European carriers go ballistic over Apple's idea for embedded SIM card, threaten to cut subsidies

European carriers go ballistic over Apple's idea for embedded SIM card, threaten to cut subsidies
This story is getting better by the day - yesterday we reported that the GSM Association will be working with carriers, including major US ones, on a joint standard for embedded in handsets subscriber identity module, or a SIM card, as generally known. That's one association and some of its carrier members, mind you. When the most profitable cell phone manufacturer in the world wants to do a similar thing, some double standard seemingly kicks in, and there are now riots in carrier land.

Apple recently started working with the wireless security company Gemalto, whose programmable over the air SIM card solutions are used in big pilot projects for mobile payments in Europe. These chips has both read-only and regular flash, which could allow activating an iPhone via an App Store download for any given network, presumably to simplify life for European users.

Afraid they will be left out in the cold as mere spectrum suppliers, if Apple decides to put an embedded SIM card in the next iPhone, some major European carriers are to cut subsidies for the iPhone, if Apple goes ahead with the idea. In private talks Vodafone UK, France Telecom and Telefonica in Spain have expressed concerns about Apple's move, and a senior executive was even cited that Apple risks "war" with them, if these plans move along.

All to the extent of carriers threatening to cut the subsidies they chip in to bring the $600 average wholesale cost of the iPhone down to free on some plans in Europe, provided that a two-year contract is signed. According to analysts, removing the carrier's subsidy could diminish the iPhone sales by 12 percent worldwide.

What worries the European carriers is that Apple will make it inherently easier for customers to activate or reprogram their iPhones for any given network by a simple App Store download, thus allowing them to move back and forth between carriers, or require shorter contracts. We really don't see what the issue is here, considering that you still have to pay for the carrier's service, and roaming charges are to be abolished throughout the EU pretty soon, but the devil is in the details, and those we don't know yet.

It is certainly a novel phenomenon - a three year old cell phone manufacturer like Apple achieving such leverage that the almighty carriers feel the need to intimidate, so as not to lose the relationship with their customers. Apple could be on to something here, so we'll be watching the developments with baited breath.

source: FinancialTimes (requires registration)



1. android_hitman unregistered

if apple does such a stupid thing they are finished.. just do it apple .. please :D revolutionize the world :D

6. smpdx

Posts: 127; Member since: Nov 02, 2010

AGREED! They shot themselves in the foot when they released a phone behind the curve and "in my opinion", with a horrible design. I honestly can't wait for the downfall of Apple!

2. protozeloz

Posts: 5396; Member since: Sep 16, 2010

Why carries wont like the idea? Several reasons, but I bet the guy at my orange local store wont like to loose his job just because someone wants to re invent the CDMA phones... I dont think its a convenient idea yet... sim card is also a portable tool, I approve a better sim card but not a integrated one

3. nimo

Posts: 72; Member since: Jun 11, 2010

The Roaming charges are not due to be scrapped to at least 2015, thats hardly "Soon".

4. remixfa

Posts: 14605; Member since: Dec 19, 2008

an integrated reflashable sim card is brilliant for the cellphone manufacturers but not for the networks. it would allow the manufacturer to make 1 phone with all radio bands in it, and u just flash it to whichever network you want. The networks are afraid because now they wont be able to gouge for service as you can just hop from say vodaphone to tmobile to orange and back and pick ur service at will. i hate apple, but as a consumer i see it as a great move. as a sales rep, i see the issues it could bring.

5. protozeloz

Posts: 5396; Member since: Sep 16, 2010

about that... my opinion is that companies can make world phones if they wanted to and it will save consumer a lot of problems, complete global phones are a good but i don't think this is apple's idea, they just want to make some other way to make profits and selling phone services on iTunes could be a great way for them to get income at nearly no cost, apple may charge carriers for "being there" and may charge customers for activating services, its a win for them on either way. why not use the CDMA network instead? it could be easyer(maybe) but wen you take the world range currently there are more caries that use GSM

7. Lifting systems unregistered

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