I live in the Netherlands, which is one of the EU's most competitive phone markets. I also know that with Apple, most demands for partners usually have to do with protecting the user experience because that user experience is Apple's key differentiator. Put the two together and I think the anger of the providers lies in several things.
First thing: The Apple iPhone will mean a new business model and a new pricing plan just for this phone. Including a data subsription is more or less required for the user experience of the phone. The providers are used to making good money on data-traffic. Apple may want them to provide a flat-fee access to the internet to protect the user experience.
Second thing: Apple is probably not willing to lower the wholesale price of the phone for providers to promote it. Most providers 'subsidise' the phone (or rather, you do it for them through your monthly fee). Depending on the plan you buy, you either get the phone for little money or for free. With the iPhone, they would probably still have to charge something like EUR 499 even with a 2-year plan. And that goes against the user experience of the average customer (2-year expensive plan = free phone).
Third thing: Apple is probably not okay with 'branding' the software of the phone, which usually also means taking the user to the provider's portal first before they can go on he 'real' internet. Providers have paid big money setting up and marketing their portals. They make big money selling ringtones. Will the iPhone even accept ringtones?
Fourth thing: The expensive changes to the voicemail system should not be taken lightly. You don't want to spoil the experience of non-iPhone users, so the system has to become two systems or should be made phone-aware. That is a *huge* change. Voicemail systems are mission-critical applications people. Big bucks are involved in any change and several providers have invested heavily in making the current systems more user-friendly. And (of course!) they charge you for listening to your voicemails! Skipping voicemails is not beneficial for them.
Fifth thing: the providers in Europe have paid insane amounts of money (some of them almost went bankrupt) to get 3G licenses. We call it 'UMTS' over here (WCDMA). To make money on these 3G networks, they need phones to support video calling (requiring a camera on the front of the phone and software support of course) and the phone should support HSDPA for data use.
Sixth thing: If the phone does not use MMS, that's another revenue-stream cut off for the providers. This game is about making money, not about forking it over to Apple.
Technically, I think the iPhone has a chance if it will support GSM quad-band, WCDMA/HSDPA and gets a better camera. Sounds like a version 2 to me.
Phones in Europe are pretty sophisticated (my Nokia N95 has all features mentioned plus a GPS antenna built in, a 5 MP camera with H.264 video recording, Bluetooth audio streaming etc.) but Apple is simply better at making features available to users in a simple way. They are GUI and user-experience experts. If Nokia ever finds out that the user experience is the key difference, Apple is f****d.
)
