China Unicom, expected to start 3G services in May, is negotiating with Apple Inc to launch the iPhone 3G in China's mainland, and if an agreement is sealed it will probably be the first legal iPhone sold in the domestic market, sources said on Wednesday.

Though the iPhone hasn't been introduced in the mainland officially, several million smuggled iPhones are sold in the mainland.

"China Unicom is in talks with Apple, and people can buy the iPhone in May," said a source in China Unicom, who didn't want to be named.

China Unicom, the country's No.2 mobile carrier behind China Mobile, is going to invest 100 billion yuan (US$14.7 billion) in its network this year, will start trial commercial use of 3G in April and officially launch it in May, based on the WCDMA, wideband code division multiple access, technology, industry sources said.

Of the three 3G technologies that will be available in the mainland this year, the iPhone 3G supports the WCDMA technology which is based on the GSM, global system for mobile communications, standard and is widely used globally. This means Apple and China Unicom are "natural partners," industry insiders said.

China Unicom and Apple China declined to comment on the issue.

China Mobile had talked with Apple to introduce the iPhone but the telco adopts the home-grown 3G technology, TD-SCDMA, time division-synchronous CDMA, which is not compatible with the iPhone 3G, media reported.

"It's not economical for Apple to design a new iPhone specifically for China Mobile's TD-SCDMA network, and there are risks to do so," said Sandy Shen, an analyst at Gartner Inc, a United States-based IT research firm.

Another problem is that China Mobile and Apple were divided on sharing profit and the business model of value-added services, analysts said. In overseas markets, Apple has installed its iTunes and App Store into the iPhone and directly provides music, video and software download services. But China Mobile aims to control the data services which are seen as a money spinner.

(Shanghai Daily February 12, 2009)