23 June, 2015
China has the world’s largest online population, yet Chinaʼs domain name industry has been largely unregulated for more than a decade. However, Internet security has become a top priority for the new administration, and the Chinese government has recognised the need to reign in control in the marketplace for new domain name extensions.
On 30 May 2015, the Ministry of Industry and Information Technology ("MIIT") issued the “Policy Interpretation of Special Operations to Regulate Domain Name Registration Services Market" (the "Interpretation"), which provides that certain special operations ("Operations") will be carried out by communications administration at all provinces, autonomous regions and municipalities and domain name registries and registrars to regulate the domain name registration services market. The aim of the Operations is to further regulate domain name registration services, create a fair and just domain name registration service market environment, ensure lawful rights and interests of customers and promote healthy and orderly development of domain registration service market.
In this Client Update, we highlight the key details of the Interpretation that companies providing domain name registration services in China will have to take note of, as well as the potential impact of the Operations on these companies.
Key Details Of The Interpretation
Requirements
Registries and registrars established in China and engaged in domain name registration service must meet relevant requirements and obtain the approval of the MIIT according to the “Administrative Measures on Internet Domain Names in China” (“Domain Name Measures”). Some of requirements include, but are not limited to:
(a) A series of application conditions, such as the long-term service capability, business development scheme, safeguard measures of network and information security, market withdrawal mechanism, etc;
(b) Domain name registries shall have in place rules to guarantee the safe and reliable operation of domain name system and to provide secure and convenient domain name services to registrars in a fair and reasonable manner;
(c) Domain name registrars shall consciously abide by relevant state laws, administrative laws, regulations and rules to provide domain name registration services to users in a fair and reasonable manner, and shall not adopt improper means to coerce users to register domain names; and
(d) Domain name registrars shall sign user registration agreement with domain name registration applicants to ensure the domain name registration information submitted by these applicants is authentic, accurate and complete.
The Interpretation provides that that domain name registrars in China will be prohibited from selling domain names in top-level domains (“TLDs”) that are not approved by the MIIT. So far, 8 registries have obtained approval to operate, maintain and manage 14 TLDs, which include "cn", "中国", "ren", "citic", "wang", "top", "商城", "网址". It should be noted that the list does not include the TLDs “.com” or “.net”, nor does it contain any countrycode TLD (ccTLD) other than “.cn”.
Non-Compliance
To ensure safe and reliable operation of China’s internet domain name system, punishment will be imposed on non-compliant or illegal registrars by the MIIT and the communications administration of all provinces, autonomous regions, and municipalities, in accordance with the circumstances.
The Operations appear to be targeted at companies operating in China that are already providing domain name registration services at the date of the Interpretations. The specific acts of non-compliance targeted by the Operations are providing domain name registration service without licence or beyond its business scope, failing to meet the requirements of requiring an applicant of a domain name to provide his/her real name, and adopting improper means such as fraud and coercion to sell domain names. However, it is very likely that the authorities will also investigate and take action with respect to other forms of noncompliance.
While the policy document does not affect domain names which have already been registered using non-compliant registrars, it does recommend that users transfer registered domains to compliant domain name registration service providers to protect their lawful rights and interests.
Schedule Of The Operations
The Operations will be carried out in four stages.
(a) ‘Self Inspection and Investigation’: This is the first and current stage of the Operations, which runs to mid-July 2015. The communications administration of all provinces, autonomous regions and municipalities shall organise the registrars under their jurisdiction for self-examination. The registrars shall self-inspect the domain name registration services provided by them and their agencies to ascertain whether they currenly fall within the permissible range.
(b) “Field Inspection”: The second stage of the Operations (late July to late August 2015) will consist of further field inspections and if necessary, MIIT will perform random inspection on domain name registration service market by such means as setting up cross-province joint inspection group.
(c) ‘Rectification’: The third stage (September 2015) will consist of those providing domain range registration services outside the permissble range taking action to rectify it.
(d) ‘Conclusion and Reporting’: The final stage takes place in October 2015 where MIIT will organize the communications administration of all provinces, autonomous regions, municipalities to convene special operation summary meetings to consolidate achievements, explore long-lasting management mechanism andpromote healthy and orderly development of domain name registration service market.
Conclusion
The Special Operations are likely to have a significant impact on the domain name registration services industry in China. Domestic Chinese registrars are facing new scrutiny, and the examination and re-approvals process will continue during the course of the Special Operations. Foreign registries which have not applied for Chinese market approval should do so in the near term, as unapproved TLDs are likely to be taken off the market following the Special Operations. For foreign domain name registries, a Chinese incorporated company and other regulatory and technical compliance will be necessary to have their domain names offered for sale in China.
For further information, please contact:
Benjamin Cheong, Partner, Rajah & Tann
benjamin.cheong@rajahtann.com
Linda Qiao, Rajah & Tann
linda.qiao@rajahtann.com
