Some of Europe’s leading mobile operators are warning that they could take punitive action against Apple if it introduces a technological innovation on its iPhone.
The operators are privately saying they could refuse to subsidise the iPhone if Apple inserts an embedded subscriber identity module, or Sim card.
The operators are accusing Apple of trying to gain control of their relationship with their mobile customers with the new Sim. The technology could allow customers to buy the iPhone and sign up for service on Apple’s website and start using it immediately.
Closer to the operators’ hearts, it could allow customers to switch more easily from one to another or insist on shorter-term contracts. It could even set the stage for Apple to resell connection service on its own, although the company has not indicated such plans.
European operators known to have concerns about Apple’s interest in the Sim include Vodafone of the UK, France Telecom and Spain’s Telefónica. They all declined to comment, as did Apple.
But one senior executive at a European telecoms group said Apple risked a “war” over the new Sim with operators, which could refuse to subsidise the iPhone.
The iPhone’s wholesale price is about $600, but the operators charge customers much less and sometimes nothing if they sign up to network contracts that can last two years. These operators’ subsidies have enabled Apple to maximise sales.
European operators say Apple is considering having a Sim embedded in the iPhone, which could then be activated and updated at its online store.
Such a Sim would be a sweeping departure, although an operators’ trade body is looking at setting standards for universal cards.
The Sim is a memory chip that enables a phone to connect to an operator’s network. It contains a customer’s personal data. Currently, the operator usually provides the Sim to the customer at its shop. The Sim is then activated by the operator so the customer’s phone can connect to the network.
Robin Bienenstock, analyst at Bernstein, said any decision by Apple to introduce an iPhone with a Sim embedded would undermine the operators’ relationship with their customers.
Such a move “could ultimately prove to be the first step in a process in which [the mobile operators] cede customer control to handset vendors like Apple, [and are] relegated to commodity capacity providers”, she said.
However, Ms Bienenstock estimated that Apple’s global iPhone sales could be cut by up to 12 per cent if the operators refused to provide subsidies for the smartphone.
Additional reporting by Joseph Menn in San Francisco
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