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Specific regulation for the public tendering of the
licence of operation of third generation public land mobile telecommunications network and provision of respective services of land mobile telecommunications of public use in the Macao Special Administrative Region of the People's Republic of China

Section 1 – Introduction

1.1. The Government of the Macao Special Administrative Region (MSAR) liberalised the market of the mobile telecommunications services in the year 2000 and now there are three Global System for Mobile Communications (GSM) networks and one Code Division Multiple Access (CDMA2000 1X) network in Macao.

1.2. Considering the size of the Macao telecommunications market, the demand for high data rate services of local and roaming customers, and the worldwide popularity of new generation mobile services, the Government of MSAR believes that this is the appropriate moment to issue the licences of operation of third generation public land mobile telecommunications network and provision of respective services of land mobile telecommunications of public use (licence hereafter) .

1. 3 . The era of third generation of mobile communications has already begun right after the approval of IMT-2000 technical standards by International Telecommunications Union (ITU hereafter) in the year 2000. The IMT-2000 technical standards consist of five different standards. The licences to be issued will be based on the ITU’s IMT-2000 standards.

1.4. Considering the worldwide development of mobile telecommunications market, especially the adoption of technical standards, the Government of MSAR will issue no more than four licences, and the licensing procedure will be separated into two phases:

First phase

• Issue three licences;
• The technical standards WCDMA and CDMA2000 1X EV-DO (including the evolving technologies based on these two standards) will be considered with priority and one licence will be issued for each of these two standards. The third licence will be chosen with the technology neutral principle among the rest of the proposals;
• If the submitted proposals do not include one, or even two of the two prioritized standards, all three licences will be selected according to the technology neutral principle.

Second phase

• The Government may consider to issue the last licence within two years after the issuance of licences in the first phase;
• The Government may choose a particular technical standard according to the worldwide development in technology and the demand of local market.
  

1.5. The timetable specified in this specification is only applicable to the first phase tendering process. The details of the second phase tendering process will be defined by another specific regulation in suitable time.

1.6. The licensee can build its own mobile service international gateway, through the external telecommunications infrastructures established by the concessionaire or proper licence holders, in order to ensure the availability of the facilities needed for the communications in the roaming mobile telecommunications services.

1.7. The mobile service international gateway shall in no case be engaged in the practice of refiling without the prior consent in writing by the Government of MSAR.

1.8. Definitions of technical terms used in this regulation should be referred to the relevant ITU documents, regulations and recommendations.

1.9. This regulation intends to provide the information and explain the procedures for licence applications. To follow the rules mentioned in this regulation does not, in any case, bind the Government of MSAR to grant any licence.

Section 2 – Applicable legislations

2.1. In preparing proposals, the major relevant legislation and regulations for mobile telecommunications services, shown in the following, should be considered:

2.2. The major concession contracts and licences related to the area of mobile telecommunication service are as follows:

Section 3 – Applicants

3.1. The commercial corporations or consortia, established or to be established, can participate in the tendering.

3.2. The shareholding companies of the tendering corporations or members of the tendering consortia should have been established, by way of presenting the confirmation document of the commercial registry from the Commerce and Movable Property Registry in Macao; if the corporations or consortia were established outside of MSAR, the copy of the foreign registration, duly certified by notary, should be presented.

3.3. Applicants should be both financially and technically qualified. In supporting this, applicants are requested to submit the past financial statements and annual audit reports and demonstrate the experience in installing and operating systems of telecommunications.

3.4. Applicants, when submitting the proposals, are not allowed to be shareholders or have any other interest in any other applicant for the licence.

Section 4 – Composition of the proposals, method and timeframe for presenting the proposals

4.1. Proposals should be submitted in triplicate, written in the official languages of MSAR or in English, opaquely covered and wax-sealed, and must be sent to the address shown below not later than 5 o' clock in the afternoon of 28th July 2006, and the acknowledgement of receipt could be obtained:

Office for the Development of Telecommunications and Information Technology
789, Avenida da Praia Grande, 1/F,
Macao Special Administrative Region

4.2. Late applications will be rejected.

4.3. Applicants may request for clarification of any doubts with respect to the clauses of this Regulation or regarding the subjects of this tendering process, until 23rd June 2006.

4.4. All the applications for clarifications should be made in writing and sent to the address shown in point 4.1 above, soliciting a proof of receipt, or sent by registered mail with acknowledgement of receipt to the same address or sent by fax to the number +853 356328.

4.5. Clarifications will be provided by the Office for the Development of Telecommunications and Information Technology not later than 5th July 2006.

4.6. In designing the network and preparing the proposals, the following radio spectrum available in MSAR should be considered:

—Frequency Division Multiple Access:

• 825 – 845 MHz / 870 – 890 MHz;
• 1710 – 1785 MHz / 1805 – 1880 MHz;
• 1920 – 1980 MHz / 2110 – 2170 MHz;

—Time Division Multiple Access:

• 1885 – 1920 MHz; 2010 – 2025 MHz.

4.7. The proposal should explicitly indicate the system capacity and capacity for expansion.

4.8. Specifications on the radio interface used in the proposed system should be provided.

4.9. It is necessary to provide the network design and configuration, namely, among others, number and location of base station, number and location of mobile switching centre, point of interconnection, channel arrangement, antenna type, effective radiated power, features supported by the network, and the list of equipments.

4.10. The organizational structure and the estimation of local job opportunities to be created should be included when submitting the proposal.

4.11. Regarding the operational aspects, applicants are necessary to elaborate, at least, a business plan for the first year and a following 3 years’ business plan.

4.12. Along with the business plan, it is important to submit an investment plan, taking into consideration the timeframe stated in point 4.24 of this regulation.

4.13. In the investment plan, the cost of network interconnection with the existing operators (including the fixed telephone network operator) and the cost derived from the services of mobile number portability for local mobile telecommunications users, should be considered.

4.14. According to the general principle adopted by the Government of MSAR, the ways and charges of interconnection between the networks of the new operator and the existing operators (including fixed telephone network operator) should be settled among themselves, based on commercial negotiation, yet the existing regulations and the directives issued by the Government must be observed.

4.15. No discrimination should be practiced by the existing operators on the charges of interconnection to be levied from the holders of the new mobile telecommunications service licences.

4.16. The agreement reached should then be submitted to the Government of MSAR for approval. If no agreement can be reached by the relevant parties, the case will be resolved according to the articles mentioned in the Regulamento Administrativo no. 41/2004.

4.17. Evidence should be provided to prove the financial capability for the network development.

4.18. The billing and operation supporting systems to be adopted, including the customer care services, need to be described with sufficient information.

4.19. A proposal of tariff to be applied, giving sufficient rationalization of the basis of formulating the local, international and roaming service charges is required.

4.20. Types of services to be offered should be clearly stated.

4.21. If there are field tests conducted, such results should be attached to the proposal.

4.22. Aspects stated in the proposals should be based on detailed studies and independent market survey.

4.23. Applicants should also present an overview of the potential benefits that their proposed investment plans could contribute to the society and economy of MSAR.

4.24. Applicants should propose a system construction plan with the objective to achieve a good quality territory wide coverage of MSAR in a period of fifteen months, counting from the date of starting to provide commercial services.

4.25. Applicants should submit a specific proposal with the planning to promote the third generation mobile telecommunication application software and content developments in local academic institutes, scientific research institutes and commercial entities of MSAR.

4.26. The proposal should be signed by legal representative of the applicant, whose signature must be recognized by notary.

4.27. The submitted proposals should remain valid for a period of 180 days, counting from the date mentioned in point 5.1.

Section 5 – Opening of the proposals

5.1. All valid proposals received or delivered before deadline will be opened at 3 o' clock in the afternoon of 1st August 2006, in the Office for the Development of Telecommunications and Information Technology.

5.2. Representatives of applicants, with adequate credentials, can attend the session for proposal opening.

5.3. The Government of MSAR reserves the right not to disclose the names of shareholding companies and members of applicants.

Section 6 – Evaluation of the proposals

6.1. The evaluation will follow immediately after the opening of the proposals.

6.2. For the sake of evaluating the proposals, when considering necessary, the Government of MSAR may request the applicants to provide supplementary information or explanations about the documents already submitted.

6.3. Proposals will be evaluated by the Office for the Development of Telecommunications and Information Technology, considering their own merits, the information provided on request as well as the situations and selection criteria outlined in the following point of this Section, not excluding, nevertheless, other evaluation criteria which are pertinent to the interest of MSAR.

6.4. In evaluation of the proposals, the following situations and criteria will be considered with priority:

• Applicants who have relevant experiences in the telecommunication industry;
• As to the corporations or consortia established or to be established for the tendering, the shareholder or member, who possesses a company participation equal or higher than 51% of the capital, has relevant experiences in the telecommunication industry;
• The commitment of providing systems with state-of-the-art and sophisticated capability;
• Investment committed and financial background;
• Technical aspects with regard to the infrastructure of the proposed networks;
• Implementation schedule for achieving a full coverage of MSAR;
• Grade of service to be offered and system performance standards;
• Management and technical expertise of the corporation;
• Tariff to be adopted for the proposed services;
• Training programs and facilities to be provided to local personnel;
• Concrete and feasible plans to stimulate the local development of application softwares and contents of the respective services;
• Economic and social benefits delivered to MSAR;
• Organizational structure.
  

6.5. The successful candidate should first conform to the conditions stated in item 1) of Article 6 of the Regulamento Administrativo n.º 7/2002, before the licence is granted.

Section 7 – Final decision

7.1. The licensing decision should be made according to the time specified in no. 3 of Article 5 of the Regulamento Administrativo n.º 7/2002.

7.2. The Office for the Development of Telecommunications and Information Technology will inform all applicants with regard to the licensing decision, by registered mail with acknowledgement of receipt.

Section 8 – Guarantees

8.1. To ensure the assumption of restrictions produced by submitting the proposals and the fulfilment of obligations inherent in the tendering process, applicants must provide a provisional guarantee in favour of the Government of MSAR, in the amount of MOP 200 000.00 (two hundred thousand patacas).

8.2. Pursuant to Article 7 of the Regulamento Administrativo n.º 7/2002, the applicant who obtains the licence is obliged to increase the amount of guarantee stated in the previous point to MOP 2 000 000.00 (two million patacas).

8.3. The guarantees should be deposited in cash in one of the agent banks of MSAR, or through bank guarantee or performance bond, in regime on first demand, contracted in banks or insurance companies operating in MSAR.

8.4. The other applicants, after the validity period of the proposals or the issuance of licence before the expiration of that period, can request the return of the amount deposited or the cancellation of the bank guarantee or performance bond.

8.5. Applicants also have the right to request the return of the amount deposited or the cancellation of the guarantee or performance bond if the proposals submitted by the applicants are not admitted to the tendering process.

8.6. All the expenses resulting from providing or drawing out the guarantees shall be borne by the applicants.

8.7. If the applicant or the licensee, by any reasons, gives up the tendering or licence, out of their own will, the guarantee provided will revert in favour of the Government of MSAR, unless the justifications are duly accepted in writing by the Government of MSAR.

Section 9 – Issuance of licences

9.1. According to no. 2 of Article 4 of Regulamento Administrativo n.º 7/2002, the validity of the licence is of eight years; the licensee could apply to the Government of MSAR, at minimum two years before the end of the term of respective licence, and it could be renewed in a period of no more than eight years.

9.2. The Government of MSAR may refuse the licence renewal according to the actual market development situation and will not be subject to any indemnification made to the respective licensee.

Section 10 – Other terms and conditions to be complied by the licensees

10.1. The necessary numbering resources for effective network operation and service provision will be administered and allocated in accordance with the Regulamento Administrativo no. 15/2002.

10.2. The Constitution and Convention of the International Telecommunication Union as well as the ITU-T and ITU-R Recommendations and Reports should be closely observed by the licensees.

10.3. If the licensees change the technical specification of the system unilaterally within the validity period of the licences, the Government of MSAR has the right to revoke the licences.

10.4. The licensees should provide commercial services within a period of one year, counting from the date of issuing the licences.

10.5. Prior to the provision of commercial services to the public, the licensees are not entitled to transfer the licences to a third party. If the licensees intend to transfer the licences after the launch of commercial service, it should be requested in accordance with Article 10 of the Regulamento Administrativo n.º 7/2002.

10.6. If the licensees, by any reasons, decide not to go ahead with the project, the Government of MSAR has the right to choose an unsuccessful candidate to take up the respective licence, before the expiration of the period mentioned in point 7.1 of this regulation.

10.7. The licensees are levied by the Government of MSAR an annual fee equal to 5% on the annual gross revenue, resulting from the activities specified in the framework of the licences. The fee is settled quarterly and should be paid to the Government within 30 days after the end of respective quarter.

10.8. The individual licence is issued with a charge of MOP 100 000.00 (one hundred thousand patacas), and should be paid within 15 days after the licence issued.

10.9. The payments mentioned in points 10.7 and 10.8, do not exempt the licensees from the obligation of paying any other fees or taxes, including the radio spectrum usage fees.

10.10. It is the responsibility of the licensees to provide good quality services to its customers in compliance with generally accepted service quality and system performance standards.

10.11. As part of the obligations of the licensees, emergency calls and assistance calls made by users should not be charged.

10.12. The licences will grant to the licensees all the rights and obligations related to the services stated in this regulation, and the rights and obligations listed in the Regulamento Administrativo n.º 7/2002. The special conditions mentioned in the proposal may be considered as exceptional terms and conditions.

10.13. The licensees shall indemnify against any damage that MSAR will suffer, as a consequence of activities related to the provision of services or the installation, maintenance and operation of the network.

10.14. The licensees should cooperate with the public departments of MSAR that, within the scope of their power and duty, impose specific requirements or rules on the network built or to be built.

Section 11 – Special arrangements

11.1. If the licensee itself or any member of the licence holding consortia already possesses the licence of Services of Land Mobile Telecommunications of Public Use issued by the Government of MSAR, the latter will be renewed for a period of no more than two years, in order to guarantee the healthy development of the mobile telecommunications market.

11.2. If any of the existing holders of the licences of Services of Land Mobile Telecommunications of Public Use cannot obtain a licence in this public tendering process, their existing licences will be renewed for a period of six years in order to protect the possible return on investment of the licence holders and minimize the impact to the customers. But the licence holders have to promise to continuously provide excellent quality and diversified services, during their application of renewal.

11.3. Due to the rapid evolution of mobile data transmission technologies, in case of technological compatibility, the licensees may consider to provide services by using other radio communications networks (i.e. the IEEE 802.11 wireless network technology, etc.) as a complementary but not replacing technology, in order to provide more value added services. But the establishment and the operation of these complementary networks require the prior authorization of the Government according to the applicable regulations.

NOTE: Should there be any discrepancy noted between this English translation and the published Chinese and Portuguese texts of the Regulation as annexed to the Ordem Executiva n.º 15/2006, the latter two versions will prevail.