Apple has reportedly been forced to drop the idea of creating embedded SIM cards for the iPhone after mobile service providers threatened to stop subsidising the device.

The iPod maker had planned to cut mobile providers out of the sales process of the iPhone with the new SIM cards, in order to form a direct relationship with customers. People would have been able to choose their service providers without having to get into long-term contracts.

Now, according to The Telegraph, wireless carriers have threatened to stop offering the device at subsidised rates if Apple choose to offer a mobile carrier-free version of the iPhone.

Currently, mobile carriers pay Apple the full £375 cost of the iPhone in order to offer it free to customers on a 2 year contract.

An unnamed executive working with a mobile services provider told The Telegraph that: “Apple has long been trying to build closer and closer relationships and cut out the operators. But this time they have been sent back to the drawing board with their tails between their legs.”