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Apple: It's the End of the SIM as We Know It

Iain Morris
9/13/2018
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Apple's recent product launches have increasingly appeared like a cynical attempt to extract more cash from devotees without really offering much in return. In many respects, its latest sermon on the mount was no different. Worshippers can now buy a supersized iPhone called the XS (cult members have been advised to pronounce that "ten-ess," so we'll stick with "eks-ess") for up to £1,449 ($1,897), according to the British press. You don't get many new features, but it is available in gold for people who drive convertible sports cars with the music on full blast. (See Apple's $1 Trillion Luxury Prison.)

There was an important difference this time round, however, and it's something that could have as big an impact as the launch of the very first Apple Inc. (Nasdaq: AAPL) iPhone back in 2007.

Both the XS and the XS Max, its even larger sibling, will come with support for an electronic SIM, or eSIM. In today's phones, the details that operators use to identify and authenticate subscribers are stored on physical SIM cards, tiny slices of plastic that are easily dropped into a pint when you are setting up your new phone in the local pub. Besides being extremely fiddly, these small circuit boards make changing service provider a faff. One way or another, you have to obtain a new SIM card, install it in a beer-free environment and then wait for "activation." That sometimes entails a few phone calls (on a separate device) to the operator. (See Apple Adds Dual SIM Support to Select New iPhones .)

Many customers, and especially those with bad eyesight or plumbers' fingers, cannot be bothered with this rigmarole. Handily enough, that keeps churn (a nasty metric that indicates the percentage of customers jumping ship) to a minimum, without requiring any real effort from operators.

The eSIM would essentially "virtualize" this process, so that customer data is not bound irrevocably to a physical chip. In theory, it opens up the possibility of changing service providers in a flash. Activation and the transfer of customer data to another company might not be quite this straightforward. But visiting the local store to pick up a new SIM card, or waiting for it to arrive in the post, would be unnecessary. In a perfect world, you might even be able to change providers in the time it takes to consume that pint, without budging from your barstool.

The widespread view is that an industry shift to eSIMs would come as a further blow to operators. As Bloomberg points out in this analysis of the issue, whenever developments have made it easier for customers to switch operators, churn has spiked. Spanish operators, for instance, registered a sharp increase in this metric when new rules forced them to cut the time customers spend on changing network providers.

The gloomiest prognosticators think eSIMs will make operators even more invisible to customers behind the barrage of smartphone and web branding. If they aren't already, telcos will start to seem like car insurance or electricity companies -- something you need to make use of your gadgets, but not something you treasure like your new XS Max.

As online sales channels grow in popularity, eSIMs could fast pose an additional threat to the high-street phone retailers, including the operators that have made investments in their own physical stores, according to John Fletcher, a telecom executive who previously worked for consulting firms including KPMG and Analysys Mason. "The real challenge is to the retail distribution network that operators have established, and to the impediment that physical SIM cards still present to churn and SIM swapping," he tells Light Reading. "Mobile phone shops are really SIM card shops and the distribution channel exists to get people to come in and buy a contract for airtime. What do you do with this real estate if people don't need the basic product you are selling?"

In the longer term, Fletcher agrees that eSIMs will fuel competition between networks. "People are keeping handsets for longer and if they own them outright, they don't have a SIM lock and are more likely to switch provider," he says. "You could visit Google's Play store, download the Vodafone app and then push a button on that for the Vodafone eSIM. In the space of three or four minutes, you have obtained a Vodafone SIM and you haven't been into Vodafone or a Carphone Warehouse store."


For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.


Some of the telcos' biggest suppliers, meanwhile, are presenting eSIMs as a potential opportunity. "There's still work to be done by the industry to support the frictionless onboarding of multiple consumer devices, which are properly secured and registered to a single persona or identity," said Gary Miles, the chief marketing officer of Amdocs Ltd. (NYSE: DOX), in comments sent by email. International carrier BICS strikes a similarly positive tone. "eSIMs provide operators with an opportunity to add multiple devices to subscriber contracts, on a global scale, creating valuable new revenue streams," said Mikaël Schachne, the company's vice president of mobility solutions. Naturally, both Amdocs and BICS have products and services that can help operators to benefit.

At least one telco is already trumpeting its eSIM capabilities in the hope of capitalizing on Apple's move. Truphone, an asset-light company that rents capacity on mobile operators' networks, reckons it is one of just 11 carriers worldwide that is set up to support Apple's eSIM, thanks partly to work it has previously done with the mobile industry's GSM Association. In the wake of Apple's announcement, it quickly said it would offer eSIM-based data plans to those using Apple's latest devices. "We built a GSMA-accredited platform that makes sure the eSIM profiles get to the iPhones safely and securely, as soon as users decide to download them," said a Truphone spokesperson in emailed comments.

The availability and take-up of eSIMs seems unlikely to be widespread in any great hurry. But this week may be one that fat-fingered technology enthusiasts eventually recall with fondness, and that operators remember more bitterly.

— Iain Morris, International Editor, Light Reading

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CollinsJordan
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CollinsJordan,
User Rank: Light Beer
9/19/2018 | 4:03:44 AM
Very interesting
It is interesting topic, because SIM cards are already the last century and obviously you have to do something about it
James_B_Crawshaw
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James_B_Crawshaw,
User Rank: Blogger
9/13/2018 | 2:21:11 PM
Re: What?
On my last trip to Argentina I traipsed round multiple Telefonica stores trying to buy a SIM to no avail. They were out of stock. This was in a city with a population of 1m. In the end I bought one from Claro in a kiosk.  

It is simple enough to put a mini-SIM in a phone but I have had issues with losing the tray for nano SIMs (fortunately I got a replacement on eBay).
James_B_Crawshaw
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James_B_Crawshaw,
User Rank: Blogger
9/13/2018 | 2:13:55 PM
£1,449 ($1,897) ! (!)
I'm not sure if this qualifies as sports cars but I found a convertible BMW 3 Series 2.5L for £1,500 on Autotrader. Perhaps they are selling it to fund the phone. 
Clifton K Morris
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Clifton K Morris,
User Rank: Lightning
9/13/2018 | 2:11:36 PM
Re: What?
Well, about 3 years ago, I sent an email to the only Apple exec with a sense of humor.

Anyways, I suggested a few feature requests, and suggested that these be implemented. One of the product suggestions was dual-sim. I am growing tired of carrying two phones and risking loosing one phone (or both).

Today, now that Xfinity Mobile has launched, their definitely is a reason to get a Dual-Sim Phone.

Another suggestion I made was once they became a $Trillion company, they should have a “sale” to “thank” their loyal customers. But I got a Christmas Card instead.
sarcher60555
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sarcher60555,
User Rank: Lightning
9/13/2018 | 1:48:57 PM
Re: What?
Just got back from three countries in Asia.  Paid between $3 and $7 for a local national sim at the airport.  No id, just paid cash and used older Android phone I had in the drawer.  Fired up Whatsapp, Wechat.  All my chats, conversations came up.  Made numerous calls around the world using the data plan.  Left the countries and threw the prepaid sims away.

Home Carrier was sending me SMS message saying $5 a Mb and $2 a minute to call home.

 
macemoneta
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macemoneta,
User Rank: Light Sabre
9/13/2018 | 1:32:12 PM
What?
I'm 62, live in the USA. Installing a SIM involves popping open the tray, inserting the SIM, and turning your phone on. Install the carrier's app, pay for service. Done. If your phone dies, move the SIM to an old phone; back in service. Traveling? Pick up a local prepaid SIM, pop it in. Easy-peasy. No human interaction required. If a carrier requires more than that, get a different carrier. The only thing eSIMs seem to provide is painful interactions with carriers that will do everything in their power to ruin your day.
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