Will the new iPhone be China Mobile compatible?

September 8, 2012, 11:42 AM UTC

Demand for the iPhone 4S in China was overwhelming. Photo: MIC Gadget

Wall Street Journal
, quoting the usual unnamed “people familiar with the matter,” reported Friday that the new iPhone that Apple (AAPL) is expected to unveil next week will work on the fastest wireless 4G LTE networks in Europe and Asia.

That’s news because there are at least three dozen flavors of LTE (for long-term evolution), and the first Apple device to support the technology, the new iPad introduced last March, was only compatible with the bands used by U.S. and Canadian carriers.

What the Journal’s sources didn’t say is whether the iPhone 5’s LTE modem is compatible with the biggest carrier of them all: China Mobile (CHL), with 655 million wireless subscribers — three times as many as Verizon Wireless (VZ) and AT&T Mobility (T) combined.

It’s a critical question — one that could break the impasse that has prevented Apple from signing a contract with China Mobile for more than four years.

The answer depends on which chipset Apple has decided to use. There are several on the market that will do the trick; Qualcomm (QCOM) has been making them for more than a year (see here). If the new iPhone uses one of them, it could triple its addressable user base in the world’s largest mobile phone market.

Not that those 655 million subscribers will get to enjoy those 4G speeds — at least not at first. Although China Mobile controls 70% of the Chinese mobile market, it has been slow to deploy the faster network protocols. The lion’s share of its network is still running at 2G speeds; less than 20% has been upgraded to 3G. And although it has begun testing 4G hotspots, as of last May they were up and running in only six Chinese cities.

But it almost doesn’t matter. The Chinese love their cell phones, and they like to have the latest model. The crushing demand for the iPhone 4S that forced Apple to shut down sales in Beijing last January was fueled largely by scalpers snapping them up for resale to China Mobile users. Earlier this year, the carrier announced that even without a contract with Apple — or an iPhone that could communicate with its home-grown 3G protocol — there were already 12 million iPhones on its network running at sluggish 2G speeds.