Carriers Objecting to Apple's Plans for Built-In iPhone SIM Card Even as GSMA Moves Forward

Late last month, we reported that Apple has been rumored to be developing a custom built-in SIM card solution for the iPhone, a programmable chip that would allow users to activate their devices with a broad array of carriers without requiring extensive interactions directly with the carriers. In support of that notion, the GSM Association yesterday announced that it is launching a task force to study how such technology could be adopted, bringing on representatives from cellular network operators to help develop a list of requirements for the technology by January 2011 and bring products to market by 2012.

The GSMA today announced the formation of a task force of mobile operators to explore the development of an embedded SIM that can be remotely activated. The move is expected to enable the design of exciting new form factors for mobile communications. It will also speed the development of M2M services by making it easier to bring mobile broadband to non-traditional devices such as cameras, MP3 players, navigation devices and e-Readers, as well as smart meters.

But while the GSMA and carriers appeared to be getting on board with the overall concept of embedded SIMs, Financial Times reports that several European carriers are threatening to withhold their iPhone subsidies if Apple deploys the technology on the 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.

According to Rodman Renshaw analyst Ashok Kumar as relayed by TheStreet, Apple has already relented and will not be pursuing the technology in the immediate future.

"Apple is relenting," said Rodman Renshaw analyst Ashok Kumar. "They are now completely backing away from their plan to take the carrier out of the equation," said Kumar, who discovered the change in plan after talking with Apple suppliers and manufacturing sources.

TheStreet and Kumar have a mixed track record, however, and it is unclear whether this information is accurate. Given that the GSMA appears to be getting on board with the technology, it may simply be a matter of slowing down the development process being pursued by Apple in order to ensure that all of the involved players can have their concerns address and that a broader strategy for the technology can be planned.