Yesterday I did a ARC test with my iPhone 11, iFi GoBar and my cellular network provider (Deutsche Telekom - LTE). And it worked very well
The setting where:
Today I did a new test - but now only MP3:
Than I changed it to:
and now ist plays:
By default ARC streams lossy content when on cellular networks, and lossless on WiFi.
You can set a preference if you go to settings and turn off “Automatically Pick Best Quality”. A couple of options then appear that let you choose the quality.
When doing lossy streaming, I think ARC uses opus for content local to a core, and mp3 from streaming services (at least from Qobuz).
It’s what the streaming services send so MP3 from qobuz aac from tidal.