Apple's China Mobile Deal Appears To Be Finally Happening - Forbes

One little piece of news that indicates that Apple might have finally come to an agreement with China Mobile over allowing the iPhone onto that network. For we know that they’ve got a model of the iPhone that works on that network, we know that they’ve got Chinese state approval, it’s been about the financial aspects of the deal for some time now.

The particular piece of news is that Bloomberg spotted a job ad in China:

Apple Inc. (AAPL) wants to hire an engineer with extensive knowledge of China Mobile Ltd. (941)’s homegrown phone network, evidence it’s moving toward an agreement for the world’s largest carrier to offer the iPhone.

The manager, who will be based in Beijing, will “support and drive the carrier approval of mobile phones,” Apple said in an advertisement on its China website. The position seeks experience with TD-SCDMA, China Mobile’s own third-generation standard that isn’t used by other carriers.

The background to this is that China Mobile has 700 million customers: it’s by far the largest network in the world that Apple has not managed to reach an agreement with. Until recently there was a very simple technical reason why: iPhones simply did not work on the China Mobile network, for that uses TD-SCDMA and they iPhones just didn’t have the chips required to get onto that network standard. This has now changed. We know from the WSJ that Apple has gained approval in China for TD-SCDMA capable phones:

According to the website of China’s Telecom Equipment Certification Center on Wednesday, Apple received a “network access license” for a handset resembling the iPhone that runs on the mobile standards used by China Mobile for third- and fourth-generation cellular services.

We’re also pretty certain we know what the product numbers are:

Yes, the missing models are A1516 (a version of 5c that works on TD-LTE and CHL’s 3G TD-SCDMA) and A1518 (a version of 5s that works on TD-LTE and TD-SCDMA). Neither show up (yet) on the 5s and 5c model listings on Apple’s website. Both have received network access licenses for China Mobile’s network (permit numbers 00-8573-139033 and -139036, respectively).

So, if we know that the phones exist and are licensed, then that ad for an engineer familiar with that network isn’t about designing a phone or getting it approved. And I’ve heard from one contact (unfortunately not directly quotable) that the chipset in the iPhone 5c and s can handle TD-SCDMA just fine. The technical change required was some minor fiddling with the antenna.

So, if all this is true then why isn’t the iPhone available on China Mobile? Well, that’s all down to the financial matters. Apple insists upon two things from an airtime provider that offers the iPhone. Firstly, a significant marketing expenditure to push the product. Secondly, substantial (and they really are substantial, hundreds of $ per handset) subsidies to consumers. That’s how you can get an iPhone 5s for $199 when you sign up for a contract but they cost $649 without one. That airtime provider is covering that price reduction: Apple’s getting paid in full. The airtime provider hopes to make that money back over the life of the contract in what they’re charging your for airtime.

China Mobile has several times stated that it’s not all that happy with such levels of subsidy. That’s really the thing that has been keeping this deal from happening. Now we have this new information, that Apple is looking for TD-SCDMA conversant engineers in China. They don’t need this to put the iPhone on China Mobile’s 4G network (not that that is really ready yet) but they would if the iPhone was going to be available on the 3G one. Thus I assume that the deal itself between Apple and China Mobile is coming together.

Keep an eye open for the announcement: it would be a big deal even for a company Apple’s size to gain access to those 700 million customers.

via apple - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHRr-69sZRDGgTdavqzxPwn3T2DUw&url=http://www.forbes.com/sites/timworstall/2013/10/10/apples-china-mobile-deal-appears-to-be-finally-happening/