The Not-So-Simple SIM Card

The SIM card in almost all of our phones is a tiny smartcard, a computer, that enables your mobile device to connect somewhat securely with a wireless carrier.

In the old days of mobile, there were 2 major competing technologies – GSM and CDMA. Most of the rest of the world went GSM; the USA went mostly CDMA. Unlike GSM, which had a SIM card, and thus could have (unlocked) phones switch carriers simply by switching cards, Americans bought their phones from carriers, and closely affiliated the phone with the carrier. You didn’t have “a Motorola phone that is on the Verizon network”; you had “a Verizon phone.” Period.

Two forces contributed to the growth of SIM cards in the US over the last decade:

  • GSM: Originally just a few smaller carriers like Omnipoint used GSM, but eventually major carriers switched. This in itself was driven by the rapid development of the technology overseas.
  • iPhone: This was the first phone that was not one per carrier, but one phone across all carriers. Sure, there are some minor differences between the models and the networks they work on, but they are still just the iPhone.

As a result, people around the world have a SIM card and know about it. Most, however, do not think about it much. You switch carriers once every few years, and you probably switch phones with the same frequency. You might know about the little card in there, but it is out of your normal awareness. Those who live close to national borders, especially Europeans and some Asian residents, might think about it a bit more, but not that much.

On the other hand, regular business travels think about SIM cards regularly. The combination of prohibitive roaming costs and the need to “appear local” with a local number when in-country means unending strategies for managing multiple SIM cards. Personally, I carry 4-5 whenever I travel; I know of people who carry many more. Other business travelers actually maintain multiple phones, or even smartphones, and carry them on their person when they travel. Regularly commute between the US and UK? No problem. One iPhone with an AT&T SIM in it at all times, another with a EE SIM in it at all times.

Besides the space and organization, each SIM card requires filling up with prepaid funds (or maintaining a more expensive ongoing plan), and most importantly means the number on a card not in the device right now just doesn’t work, at least until you switch it back.

Two key factors prevent this whole mess from going away, both part of legacy carriers’ business models.

  1. Roaming: Carriers make a lot of money on roaming. There may only be a few stories of accidental $5,000 roaming bills, but even small amounts per month can add up to a lot of money across many users. The sad thing is that the incremental marginal cost of roaming over a normal local user is nearly zero, especially for data. The T-Mobile Germany user roaming in London on EE accessing 5MB of data from his iPhone cost essentially the same as a local EE subscriber.
  2. Customer Lock: How do you authenticate to your bank? Some combination of username and password, maybe two-factor like SMS (side-channel) or Google Auth (TOTP/HOTP). How about your corporate VPN? Something similar, perhaps using an RSA keyfob, which is essentially the same. There is nothing more secure or special about a wireless network that it requires a special postage-stamp-sized computer inserted into your phone to authenticate. The only reason the SIM card is there is to keep you physically hooked to the carrier.

There is nothing in the field of technology or security or risk-management that requires a SIM card for connecting to a mobile carrier; it is only carrier legacy business models.

A few years back I explored the possibility of a multi-country wireless carrier. Buy one SIM card, and add numbers from multiple countries using an app or the Web. The key is that in each of those countries in which you have a number, you are not roaming, you are native. Have a +44 UK number and +1 US number and +972 Israel number? All three will ring on your phone wherever you are, your outgoing caller ID will be the local number based on the dialed number (+1 to US numbers, +44 to UK numbers, +972 to UK numbers), and you will pay no roaming fees in any of those countries in which you have a number.

Turns out the capital to build such a thing is quite large. Negotiating rights with existing carriers and local governments requires many millions just in licensing fees and large-scale commitments. I would love to be able to “kill the SIM” card – I don’t use one on my laptop to connect to a VPN or bank, why should I use it for a mobile carrier from my smartphone? – but it requires too much capital for a small startup.

But it isn’t too much for a large company with an innovative track record.

That, I believe, is where Apple’s latest (quietly released) feature of the iPad Air 2 and iPad Retina Mini 3 could be heading. Apple recognizes that mobile iPad use depends on ease of use, not just of the tablet itself, but of the services connecting to it. Remove the need to switch physical cards to switch carriers, and users will use more of it.

In the future, I hope we will see them take this approach to killing the SIM card entirely on its phone line. Where they go, the others follow. It would be nice to see the days of phone-SIM-carrier integration finally loosened.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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