Government regulators warn China Unicom over new iPhone 4 contract rules

in iPhone edited January 2014
Chinese government regulators have rebuked China Unicom for its new guidelines restricting contracts for Apple's iPhone 4. The guidelines were instituted Wednesday in order to curb rampant scalping of both the iPhone and prepaid microSIM cards.

The Chinese Ministry of Industry and Information Technology asked China Unicom's parent company, Unicom Group, "to respect and protect the legitimate rights and interests of telecommunications users, improve the service agreement, and improve service quality,? after the company's new guidelines caused "widespread concern," Bloomberg reports.

China Unicom issued a statement (translation) earlier this week detailing new policies that went into effect on Wednesday. The new restrictions require customers to sign an agreement acknowledging that they will only use a China Unicom SIM card with a subsidized iPhone 4. Users who are discovered to have broken the agreement may have their subsidies canceled, numbers terminated, iPhones locked and may suffer a "penalty."

The new policy comes as a response to widespread scalping on China's grey market. According to China Unicom, many buyers have purchased the iPhone 4 for resale, selling both the handset and its accompanying SIM card, which can contain as much as $1000 worth of prepaid credit, for a profit. China Unicom offers a fully subsidized iPhone 4 to customers who sign a 2-year contract and place a CNY5880 ($882) deposit toward monthly service charges.

Apple has experienced its own problems with Chinese iPhone scalpers outside its 4 retail locations. At one point, customers and scalpers "had a fight" in an Apple store, causing police and Apple security staff to intervene and break up the altercation.

In October, Apple changed its policies to require would-be iPhone buyers to first register online before arriving at a local Apple Store to purchase an iPhone. The restrictions, however, seemed to disappear with the release of the Apple Online Store in China in late October. Customers in China are now able to purchase iPhones online directly from Apple, though both the 16GB and 32GB versions of the iPhone 4 are currently listed as "Out of Stock" on the Apple Online Store in China.

Checks by AppleInsider with China Unicom vendors revealed that the new restrictions are in effect. A salesperson at a Suning Appliances store, one of China's largest electronics retailers and an official iPhone 4 launch partner with China Unicom, in Beijing confirmed that China Unicom will lock the iPhones of users who use another carrier. According to the salesperson, iPhone buyers were taking advantage of China Unicom's heavy subsidies by buying a subsidized iPhone, then swapping out the China Unicom microSIM card for a custom-cut China Mobile SIM.

China Mobile recently set up a new website to help iPhone 4 users learn how to trim their China Mobile SIM cards to fit the iPhone 4. China's largest carrier doesn't currently sell microSIM cards, but is "working hard" to make them available in its stores soon.


  • Reply 1 of 5
    1st post w00t... On a more serious note, remember, Apple Online Store China lists iPhone 4 models as "no supply" ie. LITERALLY NO INFORMATION ON WHEN THEY WILL GET MORE IPHONE4s. It's kinda insane. Anyone that thinks Apple is not doing well in China, well, think again. It's massively in demand, and the grey market is pulsating like a Zerg base.
  • Reply 2 of 5
    Well, it's nice to be popular. Even if it's in a den of thieves.
  • Reply 3 of 5
    matrix07matrix07 Posts: 1,993member
    Thank god my wife got her iPhone 4 today (after waiting for almost a month). I'd think China is sucking up all the supplies coming to Asia and she would have to wait longer.
  • Reply 4 of 5
    that's curious.

    Either Apple has a very fixed quota for each region including China (the manufacturing hub) and can't ramp up any faster if quota exceeded or Apple is slowing China sales to figure out the various issues: Sim card, grey sales, carrier, government policy etc .
  • Reply 5 of 5
    Why not just follow the example of carriers in Canada where they charge an ECF (early cancellation fee) to cover the cost of subsidizing hardware when a customer breaks their contract? They don't allow the iPhone on prepaid, only postpaid accounts. They also track customer activations/cancellations with the customer credit information to avoid potential fraud.



    iPhone 4 16 GB no term price = $659.00 CDN.

    iPhone 4 16 GB subsidized on 3 year voice and data term (contract) = $159.00 CDN.

    ECF = $500.00 CDN. Requires 30 day deactivation from date of request.
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