Global Tech

What’s Behind Apple’s iPhone Deal with China Mobile?

The Apple store in Beijing. (Image via Shutterstock)

The Apple store in Beijing. (Image via Shutterstock)

Last week will go down in the history books as the week when China finally entered the high-speed telecoms era with its granting of 4G licenses after years of waiting. But China still has the dubious distinction as one of the world’s few markets where Apple’s wildly popular iPhone isn’t available to more than half of the country’s 1 billion mobile subscribers. That looks set to finally change soon, with media reporting that China’s dominant carrier China Mobile has finally signed an iPhone deal with Apple.

If China’s march to 4G wins the prize for the slowest, most delayed telecoms news of the year, then this China Mobile-Apple deal certainly gets the runner-up for that category. This move has been discussed for years now, dating back at least to 2010 when China Mobile first disclosed it was in talks with Apple to offer iPhones for sale on its 3G network, which uses a homegrown Chinese technology called TD-SCDMA.

Before I do my brief recount of the tortured history of this deal and discuss what the future may hold, let’s take a look at the actual headlines on the signing of this new agreement. The source of all the reports is an article in the Wall Street Journal, which cites several knowledgeable sources saying that Apple and China Mobile have just signed their long-awaited deal. No timeline is given for when China Mobile will formally launch the iPhone, but media are speculating that it could happen when China Mobile formally launches 4G service on December 18.

The fact that the news is coming from the Wall Street Journal certainly gives this latest report more credibility. I wrote about the deal earlier this week, based on a Chinese media report. But that report was just one of many over the last few months in the Chinese media saying a deal was near, and of course such a deal never came. If this latest report is correct, which looks likely, China Mobile will finally join the nation’s other two telcos, China Unicom and China Telecom, in offering the iPhone in China.

Since China Mobile has more than 700 million subscribers, or two-thirds of China’s mobile market, its addition as an iPhone seller should be big news for Apple. As I’ve said above, the pair have been discussing an iPhone deal for more than 3 years but could never reach an agreement before now. One of the main stumbling blocks was technology, since Apple’s main chip supplier didn’t make chips that support the TD-SCDMA standard being used by China Mobile.

But that supplier, Qualcomm, this year finally started making such chips, as well as chips that support China Mobile’s 4G standard, which also uses a homegrown technology called TD-LTE. At the same time, China’s telecoms regulator formally awarded 4G licenses earlier this week, paving the way for China Mobile to offer commercial service after several years of trials. With that technological issue in the past and China Mobile’s 4G service set to launch soon, the timing does seem perfect for the carrier to finally launch an iPhone service plan for its network.

This deal has been far too long in coming, but should be a very positive development for both Apple and China Mobile. Apple already counts China as one of its top global markets, and having access to China Mobile’s 700 million subscribers could give it a new lift following lackluster sales over the last few quarters. The iPhone will also give China Mobile a quick boost for its 4G service launch, and I’ve previously predicted it could quickly sign up as many as 10 million subscribers in the first 1-2 months of service.

Doug Young lives in Shanghai and writes opinion pieces about tech investment in China for Techonomy and at www.youngchinabiz.com. He is the author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.

Tags: , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *