China opens door to Apple with new 4G mobile licences

Tom Mitchell and Daniel Thomas
China finally grants 4G licenses to telcos

China has opened up its mobile broadband market after granting 4G licences to the country's three main telecom companies, raising hopes that Apple will soon sign a distribution deal with the world's biggest mobile operator by subscribers.

China's mobile carriers have already embarked on an aggressive expansion of 4G networks under trial licences, prompted by a government that has identified the rapid adoption of superfast internet technology as crucial to economic and social development.

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But the official sign off for 4G in the world's largest telecoms market will mean a windfall for overseas technology companies such as Apple, which will finally be able to offer its latest iPhones on China Mobile's networks.

China Mobile, the world's largest mobile company by subscribers, has long operated a 3G standard that was not compatible with the iPhone. As a result, China Mobile never signed a formal distribution agreement with Apple. The latest iPhone 5s and 5c models, however, are compatible with the new network.

The official licences, issued by the Ministry of Industry and Information Technology on Wednesday, are for a homegrown standard for rapid mobile internet connections called TD-LTE, rather than its more popular international rival, FDD-LTE.

The ministry did not specify how much the three state-controlled companies would have to pay for the licences, if anything, which is in stark contrast to the vast sums typically paid for mobile spectrum by Western mobile groups.

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The growing market for 4G services will also boost telecoms equipment makers such as NSN, Ericsson and Alcatel-Lucent alongside domestic providers such as Huawei, which have been asked to build and to support one of the world's most rapid rollouts of mobile internet networks.

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In anticipation of the licence awards, China Mobile awarded contracts worth an estimated $3.2 billion for the construction of 207,000 mobile base stations.

China's new leadership is seeking ways to boost high-tech industries as an alternative to the country's traditional reliance on often wasteful investment in property and infrastructure to shore up economic growth.

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Licenses will also be granted to China Mobile's rivals, China Unicom and China Telecom, which have already been able to sell the iPhone given their internationally compatible 3G standard. This allowed them to capitalise on the iPhone's initial popularity in China at the expense of their larger rival.

More than 60 percent of China's 1.2 billion mobile phone users are China Mobile subscribers. China Unicom is the second-largest provider with more than a fifth of the market and about 15 percent for China Telecom, the fixed-line incumbent.

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Wang Jun, a Beijing-based industry analyst, said: "The 4G rollout will improve network service and speeds. Video never really took off on 3G."

MIIT said 4G would ensure faster download times and cheaper pricing for the country's internet users. Internet speeds can be frustratingly slow in China, especially for overseas sites subject to censorship by the government's so-called "Great Firewall".