China Telecom takes bite of Apple

China Telecom starts selling iPhone 4S on contract from March 9, 2012. [File photo]

China Telecom Corp Ltd, the country's smallest telecommunications provider by user numbers, will start selling Apple Inc's iPhone 4S on contract from Friday, ending the iPhone combo monopoly of China United Network Communications Ltd, which is also known as China Unicom.

The move will help the company complete its product portfolio - and it could intensity the third-generation network competition among the nation's three telecommunications operators, industry experts said.

China Telecom will offer black and white versions of the iPhone 4S in 16-gigabyte, 32GB and 64GB versions, some of which will be free under certain contracts, Liu Ping, the company's marketing manager, said at a launch ceremony in Shanghai.

Users who sign a two-year contract at a monthly fee of 389 yuan ($62) will get a 16GB handset free of charge. Under the three-year contract, the minimum monthly payment will fall to 289 yuan, he said.

Lower contract fees provide a competitive edge over China Unicom's iPhone offer, Liu said. "For instance, a two-year contract for the 32GB model only requires a monthly payment of 489 yuan, which is 97 yuan less than the same offer from China Unicom," he said.

The Code Division Multiple Access 2000 version of the iPhone 4S, a 3G standard that the operator applies, will be distributed through two channels: 56 percent of the units will be available at 9 am at authorized retail stores such as appliance chains run by Gome Electrical Appliances Holding Ltd and Suning Appliance Co Ltd, while the remainder will be offered through China Telecom's outlets from 2 pm.

Liu wouldn't disclose how many handsets the company expects to sell this year, but earlier media reports quoted Wang Xiaochu, the chairman, as giving a target of 100,000.

China Unicom, which supports the globally popular Wideband Code Division Multiple Access technology, was previously the sole operator offering the Apple device on contract.

Though the smallest carrier by subscriber numbers, China Telecom still had 130 million CDMA users nationwide by the end of January. Its 3G users reached 37.19 million by the end of 2011.

Experts don't anticipate that China Telecom's iPhone 4S will cause a new bout of iPhone fever, as the speed of its 3G network will crimp its sales. The surfing speed offered by China Unicom's 3G network is on average four times faster than that of China Telecom, said Xu Zhen, a telecommunications specialist with d1net.com, an information technology portal.

Furthermore, in first-tier cities like Beijing and Shanghai, where Apple's premium users are concentrated, operators' 3G deployment doesn't differ much. China Mobile Ltd, the biggest network provider with more than 645 million active members, lags in the 3G sector because its network, which applies indigenous standards, lacks support from handset and chipset makers.

But the huge user base has enabled it to manage some 10 million iPhone users, even though it's not officially sanctioned by Apple, Xu said.

Wang Penghui of the research company Analysys International, said China Mobile's opportunities lie in offering special subsidies to iPhone users and providing more free WiFi access as an incentive to retain customers.