It took Apple six years to get China Mobile to carry the iPhone

On Monday, the Trump administration rejected China Mobile’s seven-year-old application to do business in the U.S.

Fom David J. Redl, Assistant Secretary for Communications and Information, U.S. Department of Commerce:

“After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved. Therefore, the Executive Branch of the U.S. government… recommends that the FCC deny China Mobile’s Section 214 license request.” (Full press release here.)

My take: Probably the right call. The petition to deny is heavily redacted, but the problem seems to be that a Section 214 license would have given a company 74.2% owned by the Chinese government the right to make physical connections to other common carriers on the Internet. What makes me nervous is the timing of the call. Is this well-considered policy or a bargaining chip that could be played either way?

See also: The China Mobile-Apple deal: Why now? 

5 Comments

  1. Gregg Thurman said:

    “Is this well-considered policy or a bargaining chip that could be played either way?”

    China is an aggressive country intent on dominating anything and everything it can: politically, economically and militarily. I could easily envision China Mobile (with the assistance of the majority owner Chinese government) subsidizing below cost services in order to dominate the carrier market in the US. Once a dominant share is achieved (and competition sufficiently weakened) China Mobile would then raise prices.

    I may be an irrational conspiratist, but my personal dealings with China have moved me to think in this manner.

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    July 5, 2018
  2. Gregg Thurman said:

    “Of course, it was a half day, and the market’s closed tomorrow. It’ll be interesting to see what happens on Thursday….”

    It isn’t foolproof, but a 7 year daily average of how AAPL trades indicated that Tuesday would be the low point (at $183.09) for AAPL during the May earnings to July earnings period. The low point (ex-first three days post-May earnings report) actually occurred last Monday (at $180.75). In the wild and wooly unpredictability of the stock market, I think that is close enough.

    If all things go as indicated by the seven-year historic trend AAPL will rise, starting today, to about $193 by July expiry, hence my purchase of 220 $187.50/$190 July Call Spreads purchased at an average of 79¢.

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    July 5, 2018

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