In a development that opens new opportunities for Apple, Inc. in the Chinese wireless market, China’s Ministry of Information and Technology announced on Wednesday that it had issued fourth-generation (4G) wireless service licenses to China Mobile (CM), China Unicom and China Telecom (CT). On the heels of the government’s action, CM signed an agreement with Apple which enables CM to market the Apple iPhone for the first time. Prior to Wednesday’s deal and in spite of its ranking as the world’s largest provider of mobile phone services by subscribers, CM had been the only major Chinese carrier to lack access to the iPhone.

CM’s existing third-generation (3G) network is built on proprietary third-generation (3G) “TD-SCDMA” technology that is unable to support the iPhone. While CM dominates China’s wireless market with 759 million subscribers, the company’s 3G customers account for a mere 23% of its subscriber base as compared to rivals Unicom and CT, whose 3G customers account for 42% and 54% of each company’s subscribership, respectively. (Unicom and CT, which both carry the iPhone, have constructed their networks on an international 3G standard which is capable of supporting the iPhone.) The 4G licenses issued this week authorize network operations based on the TD-LTE standard which is compatible with iPhone technology. Observers anticipate that the government will also issue licenses next year for 4G operations based on the more universally-accepted FDD-LTE standard, and a spokesman for CT affirmed that his company would apply for an FDD-LTE authorization “as soon as practicable.” 

Meanwhile, while declining to specify a projected launch date for future 4G network operations, officials of CM confirmed that the carrier will “collaborate with the supply chain to make an all-out effort to push forward the construction and operation of 4G mobile communications.”

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Patrick S. Campbell, Partner, Paul Weiss

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