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1.1 As a result of the revision of the concession contract on public telecommunications services, carried out in December of 1999, some services which had been previously provided in monopoly were open to competition.

1.2 Mobile service, as the world witnesses its tremendous pace of growth, is one of the areas liberalized and open to competition.

1.3 On the other hand, due to the exclusive provision of public telecommunications services over the past two decades, the majority of prevailing legislation and regulations in areas of telecommunications and radiocommunications is not catered to the environment after the revision of the concession contract.

1.4 As a reference, the major related legislation and regulations are as follows:

• Decree-Law no. 18/83/M, Fundamental Law of Radiocommunications;
• Decree-Law no. 48/86/M, Administrative Regime of Radiocommunications;
• Decree-Law no. 33/95/M, update of the Decree-Law no. 48/86/M;
• Law no. 8/89/M, Regime of Broadcasting Activities;
• Decree-Law no. 2/89/M, Organization of the Macau Posts and Telecommunications (CTT);
• Decree-Law no. 29/94/M, Regulation of Radio Amateurs;
• Decree-Law no. 3/98/M, Basic Principles of Licensing Satellite TV Broadcasting Systems and Services;
• Administrative Regulation no. 21/2000, Alteration of the Denomination and Competence of the Macau Posts and Telecommunications (CTT);
• Dispatch of Chief Executive no. 67/2000, Formation of Office for the Development of Telecommunications and Information Technology;

1.5 The major concession contracts and licences related to area of telecommunications are as follows:

• Concession Contract on Public Telecommunications Services of CTM (revised);
• Concession Contract of Land Subscription TV Service of TV Cabo Macau, S.A.R.L.;
• Licence no. 1/99, Satellite TV Broadcasting System of Telesat;
• Licence no. 2/99, Satellite Management System and Services of Telesat;
• Licence no. 1/98, Satellite TV Broadcasting Telecommunications Service of Cosmos Televisao por Satellite, S.A.R.L.

1.6 Recognizing the potential benefits to be brought to the general public by the introduction of competition in mobile service, the Government of MSAR, through this Specification, invites applications for the provisional licence of public mobile services.

1.7 Depending on the adequacy of the submitted applications, the justification on the market share and the availability of radio spectrum, the Government of MSAR will issue in maximum three Provisional Licences.

1.8 Each Provisional Licence is associated with one type of technology and no licensee is entitled to own more than one Provisional Licence, taking also into consideration the requirement mentioned in point 2.3 .

1.9 The Provisional License entitles the licensee to install and operate in the MSAR a mobile service network, including also the possibility of building its own mobile service international gateway, which will provide services to mobile customers, on a fair competing and non-discriminatory ground with the incumbent operator and other licensees.

1.10 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.

1.11 Definitions of technical terms used in this Specification should be referenced to the relevant International Telecommunication Union documents, regulations and recommendations.

1.12 Proposals should be submitted in triplicate under sealed confidential cover and must reach the address shown below not later than 5 o' clock in the afternoon of 1st September, 2000:

1.13 Receipt of proposals will be acknowledged individually. Late applications will not be considered.

1.14 Inquiries of clarification with respect to any of the aspects mentioned in the current Specification should be made in writing and sent by post to the address shown in point 1.12 above or by fax to the number +853 356328, before 10th August, 2000, the response of which will be given in the shortest period of time.

1.15 All valid proposals received before deadline will be open at 3 o' clock in the afternoon of 2nd September, 2000, and the Office for the Development of Telecommunications and Information Technology will immediately proceed to evaluate these proposals.

1.16 The Government of MSAR reserves the right to disclose, in the act referred in point 1.15 above, the names and composition of the parties who have submitted the proposals.

1.17 When considered necessary, the Government of MSAR may request the valid interested parties to supply explanation and/or further information on materials already submitted or considered in deficiency for evaluation.

1.18 The submitted proposals should remain valid for a period of 90 days, counting from the date mentioned in point 1.15 above.

1.19 Proposals will be evaluated on their merits, having regard to the information provided as requested and to the broad selection criteria outlined at Section 4 of this Specification, notwithstanding other pertinent aspects to the interest of the Government of MSAR.

1.20 This Specification is intended to give the basic information and procedures of the applications for the Provisional Licence. It does not, in any case, bind the Government of MSAR to grant any Provisional Licence.

2.1 Companies which are interested in obtaining the provisional licence should either be incorporated in the MSAR, under the legal requirement stipulated in the prevailing legislation, or otherwise in countries or territories outside the MSAR, with proof of registration duly certified by public or private notary.

2.2 Eligibility of candidates extends to the form of consortium.

2.3 The company or the constituent party of consortium, when submitting a proposal, is not allowed to hold a share or have any other interest in any other applicants for the Provisional Licence.

2.4 Interested parties should be financially and technically sound. In supporting this, interested parties (if as consortium, each of the constituent parties) are requested to supply the company's past financial demonstration as well as annual audit report and cite the past experience in installing and operating systems of telecommunications, preferably, in the field of mobile telephone services.

2.5 The Provisional Licence shall be awarded only to a company, consortium or the branch of a foreign company or consortium duly registered in the MSAR.

Section 3. Content to be included in the applications and proposals

3.1 The Government of MSAR, when considering to issue the provisional licence, is technology neutral. Interested parties can propose a technological platform for the mobile services, observing simultaneously the radio spectrum available as referred in point 3.3 below, which is either well proven as a world standard or would adopt a forthcoming and emerging standard.

3.2 Systems and networks adopting the IMT-2000 standards, or more commonly known as 3G, will not be considered at this licensing process.

3.3 In designing the network and preparing for the proposals, take good note of the following radio spectrum available in MSAR:

• 824 ---- 849 MHz
  869 ---- 894 MHz
  (accommodate a maximum of 4 operators)
  
  
• 890 ---- 897.5 MHz
  935 ---- 942.5 MHz
  
  905 ---- 915 MHz
  950 ---- 960 MHz
  (accommodate a maximum of 2 new operators)
  
  
• 1710 ---- 1745 MHz
  1805 ---- 1840 MHz
  
  1750 ---- 1785 MHz
  1845 ---- 1880 MHz
  (accommodate a maximum of 3 new operators)

3.4 If the candidate is interested in providing a dual-band service based on the fact that the two systems involved adopt the similar technical platform and the measures to avoid interruption during signal interchange (for example, GSM 900/1800), the intention as such must be clearly indicated in the proposal to be submitted, and the Provisional Licence hereby granted is considered as a single licence.

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

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

3.7 Applicants should propose a system building plan with the objective to achieve a good quality territory wide coverage of the MSAR in a period of 18 months, counting from the date of starting to provide commercial service.

3.8 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 etc., as well as the equipment listing.

3.9 The corporate structure and the estimated job opportunities should be included when submitting the proposal.

3.10 Regarding the operational aspects of the interested parties, it is necessary to elaborate, at least, a business plan for the first year and a 5-year business plan.

3.11 Along with the business plan, it is important to submit the investment plan, taking into consideration the period stated in point 3.7 above.

3.12 A promotion and marketing plan is also required.

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

3.14 As a general principle adopted by the Government of MSAR, the ways and charges of interconnection between the networks of the new operators and the incumbent operator should be settled between these two, based on commercial negotiation. However, no discrimination should be practiced by the incumbent operator on the charges of interconnection to be levied from all the licensees. The agreement reached should then be submitted to the Chief Executive for approval. Should there be dispute arisen and no conclusion is to be reached, the Government of MSAR reserves the right to arbitrate and fix the charges for the interconnection on a cost basis.

3.15 In order to foster fair competition in the market, applicants should make number portability as an inherent feature in their networks proposed. They are also required to reflect in their proposals the architecture and costs of implementing their preferred methods for number portability and the possible inter-operator charges.

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

3.17 Types of basic and value-added services to be offered should be clearly stated.

3.18 If there are field surveys to be conducted, the results of which should be attached to the proposals.

3.19 Applicants should attach an overview of the potential benefits that their investment projects could contributed to the society and economy of the MSAR.

Section 4. Criteria of selection

4.1 In evaluation of the quality of applications and proposals for obtaining the provisional licence of mobile service, the following listed criteria will be duly considered:

• The commitment of providing state-of-the-art and sophisticated system capability.
• Investment committed and financial background.
• Clearly outlined corporate structure.
• Technical aspects with regard to the infrastructure of the proposed networks.
• Implementation schedule for achieving a good quality territory wide coverage.
• Grade of service to be offered and system performance standards.
• Management and technical expertise of the corporation.
• Research in a sense that aspects stated in the applications and proposals should be substantiated by well-researched facts and comprehensive independent market survey.
• Tariff to be adopted for the proposed services.
• Training programs and facilities to be provided to local personnel.
• Economic and social benefits delivered to the MSAR.
• Clearly presented and easy to follow proposals.

4.2 The above-mentioned points of consideration do not limit the Government of MSAR to include other factors, which would lead to the selection of successful candidates.

5.1 Numbering blocks for each licensee will be allocated by the Government of MSAR.

5.2 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 licensee.

5.3 The proposal should be signed by legal representative of the interested party, whose signature must be recognized by a public or private notary.

5.4 The validity of the Provisional License is of one year. Once the legal framework and associated regulations in area of telecommunications are in place, the Provisional Licence will be converted to Definitive Licence if and only if the legal procedure as well as the conditions and requirements by then stipulated are duly fulfilled. The system operated under the Definitive Licence should not be different from that of the Provisional Licence. If there is any deficiency found with respect to the referred conditions and requirements, the licensee holding the Provisional Licence should first rectify the situation.

5.5 The Provisional Licence shall be invalidated if the deficiency is not rectified by the licensee before the expiration of validity of the Provisional Licence, and in this case, the Government of MSAR will not indemnify the licensee.

5.6 In preparing the legal framework and associated regulations as referred in point 5.4 above, the Government of MSAR will study the situation, with due consideration, in order to reduce, as much as possible, the steps taken, and thus facilitating the process, to convert the Provisional Licence to the Definitive Licence.

5.7 The Definitive Licence will be valid for a period of 8 years, the renewal of which is subject to the approval in accordance with conditions to be fixed by the Government of MSAR.

5.8 The provisional licence are issued with a charge of 100,000 patacas (one hundred thousand patacas).

5.9 The charge mentioned in point 5.8 above is paid to the Government of MSAR, or an entity designated by the Government of MSAR.

5.10 The provisional licence will convey the general rights and obligations for all public mobile service operators, with additional key aspects from the proposal considered as special terms and conditions.

5.11 The selection of successful candidates will be based on the broad criteria defined in Section 4.

5.12 On granting the Provisional Licence, the Government of MSAR shall request the licensee to submit a bank guarantee at the amount of two million patacas, with validity maintained for the full period of the Provisional Licence. Under the Definitive Licence, the bank guarantee will have to be renewed in accordance with the applicable legislation.

5.13 If the licensee, by any reason, withdraws of its own accord from installing the network, the bank guarantee referred in point 5.12 above will be reverted to the favor of the Government of MSAR.

5.14 Prior to the provision of commercial services to the public, the licensee is not entitled to transfer the licence to a third party. After the launching of commercial services and with the prior approval of the Government of MSAR, the licence is transferable if so solicited by the licensee.

5.15 If any of the licensees decides not to go ahead with the project, the Government of MSAR reserves the right to choose from the list of unsuccessful candidates the most appropriate one to take up the Provisional Licence, before the expiration of the period mentioned in point 1.18 above.

5.16 The financial statement and annual audit report with respect to activities carried out by the licensee in a given year should be submitted to the appreciation of the Government of MSAR or an entity designated thereof by the Government of MSAR, before 15thMarch of the following year.

5.17 The licensee is levied 5% on the annual gross revenue, as royalty paid to the Government of MSAR, resulting from the activities specified in the framework of the Provisional Licence, with the exception of handsets and accessory sales.

5.18 The payment mentioned in point 5.17 above does not exempt the licensee's obligation to pay other taxes to the Government of MSAR as the laws require as well as the applicable radio spectrum usage fees.

5.19 The Government of MSAR, when justifying the licensee's not fulfilling the implementation schedule as referred in point 3.7 above and no acceptable justification is put forward by the licensee in a period of at least 30 days before the deadline of the referred schedule, has the right to impose a penalty of 100,000 patacas (one hundred thousand patacas) for every month's delay until a maximum delay of six months.

5.20 When the justification has been put forward by the licensee during the specified period, the Government of MSAR could authorize, in accordance with the actual situation, the prolongation of the deadline for the licensee to fulfill the obligation stated in point 3.7 above. If the licensee fails to fulfill its obligation when the prolonged period has expired, the Government of MSAR has the right to impose a penalty of 100,000 patacas (one hundred thousand patacas) for every month's delay until a maximum delay of six months.

5.21 When the maximum period of six months specified in point 5.19 or 5.20 above has passed and the incompliance has been judged imputable to the licensee by the regulator, the Government of MSAR has the right to suspend or revoke the licence and by so doing, no indemnification will be given to the licensee.

5.22 It is the obligation of the licensee to provide good quality services to its customers in compliance with generally accepted quality and system performance standards.

5.23 As part of the responsibility of the licensee, emergency calls and assistance calls made by users should not be charged.

5.24 The Government of MSAR, according to the situation and the justification formulated by the licensees, could concede to the licensees the right of access to buildings for the purpose of base station and antenna installation and/or the right of access to public roads for the objective of laying cables to connect the base stations to the mobile switching centers of the same network. However, the licensees are responsible for any charges thereby incurred.

5.25 The licensee shall indemnify the Government of MSAR against any losses, which the Government of MSAR incurs or which may be made against the Government of MSAR as a consequence of or in relation to the activities of the licensee, with regard to the provision of services or the installation, maintenance and operation of the network.

5.26 In the event of any discrepancy between the Chinese version and its English translation of this Specification, the Chinese version shall prevail.