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Rumor: MIIT Drafting New Telecom VAS Licenses

21st Century Business Herald, 6/14/11

An industry source recently told 21st Century Business Herald that China's Ministry of Industry and Information Technology (MIIT) is in the process of developing a completely new categorization system for enterprises providing telecom value-added services (VAS), and is preparing new licensing standards for the industry that will more clearly delineate the scope of operations and enterprise qualifications for license holders. One possible direction, the source said, would be to separate the industry into ISPs, IDCs, and CDNs, then further divide into subcategories.

In the past, only one permit was issued for all of these services, the "Telecom Value-Added Services Operating License," which divided license holders into regional and trans-regional VAS providers. Regional licenses were issued by local communications authorities, while trans-regional licenses had to be reviewed by the MIIT. Different license numbers indicated whether license holders offered IDC services, ISP services, mobile SP services, domestic VPN services, or other services.

The MIIT's new "2010 List of Qualified and Probationary Trans-Regional Telecom Service Operators" initially listed (besides the three major telecom operators) 1,544 enterprises found to be "acceptable" and 330 operators "in need of improvement." A second list contained 68 "acceptable" operators and 121 "in need of improvement."

A source at a major domestic internet company said that the IDC license had been retired since 2008. "We have a license," the source said, "but in our actual work it makes little difference." There are several thousand internet access and managed hosting companies around China; many of these offer services despite not being licensed, and with the exception of customers who strictly require their service providers to be licensed, the majority of customers appear not to care.

An industry source said that the MIIT had also stopped issuing ISP licenses after the late 2009 national crackdown on internet pornography. ISP licenses can now be resold for nearly RMB 1 mln apiece.

In 2002, the then-MII issued China's only CDN license to CDN service provider ChinaCache; it has issued no more since. An industry sales employee said that many companies, including ChinaNetCenter, Dnion, and Fastweb, currently offer CDN services using their IDC or ISP license, and that the practice has been unofficially approved by authorities.

Keywords: Internet license MIIT CDN IDC VAS regulation

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