According to a report by BusinessWeek, both Verizon Wireless and Sprint have baulked at offering Motorola's forthcoming iTunes-compatible mobile phone in favor of launching their own download services. While the iTunes Music Store charges a flat rate 99 cents for each song, both Verizon and Sprint expect to charge around $2 per song on their services.

The report cites "a knowledgeable source close to Apple" as saying that the two companies are setting an unrealistic price for their songs. "If you can get something for a buck, why would you buy it for $3? Do they think people are that dumb?"

However, the phone companies may have a significant factor on their side: the record companies. Recent reports have suggested that the record companies are unhappy with Apple's insistence that all songs should be charged for at a flat rate, and favor the kind of multi-layered pricing model that phone companies are largely adopting.

All of this could spell trouble for Apple, which is currently the dominant player in the markets for both music downloads and portable players, with the company claiming a share of over 70% of all paid-for downloads.

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