China United Telecommunications Corp. (China  Unicom)  will  begin  to  sell Apple Inc.'s new 3G version iPhone in mainland China in August, Chinese media reported today.

China Unicom  has  reached  an agreement with Apple to introduce the new iPhone 3G  in mainland China, Chinese Web site Sina reported today. This is in line with an earlier report by Oriental Morning Post, which quoted Apple's  chief  executive,  Steve  Jobs,  as  saying that he expects the iPhone 3G to enter mainland China this year.

"I have  not  heard  of  a  deal between China Unicom and Apple over the iPhone,"  Shi  Lin,  an official from China Unicom's handset procurement subsidiary Unicom Vsens, told Interfax.

"It is unlikely  that  China  Unicom  will  share  monthly revenues with Apple. If  Apple  wants  to  strike  a  deal  with China Unicom, it will probably  need  to  rework  the  terms and give up revenue sharing," Hou Ziqiang,  chief  technology  adviser  for China Netcom Group Corporation (Hong Kong)  Ltd. and a senior researcher at the Institute of Acoustics,
Chinese Academy of Sciences, told Interfax.

An EDGE  (Enhanced  Data  rates for Global Evolution) version iPhone was launched  in the United States last June with an unusual revenue-sharing deal between  AT&T  Communications Inc. and Apple. The iPhone blends the iPod media  player  with a mobile phone and substantially drives up data use by consumers  who  use  the  device to surf the Internet or download
music. AT&T  agreed  to  give  a portion of its monthly service revenues from iPhone  customers  to  Apple  in  exchange  for being the exclusive iPhone distributor.

However,  the cooperation model between AT&T and Apple is changing. AT&T announced  last week that it would no longer share monthly revenues with Apple for the new iPhone 3G. Instead, the wireless carrier will purchase iPhones  from  Apple,  reselling  them to consumers for a lower cost and making back the difference on connection charges.

Hou also  said  that  it  is  likely  that  China Unicom will only start selling the iPhone 3G after it upgrades its network to 3G.

"China Unicom  upgraded  its  GSM  network  to  GPRS  only recently. Its network  does  not support the EDGE version iPhone. It will only be able to support the iPhone 3G after it upgrades its network to 3G," he said.

China Unicom,  a  mobile  operator  that  provides  both  CDMA  and  GSM services, recently agreed to sell its CDMA network and business to China Telecommunications  Corp.  (China Telecom) as part of a telecom industry restructure  ordered by the government. It will also merge its remaining GSM business  with  China  Network  Communications  Group  Corp.  (China Netcom), a process which is slated to be completed in October.

After the restructuring is complete, China Unicom is expected to receive a WCDMA  3G  license. Industry sources say that the government is likely to issue 3G licenses near the end of this year.

China Mobile's  negotiation with Apple over iPhone sales reportedly came to a close  last  December  because  the  two  sides  could not reach an agreement on the division of revenues.

While the  iPhone has not made its official debut in mainland China, the product  has  made  its way into the country via the grey market. At the end of 2007,  about  400,000  unlocked  iPhones were being used on China Mobile's network, according to a report by research firm In-Stat. Third-party iPhone software applications that support the Chinese language are also widely available.

Apple launched  the  iPhone  3G  last  Monday,  saying  that it would be available  in  22 countries and regions on July 11, including Australia, Austria,  Belgium,  Canada,  Germany,  Hong  Kong,  Japan and the United States.  Apple's  official  Web  site  said  that  the iPhone 3G will be available "soon" in over 70 additional countries. Mainland China was not included in the list.

The iPhone  3G  comes  in  two  models,  namely an 8 Gigabyte (GB) model priced at $199 and a 16GB model priced at $299.

Source:INTERFAX-CHINA