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Apple shelves integrated-SIM iPhone after network pressure

Apple has reportedly been forced into a humiliating climbdown over plans to stick an embedded SIM card into the iPhone, with the networks employing some good old-fashioned blackmail.

Pressure from mobile-phone networks has forced Apple to give up on its plan to stick an integrated SIM card into iPhones, according to The Sunday Telegraph.

The plan would have removed the mobile networks even further from the process of buying an iPhone, making it possible to set up with a carrier through an app or iTunes. You would have also been able to change networks without having to swap carrier-specific SIM cards.

The move would have made swapping between networks much easier, and could have led to more competition between operators. It could also have drastically increased the demand for short-term contracts. But the UK phone networks were having none of it, threatening to stop subsidising the cost of the expensive phones if Apple continued with its plan.

Last week, European mobile operators warned they would start a war with Apple if it deployed the technology. They accused Apple of trying to take control of their relationship with the consumer, by cutting them out completely.

"Apple has long been trying to build closer and closer relationships and cut out the operators," said a senior source. "But this time they have been sent back to the drawing board with their tails between their legs."

In backing down, Apple seems to have realised there is no point engaging in a battle with operators over this issue, especially given the success of the iPhone. As the networks would point out, not everybody can afford to pay hundreds of pounds up front for a SIM-free phone.

But the report suggested Apple was going to push ahead with plans to release a 3G iPad with an integrated SIM card. This would make more sense, as iPads aren't subsidised by mobile networks in the same way as the iPhone. The 3G iPad is expected to arrive in the run-up to Christmas, or early next year.