Gemalto

Just last month reports indicated that Apple was planning to integrate reprogrammable SIM cards into iPhones, cutting wireless carriers out of the activation process. Turns out that opposition from European carriers has derailed the project. According to a report in the Sunday Telegraph, the wireless companies threatened to stop paying iPhone subsidies for contract subscribers. Currently, carriers pay the subsidy directly to Apple and collect the money from customers during their service subscription period.

An anonymous source at one mobile operator told the paper that Apple has "been sent back to the drawing board with their tails between their legs." The company's work on embedded SIM cards may not be entirely wasted, as the report also explains that future iPads may include the special SIM. The iPad is not subsidized by mobile carriers, and a reprogrammable SIM card would make it possible to activate the device at the point of purchase on a variety of carrier's networks.

Apple is reportedly partnering with SIM card manufacturer Gemalto to come up with its own reprogrammable SIM cards that could ship embedded in iPhones. GigaOm has heard from several European wireless carriers that the project is underway, and they're not thrilled about the prospect. An embedded SIM in the iPhone would make it possible for Apple to allow iPhone buyers to decide which carrier they want at the point of purchase.

iPhone activation could all be handled with a simple app download from the Apple App Store, cutting out the carrier's involvement in the process. Gemalto would provide support for the iPhone to find a phone number and start service on a carrier's network, and the appropriate data would activate the device after it's written to flash memory in the SIM chip.