reform Program of Institutions of State Council” approved by the 1st session of the 11th NPC in 2008

Industry management responsibilities of NDRC

COSTIND, excluding responsibility for nuclear power MIIT

MII

2020

SCITO

• Main responsibilities of MIITFormulate industrial plan industrial policies and– Formulate industrial plan, industrial policies and standards and organize their implementation

– Monitor daily operation of industry

– Promote the development and independent innovationPromote the development and independent innovation of major technologies and equipment

R l i f i i– Regulation of communications sector

– Direct and promote the informatization

2121– Coordinate and safeguard national information security

4. Legislation consummate in the process of reformL– Law• Decision on Safeguarding internet security, NPC

– Administrative Regulations of State Council– Administrative Regulations of State Council• Regulations on Telecommunications• Measures on Administration of Internet Information

Services• Regulations on Administration of Foreign-Invested

Telecommunications EnterprisesTelecommunications Enterprises• ……

– MIIT rules• Administrative Provisions on Telecom Services Operation

and Licensing•

2222

• ……

III Trends AnalysisIII. Trends Analysis• Telecom reform and regulation shall be adapted to

social and economic development and technology advancementdv ce e

– Convergence of industrialization and informatization

– Convergence of telecom, broadcasting networks and

internet

– Effective competition

2323

– Promulgation of Telecommunications Law

Thank youThank you

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