China Relaxes Some Laws on Foreign ISPs

Andrew Froehlich, Network Engineer & IT Consultant | 10/22/2013 | 17 comments

Andrew Froehlich
The Chinese government recently decided to offer foreign Internet service providers (ISPs) licenses to sell Internet services within the special economic zone called the Shanghai Free Trade Zone. This is a big step forward, and it's great news for those companies that were struggling to function at full capacity using local providers.

If you've ever had to operate a remote office in China, you're probably well aware that getting things accomplished over there takes an extra bit of patience and ingenuity. From a technology perspective, much of the difficulty revolves around inadequate data and voice communications between remote sites in China and facilities in the West. Until recently, the only options for ISPs were national carriers such as China Mobile, China Telecom, and China Unicom -- all of which are state-owned enterprises.

For years, enterprises with thousands or tens of thousands of employees in China resorted to building their own private WAN infrastructures using technologies like multi-protocol label switching (MPLS). This was done partly to circumvent the Chinese government's content filtering, but it mostly had to do with the limits on what Chinese-operated providers could deliver in terms of bandwidth, latency, and reliability. Even though services have improved in recent times, latency remains a major issue, so private MPLS networks remain an absolute must, despite the enormous costs.

The problem for small and midsized remote sites in China is that MPLS is cost prohibitive. The only alternative was to use a local Internet provider and tunnel traffic back to the West over a virtual private network connection. It was illegal for MPLS network owners to offer private-line services to their smaller counterparts, because the owners would then essentially be competing against state-run providers.

But the Chinese government is finally starting to relax its noncompete laws and accept bids from foreign service providers to offer Internet services to other foreign companies. The idea is that China wants to be seen as a flexible place to do business. A foreign ISP will be allowed to purchase a license, build its own MPLS infrastructure with very few hops back to the West, and offer low-latency services at reasonable rates to small to midsized remote sites that need them.

This is great news for many Western companies that were in desperate need of faster data communications, but I must reiterate that foreign ISPs are being allowed to operate only within the Shanghai Free Trade Zone. Companies with offices or factories in areas like Shenzhen are still out of luck.

But progress is progress, and hopefully the popularity of foreign ISPs working in the Shanghai FTZ will lead to relaxation of the foreign ISP competition rules in other major Chinese cities. This may be the turning point that many businesses were seeking in an attempt to bolster communications between the East and the West.

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batye   China Relaxes Some Laws on Foreign ISPs   2/6/2014 4:07:20 PM
Re: Private industry to the rescue
it all depends on the country and other political factors in play.... but at least we see change... and this is important...
Umair Ahmed   China Relaxes Some Laws on Foreign ISPs   10/31/2013 5:36:17 PM
Re: Private industry to the rescue
@ Sara: I personally believe in some parts of the world censorship has done well for the community. Public reactions to some issues in different parts of the world are very different, and authorities need censorship to maintain stability. It is not always the suppressing armor of the authoritarian regime. I have visited China twice and have number of Chinese friends living in China; they do not consider themselves oppressed.
Sara Peters   China Relaxes Some Laws on Foreign ISPs   10/31/2013 5:30:20 PM
Re: Progress
@Andrew  Even if it's a slow positive step I'm satisfied with the fact that it's a step in the right direction. These kind of major shifts in culture and global economic policy don't happen overnight.
Sara Peters   China Relaxes Some Laws on Foreign ISPs   10/31/2013 5:28:37 PM
Re: Private industry to the rescue
@Umair  I'm hoping for the same: "I hope that along with welcoming foreign ISPs, the Chinese government would also reduce the state level content filtering, particularly restricting social media." I do, however, think that China has a right to be whatever it wants to be. I worry sometimes that the US foreign policy has a tradition of being rather pushy and wants every other country's culture to be more like our own. I myself don't think I could live there with that level of censorship, though

singlemud   China Relaxes Some Laws on Foreign ISPs   10/28/2013 1:03:56 PM
Re: Private industry to the rescue
I think Chinese govement has no control on the content the Foreign ISPs carries, so it should be free speech zone.
Hospice_Houngbo   China Relaxes Some Laws on Foreign ISPs   10/26/2013 7:51:05 PM
Re: Private industry to the rescue
That may take some time, because the chinese regime is still an authoritarian regime. Freedom of speech and access to information without restriction will come with more democracy.
tinym   China Relaxes Some Laws on Foreign ISPs   10/26/2013 4:38:39 PM
Re: Private industry to the rescue
@Umair it would be great if they relaxed filtering for the free trade zone but I'm not optimistic.
Umair Ahmed   China Relaxes Some Laws on Foreign ISPs   10/26/2013 11:55:53 AM
Re: Private industry to the rescue
Seems very limited but good move by the Chinese authorities. I hope that along with welcoming foreign ISPs, the Chinese government would also reduce the state level content filtering, particularly restricting social media.
Hospice_Houngbo   China Relaxes Some Laws on Foreign ISPs   10/25/2013 8:54:22 PM
Re: Private industry to the rescue
More players in a business sector benefits users for sure, as competitions enable more innovations and affordable prices.
sherly_mendoza   China Relaxes Some Laws on Foreign ISPs   10/25/2013 12:46:10 AM
Re: Private industry to the rescue
@Hammad: China has always had strict laws. I remember a friend who lived there for two years. She told me stories about how their computers in school (she worked as an English teacher) were regularly monitored. There was even one time when authorities barged into their school and opened all computers and the files inside them because they traced some suspicious activity coming from one of the computers there. IF I remember it right, I think their computer files were deleted (most of them, anyway). So this change in ISP policy is definitely welcome news. And we can only hope that similar things will happen in the near future.
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