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  (Source: Lucasfilm Ltd.)
Cupertino company sees its bid to push its inferior SIM standard for profit hit an obstacle

Apple, Inc. (AAPL) has created quite the controversy in the European phone market, which relies heavily on the GSM 3G communications standard. This in turn requires a small circuit called a "Subscriber Identity Model" (SIM) insider every phone.

I. Protest Delays Apple Takeover

Apple's efforts to "dissolve the Senate" by giving itself more votes on the European Union's phone standard board -- the European Telecommunications Standards Institute (ETSI) -- than all the other players combined has stalled thanks to a protest filed by Canada's Research in Motion, Ltd. (TSE:RIM).

RIM is among the many phonemakers fearful of the Apple takeover and the financially damaging sanctions against its rivals. 

RIM writes:
 
Over the last few days we have observed a number of representatives from one company changingtheir affiliation over night and registering to the meeting not representing their employer or any of theiraffiliates but representing a completely different company.
...
As a consequence, we kindly ask that neither shall a person of one company who is appointed to carrythe votes of another company be entitled to cast a vote on behalf of that company, nor shall a personof one company who is registered in the place of a person from another company and appointed tocast a vote on behalf of that other company, be allowed to cast a vote on behalf of that company.

RIM, currently struggling with financial issues, is fearful of Apple's bid to assert control of EU phone standards, both by registering its subsidiaries as independent voting members and by applying financial pressure to EU telecoms to join its quest to consolidate power.

But it's hardly alone.  While RIM took the lead in filing the challenge to Apple's recent moves, it's just one of several top phonemakers who have spoken out against Apple's plans. The move would look to put the American phonemaker in a peachier position financially, while leaving customers with an inferior design, and killing the democratic nature of the EU standards board.

II. Hijacking the Process

The story of the dispute began with Google Inc.'s (GOOG) new subsidiary Motorola Mobility, Nokia Oyj. (HEL:NOK1V) -- the world's largest maker of tradition phones -- and RIM efforts to trim the SIM card to allow for thinner, lighter smartphones.  The trio proposed an ambitious new design that takes on a form factor comparable to a microSD card and is relatively sturdy.

Apple, however, seized on this as an opportunity to hijack the process with its own patented standard, which it would only offer competitors "for free" to Nokia if they scrapped existing royalty agreements for patents Apple currently licenses.

Furthermore, the design Apple put forth did not satisfy the standards committee -- the European Telecommunications Standards Institute (ETSI) -- requirements in terms of form factor.  In addition the gadget maker's design was so crude that it needed a special protective plastic tray to prevent it from snapping -- a design which Apple patented.

SIM Card designs
Apple's design (right) is essentially a current gen. SIM card with the plastic trimmed off.  The rival designs (left) resemble a microSD card, and feature a more robust, brand new form factor.
[Image Sources: The Verge (top, bottom right; bottom left); Inventor Spot (top left)]
(Click image to enlarge.)

Nokia, Motorola, and RIM clearly were not happy with Apple's efforts to push this cruder design for its own financial fortune.  While it might seem that three phonemakers' opinion would trump that of one, Apple -- the world's most profitable technology company -- looked to exploit a loophole in the standards organization's rules, registering six of its subsidiaries as independent companies, in an effort to appoint itself dictator of the board and give itself more votes than the other members combined.

Allegedly several telecoms -- including Bell Mobility, SK Telekom Ltd. (FRA:KMB) and KT Corp. ADR (FRA:KTC) -- also agreed to assist Apple in its power grab.  Potential reasons for their collaboration include an effort to win favor with the phonemaker and retain/win access to its popular iPhone.  Also carriers reportedly liked Apple's less open, more traditional design that closed the route to reprogrammable SIM cards.

Apple in 2008 supported reprogrammable SIM cards, but has since largely dropped its support of the more open standard, which would offer its customers more freedom, but offer it less financial advantages. 

Apple money
Apple is trying to appoint itself ruler of the ETSI board with 270 votes, thanks to its record profits.  Nokia currently has the most votes of anyone -- 92. [Image Source: SomanyMP3s]

Aside from the SIM issue, if Apple succeeds in its goal of taking control of the EU's standards board, it could essentially win a free license to dictate financially destructive standards on its Windows Phone and Android rivals.

Source: RIM [Scribd]





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