To strengthen the management of the use of telecom enterprise subscriber numbers and to prevent telecom numbers from being used fraudulently, the National Communications Commission (“NCC”) held its No. 1102 committee meeting on January 17, 2024 and announced the draft Measures for the Management of the Use of Telecom Enterprise Subscriber Numbers (the "Draft") on February 23, 2024. We hereby summarize the Draft.

 

In line with the “Preventing Fraud” strategy outlined in the Next-generation anti-fraud strategy guidelines version 1.5 (新世代打擊詐欺策略行動綱領1.5版) promulgated by the Executive Yuan, the NCC has not only continued to investigate and penalize cases where telecom companies fail to verify and register numbers, but has also issued the Guidelines of Telecom Enterprises' Risk Management Mechanism for Application of Telecom Services (電信事業受理申辦電信服務風險管理機制指引, the "Guidelines"). The Guidelines require that all telecom enterprises continue to strengthen the implementation of the Know Your Customer ("KYC") mechanism when providing services to ensure comprehensive risk management. On this basis, the NCC announced the Draft to establish a regulatory framework for compliance issues. The issues therein include subscriber information verification and registration, restrictions on subscriber number allocation, management of subscriber number usage, disclosure of subscriber information, and cooperation with the online platform industry.

 

1.        KYC, Risk Control, and Telecom Enterprise Internal Audit Obligation

            （1）  Although the Draft does not require the registration of service providers engaged in the wholesale and resale of subscriber numbers (e.g., mobile virtual network operator, “MVNO”) as telecom companies, the NCC has stated that it will introduce additional requirements in future amendments. Furthermore, the Draft mandates that telecom companies that have provided cellphone numbers to MVNOs must conduct relevant audits. These audits include verifying whether the MVNO has registered as a telecom company, and checking basic information such as the nature of the business, capital amount, number of employees, and the use of wholesale subscriber numbers.

            （2）  Under the aforementioned requirements, MVNOs may choose to register as telecom companies to obtain subscriber numbers. Therefore, the Draft requires both telecom companies and MVNOs (if they choose to register or if they are further required to register as a telecom company) to comply with obligations such as KYC, risk control, and internal audits. Specifically, Article 3 of the Draft requires telecom companies to verify and register subscriber information before assigning subscriber numbers.

            （3）  Further, the NCC has instructed telecom companies to improve their management of subscriber number applications. Such enhanced supervision includes requesting reports and letters of undertaking from enterprises, and conducting on-site interviews with their customers to confirm the purpose of the application for the number and their business operations.

            （4）  The Draft also stipulates that telecom companies may not authorize subscriber numbers for extraterritorial use without the consent of the NCC.

 

2.        Parameters of Self-Regulation

Considering the fast-paced nature of online retail platforms, the Draft requests industry players of internet platform operators to strengthen self-regulation. Notably, Article 22 of the Draft stipulates that online retail platform operators should incorporate the following measures into their self-regulatory standards or terms of service for the sale of telecom service containing providing subscriber numbers: (i) require telecom service providers who sells the services containing provision of subscriber numbers to provide supporting evidence of that they are registered as telecom businesses, or that they are engaged in the wholesale or resale of subscriber numbers; and (ii) require that the said providers should disclose their identity and other contents that should be made known to subscribers. If the online retail platform operator discovers that the information disclosed by the provider does not comply with the aforementioned requirements, it should notify the seller to rectify the situation within a certain period or take necessary measures.

 

The implementation of the Measures for the Management of the Use of Telecom Enterprise Subscriber Numbers is expected to affect legal compliance of telecom enterprises, MVNOs, and online retail platform operators whose platforms may facilitate the completion of the sale of telecom services containing provision of subscriber numbers. If you have any questions, please contact our Digital Industry, Communications and Personal Data Protection team.