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If anyone was going to turn the tables on Apple and its famously demanding operator contracts, it would have to be the world's largest cellco, China Mobile. The carrier has walked away from at least three rounds of talks about an iPhone deal because, reportedly, it would not accept Apple's terms and conditions or submerge its brand to that of the OEM. Now Mobile is said to be engaged in yet another round of talks, and to be demanding a share of the revenue Apple makes from its App Store.

This would be a major reversal, given that Apple initially imposed the opposite approach on early partners, taking a slice of their iPhone-based revenues. The details - reported by analyst Shaw Wu of Sterne Agee, quoting unnamed industry sources - may never become clear, but the stand-off is an interesting battle of wills, and will be important to the overall balance of power between Apple and the cellcos as the iPhone comes under greater competitive pressure from Android devices.

On the one hand, Apple acknowledged at the iPhone 4S launch that it wanted to go after emerging markets and the huge user base beyond high end smartphone markets. In this quest, China Mobile has a huge number of subscribers, a large percentage of them poised to make the leap from 2G featurephones to 3G, and so is clearly essential to Apple's objective (even if it has to develop specific TD-SCDMA versions). Mobile already sold 5m iPhone units in four months on the basis of consumers using Wi-Fi only, and therefore without 3G support or any formal agreement with Apple.

However, because of its off-center 3G platform and its plan to use TD-LTE rather than the more common FD-LTE in future, Mobile lags behind its rivals in the choice of high profile handsets it can offer its users. As operators in many markets have seen, adding the iPhone can make a big difference to customer attraction and retention.

China Mobile CEO Wang Jianzhou, who said in 2008 that Apple's desire for control was enough to wreck any agreement, has therefore softened towards the firm recently, especially hinting at a TD-LTE iPhone to boost the cellco's claims to be building a strong TDD handset ecosystem. Earlier this year, he met Steve Jobs and said it was a "common wish of China Mobile and Apple to come to an agreement as soon as possible". He added in a recent interview: "We hope Apple will produce a new iPhone with TD-LTE. We have already got a positive answer from Apple." But, like so many US giants before it (Qualcomm comes to mind), Apple may find that China is the market where it has to change its usual ways of working and make significant compromises.

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