Recent reports that China Unicom and Apple China are in talks made headlines in China, but the two giants declined to make any comment on the issue. [Photo: intomobile.com]

The rumored deal between China Unicom and Apple to introduce the new 3G iPhone on the Chinese mainland market, if true, could be a devastating blow to China's strategy of developing its homegrown 3G standard, TD-SCDMA, time division-synchronous code division multiple access, an industry expert said.

Recent reports that the two giants are in talks made headlines in China, but both China Unicom and Apple China declined to make any comment on the issue.

In an article on Sina.com, He Tingren, an expert in telecommunications and wireless technology, said this time Apple would possibly achieve a "one stone, two birds" grip on the Chinese market by striking a deal with China Unicom.

If the deal is inked, Apple will gain access to the Chinese mainland's 3G market of WCDMA, or Wideband CDMA, and neglect China Mobile's request to build a new version of its iPhone 3G handset that is compatible with its own TD-SCDMA networks, he said.

The move, along with possible moves by other foreign 3G handset manufacturers, whose products are only compatible with the more widely-used WCDMA and CDMA2000 networks, could be detrimental to the growth of China's SD-TCDMA standard, he said.

China Unicom, China Mobile's major rival, is reportedly negotiating with Apple to launch the iPhone 3G on the Chinese mainland. If the deal is hammered, legal iPhones would be sold in China, though several million unlocked black market iPhones have already made their way into the country.

Industry insiders call Apple and China Unicom "natural partners", as the iPhone 3G supports the WCDMA technology.

Before talks with China Unicom, Apple spoke with China Mobile, the world's largest mobile service provider with 460 million users. But the talks stalled as Apple shied away from designing a new iPhone specifically for China Mobile's TD-SCDMA network. The two sides were also divided on sharing profits and the business model of value-added services.

The potential deal between China Unicom and Apple, however, is seen by some industry insiders as signs of improved competition that will bring better services to customers.

There are now only seven types of TD-SCDMA terminals manufactured by foreign handset producers, which puts China Mobile in a disadvantageous position to attract 3G service users.

On January 13, China Mobile announced that it will provide subsidies totaling more than 10 billion yuan (or 1.46 billion US dollars) for domestic and foreign TD-SCDMA handset manufacturers in 2009 to encourage the production of TD-SCDMA terminals.

(CRI February 14, 2009)