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RIM under carrier pressure to cut fees

updated 08:31 am EDT, Wed July 4, 2012

RIM facing more financial pressure as the squeeze gets tighter

Struggling Canadian smartphone maker RIM is now facing a fee squeeze from carriers, reports Bloomberg. Already reeling from plunging sales and its first-ever quarterly loss, carriers are said to be pressuring RIM to reduce the fees that that they draw from customers through monthly contract charges. The fees generate as much as $4 billion for RIM's annual bottom line, or a third of its revenue, and is yet another problem to hit its besieged CEO Thorsten Heins.

The fees are among the charges that RIM requires carriers to pay in order for their subscribers to access its BlackBerry server network, which remains RIM's strongest asset. With its products getting harder to shift in a highly competitive smartphone market, carriers are also facing pressure to reduce monthly subscription fees. In a statement on the matter, a RIM spokesman said that "RIM intends to continue generating a revenue stream from the services we offer."

On Tuesday, CEO Thorsten Heins was forced to argue that RIM is not in a "death spiral." Its long-overdue, touch-based OS has been further delayed and is now not expected to arrive until early 2013. Further, its share price has collapsed 95 percent since 2008. Despite this, Heins remained upbeat, arguing that there is "nothing wrong with the company as it exists right now."

Many observers believe otherwise, variously suggesting the company should be broken up into two, with separate divisions for hardware and its valuable network infrastructure, or that it should enter into a deal with Microsoft and develop Windows Phone 8 handsets.

by MacNN Staff



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