Reports are suggesting that Nokia has bitten off more than it can chew with its coming later this year "Comes with Music" service.

While the service has won the support of the big music labels including Universal Music and Sony BMG (and possibly EMI some time soon), online reports suggest that it is going to leave the phone company with a huge bill.

The Register has stated that the unlimited music service will actually cost Nokia money if downloads go above a certain - and almost unbelievably low - threshold.

If the report is to be believed - the company will be paying wholesale per-song rates once a user goes over 35 songs rather than $80 or so flat fee per handset that had once been rumoured.

And apparently heads have already been on the block with Nokia execs reportedly "punished" for such poor negotiation skills.

"It will cost Nokia a fortune - it's a reckless business move", an insider told the site.

The service is due to launch with select handsets in select markets in the second half of 2008.