updated 06:45 pm EST, Thu November 18, 2010
Euro carriers warn Apple over embedded SIMs
European carriers are discussing the possibility of retaliating against Apple if it goes ahead with a rumored plan to use embedded SIMs in iPhones, leaks from the industry alleged Thursday night. The parent companies of O2, Orange and Vodafone have reportedly been worried that Apple was trying to take control of the "relationship" the carriers have by letting customers buy without having to talk to the carrier. An unnamed executive at one of the companies told the Financial Times that Apple could risk a "war" if carriers decided to stop subsidizing the iPhone on contract.
The providers are primarily worried that the move would give customers too much empowerment. It would further encourage customers to buy unlocked iPhones, since they could easily switch carriers or push for shorter contracts without having to confront a representative to cancel their existing service. Networks are afraid of becoming Internet providers, since they see it as a 'dumb pipe' where they can't charge extra for special features or otherwise distinguish themselves beyond quality of service.
None of the involved companies has commented on the claims.
An attempt to single out Apple may be counterproductive, as embedded SIMs have received official GSM Association backing and could be commonplace in phones by 2012. The plan, which has the help of several carriers mostly outside of Europe, is meant both to simplify activating a phone at home and to make 3G and 4G service possible in devices that are too small for any SIM card.
Apple had tried such an approach with the original iPhone in 2007 but was eventually forced to go to a traditional activation model. While it helped quickly move sales in stores, it led to teams of gray market importers from China and elsewhere buying phones in large numbers, often depriving genuinely interested locals of sales. Embedded SIMs potentially recreate the problem by letting these teams buy a locked device without having to provide account details before they to unlock it themselves.