Update: 5/29/08: iPhonAsia has reviewed numerous current reports which indicate that the newly formed China Uniom/Netcom will ultimately receive a W-CDMA 3G license. If this proves true, China Unicom may become an alternative to China Mobile as a partner for Apple (iPhone) in China. It may also be possible for Apple to work with both carriers.
Note also the just announced 5/29/08 iPhone deal in Hong Kong and Macau with Hutchison Telecom Intl. Ltd. Hutchison runs a W-CDMA network in Macau.
China Announces Telecom Industry Restructuring
China Ministries issued a joint statement Saturday announcing a major restructuring of the RBM 728 billion (US $105 Billion) telecommunications industry. The process has been in planning for about 3 years and quietly underway for the last six months. China will reshape the industry through series inter-carrier mergers and acquisitions. The aim is to bring more competitive balance to China’s telecom industry where the 800-pound Gorilla, China Mobile, has been finishing everyone’s rice bowl. When all is said and done there will be three newly structured carriers – China Mobile, China Telecom and China Netcom/Unicom – offering both wireless and fixed-line services to a subscriber base of 913 million (535 million wireless) customers. More MII quotes and restructuring details > HERE
The joint ministries’ statement included confirmation that 3G licenses would be issued once restructuring is complete. China officials have previously suggested that 3G would roll out soon after the Olympics. But don’t run the victory lap just yet. Analysts’ opinions vary over timeline. It could happen this summer or drag out well into 2009. The fear is that China will delay 3G until the “China built” TD-SCDMA network has been fully deployed and all usability bugs have been squashed. Many sources inside China are skeptical over TD-SCDMA’s future. For more on this topic see China’s TD-SCDMA may not be an eternal flame
iPhone in China Deal(s)
How does China’s telecom industry reorganization impact Apple’s launch of iPhone in the China market? It removes China Mobile’s virtual monopoly, opens up wireless and stokes the competitive flames. Yes China’s carriers, through their holding companies, are all state owned and they follow instructions from above when “encouraged” to do so. Yet they also compete like crazy. The Chinese are some of the best capitalist I know!
This discussion could be academic if Apple has already sealed an iPhone deal in China. And yes, it is possible that an iPhone deal has recently (and quietly) been concluded. While western carriers specialize in spilling the beans, China carriers are good at keeping secrets. If a China deal has been made, we should hear about it shortly … perhaps as soon as WWDC Keynote on June 9. If terms still need to be negotiated, not to worry; Apple is no doubt well versed on the China telecom restructuring process and “TD” issues. And if no deal has yet been signed, then this may ultimately work to Apple’s advantage. A one-sided deal with the aforementioned 800-pound gorilla, would likely not have been in Apple’s best interest. Ask Research in Motion (RIM). The Canadian smartphone manufacturer made hay last year by announcing an “exclusive” deal to sell Blackberry smartphones in China in partnership with China Mobile. The press and pundits lauded RIM for this coup. Turns out the Blackberry deal was not so sweet for RIM. Betcha Apple won’t make the same mistakes and waiting for the China telecom reshuffling dust to settle a bit, may prove to be a very good move for Apple.
Finally, consider that Apple does not have to conclude a formal deal with a China carrier in order to sell iPhones in China. Evidence some 400,000 generation one iPhones now running on China Mobile’s GRPS/EDGE network. Would a formal carrier deal(s) be best? Sure! Better to have China carriers working with Apple under an agreement where both sides stand to win something. The major win for Apple is official carrier promotion/distribution of their 2.0 iPhone in China. The “something” for China carriers is a revolutionary iPhone that drives data and ARPU (average revenue per user) more so than any other handset on the market.
For more details on the China telecom restructuring see > China says yes to 3G
Reuters has a more detailed report on China’s telecom restructuring > HERE
For more details on China’s telecom industry executive reshuffle see Lisa Tang’s Asia -Europe Business >HERE