iPhone in China will have no Wi-Fi to comply with Govt. rules

On 28 August, the Company and Apple reached a three year agreement for the Company to sell iPhone in China. The initial launch is expected to be in the fourth calendar quarter of 2009.

The release of the iPhone in China — which has 687 million wireless subscribers, more than twice the population of the U.S. — is expected to be a boost for both Apple and Unicom, one of three Chinese state-owned telecommunications carriers. Still, the two companies face challenges to realizing the iPhone’s potential in China, including competition from similar devices, and the companies have left several questions about pricing and other details unanswered.

Under the three-year deal, iPhones will start to be sold in China in the fourth quarter. Unicom won’t share revenue with Apple, as some operators do, and it will purchase the handsets from Apple on a wholesale basis and resell them to consumers, the Chinese company said.

The Chinese version of the iPhone will, at least initially, be stripped of its Wi-Fi wireless Internet capability to comply with government rules.

Reason:

For years, the country has been trying to push tech companies to adopt its own wireless encryption standard called Wireless Authentication and Privacy Infrastructure (WAPI), which competes with the Wi-Fi (IEEE 802.11) standard.

Years ago, the Chinese government failed to impose WAPI as a mandatory security measure in China. Then, 22 companies formed an alliance agreeing to help push WAPI as a standard. China Unicom is part of that alliance.

Sources: China Unicom, Wall Street Journal, Wired.com.

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