In a September 7 notice, China's Ministry of Industry and Information Technology (MIIT) announced that its annual review of enterprises holding infrastructure telecommunications service permits and inter-regional telecommunications service permits had found 314 enterprises that failed to meet standards. The majority of non-compliant enterprises were ISPs, service providers, or data center VAS operators involved in internet access, online gaming, online reading, and music downloads, among other fields. The companies named account for around 15% of the more than 2,000 enterprises inspected.
According to the MIIT, the companies named were culpable for unauthorized changes to shareholder structure, operations exceeding the scope of their permits, and other violations, and will be dealt with by MIIT and Ministry of Commerce departments. In addition to being ordered to correct irregularities, companies may have their permits suspended or revoked, and could be barred from engaging in related businesses.
In an interview with Economic Information Daily, IT industry expert Wang Yijiang said that besides the oft-cited problems of online pornography and unauthorized mobile billing, unauthorized trade in bandwidth resources and ISP licenses was becoming increasingly worrisome. In Beijing alone, unauthorized resale of bandwidth resources is a common occurrence, with many authorized internet service providers outsourcing residential compound internet access contracts to unauthorized ISPs which compete with other companies on price. In one case, the ISPs responsible for one residential compound advertised 10 Mbps internet access for RMB 65 per month - while China Telecom (NYSE: CHA; 0728.HK) offers 2 Mbps access for RMB 120 per month.