Vodafone Furious As Apple Looks At Technology That Could Cut Out Carriers

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Phone carriers such as Vodafone are furious that Apple has been working with a SIM-card manufacturer to create a special SIM card that would allow consumers to buy a phone in an Apple store and activate the Sim online bypassing the need to use a carrier.

Phone carriers such as Vodafone are furious that Apple has been working with a SIM-card manufacturer to create a special SIM card that would allow consumers to buy a phone in an Apple store and activate the Sim online bypassing the need to use a carrier.

The concept that is initially being developed for the European market has infuriated carriers, who are now warning that they could take punitive action against Apple if it introduces the technology. They have also warned that they will stop subsidising handsets a move that could impact future sales of the iPhone. 

According to the Financial Times the operators are accusing Apple of trying to gain control of their relationship with their mobile customers via the use of the new Sim which has been developed by Gemalto. 

Another issue concerning carriers like Vodafone is that the new technology will allow customers to switch more easily from one to another carrier it could also lead to consumers taking out shorter contracts.

It could even set the stage for Apple to resell connection service on its own, although the company has not indicated such plans.

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.

 

Robin Bienenstock, analyst at Bernstein, told the Financial Times that 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.

This is not the first time that a vendor has tried to bypass a carrier. Google did it with their NexusOne which was offered to consumers directly online.

The Gemalto SIM is apparently embedded on a chip that has an upgradeable flash component and a ROM area. The ROM area contains data provided by Gemalto with everything related to IT and network security, except for the carrier-related information.

 The flash component will receive the carrier related data via a local connection which could be the PC or a dedicated device, so it can be activated on the network. Gemalto will provide the back-end infrastructure that allows service and number provisioning on the carrier network.
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