China Technology, Media and Telecom: Monthly Update – May 2022 Issue

Key highlights

State Council has amended the Provisions on Administration of Foreign-Invested Telecom Enterprises. The provisions herald possible further relaxations of the restrictions on foreign ownership in FITEs, especially in BTS, and brings consistency between the regulation and the current foreign investment regulatory practice regarding telecom services. The removal of track record requirement for main foreign investors and the streamlined process provides the foreign investors with more flexibility in structuring their investment and render the application for a telecom service license less time-consuming and less costly for the foreign investors. For more details, please read our below article on the topic.

Our Views

China Revamps Regime on Foreign Investment in Telecom Services

Regulatory Developments

1. The State Council amends the Provisions on the Administration of Foreign-funded Telecommunications Enterprises

On 7 April, the State Council published the Decision on Amending and Abolishing Certain Administrative Regulations, which makes notable amendments to the Provisions on Administration of Foreign-Invested Telecom Enterprises (the “FITE Provisions”). The amended FITE Provisions remove the requirements that the main foreign investor of an FITE should have good credentials and operational experiences in operating relevant telecom services, and streamline the process for applying for a license of telecom services.

2. The Opinions on Strengthening the Fight Against Illegal Acts and Crimes of Telecom Network Fraud was released

It was reported on April 18 that the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Strengthening the Fight Against Illegal Acts and Crimes of Telecom Network Fraud (the “Opinions”). According to the Opinions, it is necessary to establish and improve industry safety assessment and market entry mechanism, strengthen the supervision capacity of financial, telecom, Internet and other industry authorities, establish and improve the credit punishment system, strengthen the comprehensive management of territorial control, and further implement the supervision responsibilities of financial, telecom, Internet and other industry authorities.

3. The China Intellectual Property Administration issued the Outline of Building a Country Strong in Intellectual Property and Key Points of Local Works for the 14th Five-Year Plan in 2022

On 8 April, the China Intellectual Property Administration recently issued the Outline of Building a Country Strong in Intellectual Property and Key Points of Local Works for the 14th Five-Year Plan in 2022 (the “Outline”). The Outline specifies the main tasks for local governments in six aspects, including strengthening top-level design, enhancing intellectual property protection, promoting intellectual property transfer and transformation, optimizing intellectual property services, promoting international cooperation in intellectual property, and promoting intellectual property talents and cultural construction.

​4. Two departments released the Notice on Strengthening the Administration of Game Livestreaming on Online Audio-visual Platforms

On 15 April, the Department of Online Audio-visual Programs of the National Radio and Television Administration and the Publication Bureau of the Publicity Department of the CPC Central Committee released the Notice on Strengthening the Administration of Game Livestreaming on Online Audio-visual Platforms (the “Notice”). The Notice requires that 1) strictly prohibiting the network audiovisual platform to disseminate illegal games; 2) strengthening the broadcast management of game livestreaming content, improving program monitoring and public opinion monitoring mechanism; 3) urging the livestreaming platform to establish and implement the protection mechanism for minors, prohibiting minors from recharging and rewarding, and establishing special disposal channels for the return of minors’ rewards; 4) strictly implementing the category-based approval and record-filing system, and specifying that the broadcasting of overseas game programs and competitions shall be subject to approval.

5. SAMR issued the 14th Five-Year Plan for the Development of Advertising Industry

On 22 April, the State Administration of Market Regulation (SAMR) issued the 14th Five-Year Plan for the Development of Advertising Industry (the “Plan”) to systematically plan the work related to promoting the high-quality development of the advertising industry during the “14th Five-Year Plan” period. The Plan proposes to encourage technological innovation and application in the advertising industry, promote the digital transformation of the advertising industry, encourage the wide application of the technologies in the field of the Internet, artificial intelligence, block chain, big data, cloud computing and so on, and strengthen basic and critical technology research and development. The Plan also proposes to improve the management rules of Internet advertising and strengthen intelligent supervision.

6. The Implementation Rules for the Management of Unmanned Road Testing and Demonstration Applications of Passenger Vehicles in the Beijing Intelligent Networked Vehicle Policy Pilot Area was released

On 28 April, Beijing released the Implementation Rules for the Management of Unmanned Road Testing and Demonstration Applications of Passenger Vehicles in the Beijing Intelligent Networked Vehicle Policy Pilot Area (the “Implementation Rules”), taking the lead in opening up unmanned passenger vehicle operations. According to the Implementation Rules, Baidu and Pony. AI were the first batch to be allowed to place unmanned passenger vehicles in the Beijing high-level autonomous driving demonstration zone.

Enforcement Developments

​1. The Supreme People’s Procuratorate released typical cases of combating and managing telecom network fraud crimes and related crimes

On 21 April, the Supreme People’s Procuratorate released 10 typical cases of combating and managing telecom network fraud crimes and related crimes, as well as the results of strengthening judicial cases handling, combating crimes, carrying out dynamic duties, and collaborating to promote the network governance. Five of the 10 cases were telecom network fraud crimes, and the other five were related to cybercrimes, among which the fraudulent means include the fraud by game sales and virtual currency investment, illegally obtaining personal information to activate mobile phone cards for telecom fraud and other new fraudulent means.

2. CAC and other three departments launched the “Qinglang·Rectifying the Chaos in the Field of Online Livestreaming and Short Video” special action

On 15 April, the Secretary Bureau of the Cyberspace Administration of China (CAC) issued the Notice on the Implementation of the “Qinglang·Rectifying the Chaos in the Field of Online Livestreaming and Short Video” special action (the “Notice”). The Notice specifies that the CAC will take the lead to carry out a two-month special action. The special action will 1) strictly rectify the misconduct of functions, “chaos of online celebrities”, wrong reward, illegal profit, malicious marketing and other outstanding issues; 2) regulate the presentation of important pages such as opening screens and recommendations, supervise the accounts of “online-celebrity accounts” and MCN; and 3) manage the rewards by inducing and following the trend as well as the rewards given by minors.

3. The teleconference on combating and managing telecom network fraud crimes was held

On 14 April, the State Council Information Office held a press conference to introduce the progress of work of combating and managing telecom network fraud crimes. The meeting introduced that since April last year, the public security departments carried out “Cloud Sword – 2021” and other special actions of combating and rectifying telecom network fraud crimes, in which a total of 394,000 cases were solved and 634,000 suspects were arrested. The conference underlined the strengthening of early warning prevention and the construction of anti-fraud protection network based on advanced technologies in all aspects.

4. MIIT held a teleconference on the progress and correction of the ethos in the information and communication industry in 2022

On 8 April, the Ministry of Industry and Information Technology (MIIT) held a national teleconference to summarize the enforcement actions in the information communication industry in 2021 and deploy key tasks in 2022. At the conference, Zhang Yunming, the vice minister of the MIIT, pointed out that it was necessary to expand service areas, continuously improve the supply capacity of information communication services, and focus on solving hot and difficult issues on telecom and Internet services and personal information protection that the people are concerned about.

5. MIIT issued the Notice on the Quality of Telecom Services in the First Quarter of 2022

On 28 April, the MIIT issued the Notice on the Quality of Telecom Services in the First Quarter of 2022 (the “Notice”). The Notice shows that in the first quarter of 2022, the MIIT tested 610,000 Apps, ordered the rectification of 422 Apps and publicly notified 134 Apps. For enterprises with problems of number portability services, 12 enterprises were admonished and reminded, 9 enterprises were notified and criticized, and 9 enterprises were administratively punished; for enterprises with problems of spam, 41 enterprises were admonished, reminded and ordered to rectify, 84 enterprises were notified and criticized, and 6 enterprises were administratively punished.

6. The Hangzhou Internet Court pronounced the first judgment on the infringement in the field of NFT in China

On 20 April, the Hangzhou Internet Court held a public trial on a dispute over the infringement of the right of information network dissemination of works in the field of NFT (Non-Fungible Token). In this case, the plaintiff claimed that a user of the defendant’s NFT trading service platform cast and published the NFT work of “Fat Tiger Vaccination”, which was identical to the illustration work published by cartoonist Ma Qianli on Weibo, and brought the defendant to court for infringement. In the judgment, the Hangzhou Internet Court explained the definition of NFT, the legal nature of casting and trading of NFT digital works, the legal nature of the trading platform and the determination of responsibility and the allocation of liability in such cases.

Industry Developments

1. The National Press and Publication Administration issued the game license numbers first time after 263 days

On 11 April, the official website of the National Press and Publication Administration published the first batch of domestic game license numbers in April 2022, and a total of 45 domestic online games were approved. This is the first time that the National Press and Publication Administration issued game license numbers since July 22, 2021.

​2. National Internet Finance Association of China and other three associations warns the financial risks related to NFT

On 13 April, National Internet Finance Association of China, China Banking Association and Securities Association of China jointly issued the Initiative on Preventing Financial Risks Related to NFT (the “Initiative”). The Initiative provides that 1) the underlying assets of NFTs should not include financial assets such as securities, insurance, credit, and precious metals; 2) the non-fungible characteristics of NFT should not be undermine so as to indirectly facilitate initial coin offerings; 3) it is prohibited to provide centralized trading platforms for NFT transactions; 4) cryptocurrency should not be used as payment tools; 5) enterprises should carry out real-name identification for issuers, sellers and buyers of NFTs and actively cooperate with anti-money laundering work; and 6) enterprises should not engage in NFT investment directly or indirectly, and nor should they provide financing services for NFT investment.

3. The Digital Transformation Standard Working Group of the National Technical Committee for Standardization of Information and Industrialization Integration Management was found

On 13 April, the establishment conference of the Digital Transformation Standard Working Group of the National Technical Committee for Standardization of Information and Industrialization Integration Management (TC573/WG16, the “Standard Working Group”) was held. The Standard Working Group will focus on the key areas of digital transformation, orderly promote the establishment and development of key national standards, industry standards, etc., to help the industry to accelerate digital transformation.

4. The Broadband Development Alliance released the China Broadband Rate Status Report for the fourth quarter of 2021

On 15 April, the Broadband Development Alliance released the China Broadband Rate Status Report (Issue 26) for the fourth quarter of 2021 (the “Report”). The Report shows that in the fourth quarter of 2021, the average download rate of China’s fixed broadband network reached 62.55 Mbit/s, with an annual increase of 17.2%; the combined average download rate of China’s mobile broadband users accessing the Internet using 4G and 5G networks reached 59.34 Mbit/s, with an annual increase of 75.7%.