The Chinese government, which controls the nation's three major cellular carriers, said in the past that it objected to Wi-Fi in phones (perhaps because it's harder to sniff local packets than ones drifting through a wide-area network). According to reports, China Unicom has a deal to sell a GSM-based iPhone, like the ones sold elsewhere, but the license is for something where Wi-Fi is blocked. As TradingMarkets.com puts it: "Apple has to cancel the Wi-Fi function without changing other components."

The good news is, China has been waiting for the damn iPhone forever, and to get it in time for the Spring Festival next January is like amazing. I just wonder how adept the Chinese jailbreakers will be at reactivating that Wi-Fi. [BusinessWeek and TradingMarkets.com via AllThingsD]