Apple to Kill Carrier-Irking iPhone Plan - TheStreet

NEW YORK (

TheStreet

) -- Bowing to pressure from telcos,

Apple

(AAPL) - Get Report

plans to abandon its carrier-agnostic iPhone SIM card strategy.

Apple had hoped to move from its exclusive partnerships with carriers in every country to a non-exclusive approach using a programmable SIM card that would allow Apple iPhone buyers to pick any phone service provider they wanted.

But the move caused a severe backlash from telcos, which threatened to withhold phone subsidies, leaving Apple with no choice but to kill the idea for now.

"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.

Apple faced a "war" with European and U.K. phone companies like

Vodafone

(VOD) - Get Report

and

Telefonica

(TEF) - Get Report

over its plan to sell iPhones with pre-installed SIM cards, according to a report late Thursday in the

Financial Times

.

Typically carriers pay a big chunk of the $500 iPhone price so customers can buy the phones for $200. The tradeoff for carriers is that they activate the phone service with a specific SIM card and lock subscribers into long service contracts so they can recoup their outlay.

Without the subsidies, Apple's iPhone sales would plummet as consumers balk at paying $500 for a phone.

The SIM card reversal marks yet another collision between Apple and would-be partners as the company tries to

extend its control

over all aspects of its business.

For example,

Apple has bumped heads with Facebook

recently over customer control. The two companies want to partner on services, but neither will relinquish control over the log-in process, say people familiar with the problem.

Apple apparently insists that Facebook access on its devices should go through an Apple log in, and Facebook is determined to keep its customers logged in under its service.

And just this week, after months of squabbles and delays, the newest version of

Google's

(GOOG) - Get Report

calling application, Google Voice, is now available through Apple on the iPhone.

--Written by Scott Moritz in New York.>To contact this writer, click here: Scott Moritz, or email: scott.moritz@thestreet.com.To follow Scott on Twitter, go to http://twitter.com/MoritzDispatch.>To send a tip, email: tips@thestreet.com.