Posts Tagged ‘subsidies’

China Mobile may raise handset and plan subsidies to as much as 10 billion yuan (US$1.5 billion) in 2009 to promote their third-generation (3G) TD-SCDMA network services. China Mobile CEO Wang Jianzhou said in a Bloomberg News interview last Saturday at the World Economic Forum in Davos, Switzerland.

China Mobile Chairman Wang Jianzhou

China Mobile Chairman Wang Jianzhou

Wang stated “In order to promote our 3G business, we’ll increase subsidies for handsets,” ….“Ten billion yuan is possible” and the spending would include 2.5 G services. China Mobile has been working out technological issues to ensure that new TD-SCDMA handset users can seamlessly transition between TD-SCDMA (3G) and EDGE (2.5G). This back and forth transition during handset use may be critical has TD-SCDMA has thus far delivered spotty connectivity in areas and EDGE coverage has remained solid.





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Update:Aug 29, 2008 via Marbridge Consulting 

A source inside the Ministry of Industry and Information Technology (MIIT) revealed yesterday that China Mobile had reached a basic agreement with Apple to cooperate on bringing the iPhone to China without the revenue-sharing agreements Apple has in place with other carriers. Instead, China Mobile will procure the handsets for their full price, and then on-sell subsidized handsets to consumers. The source explained that China Mobile could buy a 3G iPhone from Apple for USD 299 – an example price – and then sell the handset to users for USD 199, treating the additional USD 100 as compensation to Apple.

iPhonAsia Comment: The following is guesswork … iPhonAsia believes Apple is building a TD-SCDMA handset for China. A subsidy and pre-buy of quantity for China Mobile’s inventory makes sense. China Mobile is currently providing generous subsidies to all TD-SCDMA handsets (primarily China built) to help encourage Chinese wireless users to take the TD-SCDMA plunge. Moreover, Apple would not naively begin production (with specialized TD chipsets plus lengthy test phase) of a TD-SCDMA handset for China Mobile without getting something in return …. the two most logical “gets” are a minimum quantity pre-sale to China Mobile (into seven figures in units is my guess) and a generous subsidy to bolster sales well beyond the inventory pre-sale … a win for both Apple and China Mobile. 

For many reasons, profitability surrounding TD-SCDMA is a lesser concern (in the near term) to China’s ministries and to China Mobile who must march along the “indigenous innovation” path. China Mobile has been given a bogey of 100,000,000 TD-SCDMA subscribers by the China’s MIIT.  

More on prospects for a TD iPhone 3G > HERE  and > HERE

NOTE: There will be no mention of TD-SCDMA in association with an iPhone for China (for now) as China does not want to discourage current TD handset sales … which have been very sluggish and will be even more so if the public catches wind that a subsidized TD iPhone 3G will be forthcoming. Timing for distribution of a TD iPhone 3G may be into early 2009 (Apple will not skimp on test phase – TD iPhone 3G will have a new chipset supporting TD-SCDMA and possibly also CMMB for mobile TV).

One other note … it’s possible (outside chance) that South Korea will be part of this special production run TD-SCDMA iPhone 3G “deal.” SKT has been working very closely with China Mobile on TD-SCDMA and Apple is not yet in South Korea due to WiPi protocol and state politics.


EXCERPT: Rumor: China Mobile To Subsidize Apple’s iPhone 

Posted by: Cherry Zhang on Aug 29, 2008 | 19:08

China Mobile (NYSE: CHL, 941.HK) and Apple (Nasdaq: AAPL) have decided to rely upon handset subsidies to bring Apple’s iPhone to China, reports China Communications quoting an insider close to China Mobile. The would-be mobile partners are nearing the end of talks that aim to avoid passing on the relatively high price of iPhones to Chinese consumers by having Mobile subsidize the phones, said the insider. The new plan is intended to replace revenue sharing models that left earlier talks at a stalemate. China Mobile president Wang Jianzhou initially revealed iPhone negotiations in November, 2007.

Full post > HERE

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