Apple set to introduce e-SIM functionality in next generation devices

Both Apple and Samsung are in talks with the major players in the telecommunications ecosystem, and have been some time, building new standards which allow the next generation of smartphones to utilise e-SIM functionality.

Unlike existing physical SIM cards, eSIMs require no physical SIM to use phone company network services. All the settings required to connect to a phone company’s network can be downloaded OTA (Over The Air).

What is the Apple e-SIM & how does it work ?

The Apple e-SIM also known as a soft SIM is a facility for use in any device which needs to connect to a phone network to access the internet. As we have covered elsewhere, Apple have tested the capability in some of their devices over the last few years. The Apple SIM was introduced to some previous generation of iPad tablet devices, for consumers in the US or the UK.

Currently, smartphones require a physical SIM card installed into the SIM card slot in order for the user to be able to make and receive calls as well as text messages. A soft SIM (like this Apple SIM ) works on the principle of being electronic and virtual. the SIM itself is built into the smartphone or tablet device. It allows users to change their SIM only prepaid plan, all at the touch of their fingers. Being able to switch network providers depending on where you are, at what time and selecting the best-valued deal for that moments usage, is the freedom of choice which Apple is pushing for.

Apple, the GSMA and the eSIM

The GSMA is the telecom industry association which represents all of the different mobile network operators around the world. They develop the standards to which all smartphones and physical SIM cards operate. The GSMA have said :

“With the majority of operators on board, the plan is to finalise the technical architecture that will be used in the development of an end-to-end remote SIM solution for consumer devices, with delivery anticipated by 2016.”

The GSMA said it was “continuing to work with Apple to secure their support for the initiative. While we are optimistic, a formal agreement with them is still in progress.”

The GSMA has designed the standard for and worked to develop tools which will assist with the management of e-SIM technologies in the machine operation industry, specifically in common utility devices such as traffic lights or assisted living machines. This sort of ‘field’ device – located in physically disparate locations, where, traditionally it’s not as easy to change the SIM cards, as it would be in to a simple mobile phone are perfect targets for eSIM capabilities.

But why has Apple been pushing for it ?

Why are Apple interested in the eSIM?

Apple is all about creating and enriching the user experience, the happier consumers are to purchase, use and engage with their products, the more revenue their business model can generate. Built-in SIM card functionality is just another step in the long line of previous ones which Apple has taken since they started to manufacture smartphone and handheld devices. By removing the need to a physical plastic SIM card, Apple is effectively making the mobile phone operators play by their rules, which is great news for consumers.

Apple and Samsung are two of the biggest global players in the manufacturing world and hold a large influence. By forcing telco companies to adapt to changes which make their users lives easier, they stand a chance of converting more users to other areas of their ecosystem. Benefits to Apple and their users include :

  • Lower prices for their customers :
    The move to the eSIM is likely to engender a shift away from phones being sold under contract and towards more people taking up SIM Only and Prepaid Deals. Where users were once, typically locked to one network provider, with a phone bought out of contract, often unaware or unmotivated to change, e-SIMs are likely to make movement from phone company to phone company, and plan to plan far easier.  Phone users are likely to benefit from lower total costs of ownership for their phone + plan combination.
  • Apple may start to sell phone plans themselves :
    Tim Cook, CEO of Apple has denied that Apple want to to sell phone plans for a long time, often publicly denouncing the possibility. The eSIM makes it far more likely, in our opinion that Apple would set themselves up as a phone company, in each market around the world and resell phone plans bought at wholesale prices from tier 1 phone companies. There are around 50 companies which do this in Australia already. Companies which do this are called MVNOs – Mobile Virtual network Operators. We are also likely to see innovation in the phone plans and phone plan management tools which are available. (See ‘Generates Innovation’ section below.)
  • A better customer experience :
    Next-generation devices with Soft SIM functionality could drastically change the way in which we sign up for carrier plans. The process is easier to use than the way physical SIMs operate. Connecting to a plan using an eSIM is a painless process which can be done from the handset.
  • Smaller, lighter, cheaper iPhones : 
    You might have noticed with each new generation of smartphones and tablet devices, that the devices and even the SIM cards themselves are getting smaller and thinner. With the move towards virtual SIM cards and the removal of the port usually required to hold the physical card, this allows manufacturers to create much thinner devices. They avoid the cost of some of the components that were used to read the physical SIM card and, since there is no slot in the side of the phone, devices are easier to waterproof.
  • Connected everything :
    Apple come at the opportunity the eSIM represents mostly from a consumer standpoint. Apple products are disproportionately successful in Australia and some estimates suggest that Australian families have 7 internet enabled devices in their homes. Apple’s announcement they are including the eSIM in their 2017 Apple Watch is just one example of how Apple might connect all of their products to the internet using soft SIM capabilities. In a broader context, eSIMs will make it easier to connect everything to the internet, an idea known as the internet of things.
  • Cheaper roaming :
    If you are an avid user of Apple products and have an Apple iPhone device, and were to travel abroad for business or just as a tourist on holiday, soft SIM technology would make your life much easier. Just imagine arriving at the foreign country and not needing to waste time getting a local SIM card, switching out your Australian one and then putting the new one into your smartphone and powering back on. The same goes for expensive roaming fees, eliminating the need for spending costly amounts of money on your existing number and a prepaid plan if you happen to make calls or send texts when you are in a different country. By being able to connect to local carriers no matter where you are in the world, all from inside your enabled next generation smartphone or tablet device, a world of choice is literally at your fingertips.
  • Generates innovation around phones :
    Apple’s Music and App stores are not just a substantial contributor to their bottom line, they create an open infrastructure where smaller companies can access a giant market. The result has been a huge amount of innovation in the form of apps. We all know that now, whatever it is, there’s an app for that. In some senses, the eSIM creates a facility for the same to happen in network services. It’s likely that people will be able to tie together multiple capabilities in an esIM enabled phone. For example, eSIMs can support two SIM profiles at once. Imagine having one of the increasingly popular a data plans with 50 GB of data on one of those profiles and another with unlimited voice and SMS – which can be found in plans as low as $15 these days. right now, the phone companies preclude the possibility of this by limiting their wholesale agreements with phone companies which resell their services. They can’t stop it in an eSIM world.
  • Sets the scene for the future :
    We have come to expect that we can do everything from our handheld device. But the smartphone won’t last for ever. There is a huge amout of development in the area of VR and headsets, glasses, including Google Glasse and other technologies which can connect us to the internet without the ‘inconvenience’ of a using handheld phone.
  • Muscle in to phone companies territory :
    Apple appear to want to encroach on the phone companies territories in a number of ways. Facetime and other Apple communication apps / tools are used in preference to sending texts by most users which chips away at phone company revenues. As we have seen from above, the eSIM makes it more likely Apple will start to sell phone services themselves. As things stand, Apple needs the phone companies. They work with around 700 telcos around the world which sell, distribute and connect iPhones. But over time, Apple seem to be stepping in to every component of what the telcos do (except the messy, dirty part of building and maintaining networks. ) It is not hard to imagine a day when Apple users don’t even know what network they’re connected to and Apple own the entire customer experience of Apple users, on phones and whatever other technology we use to interface with the internet.

While Soft SIM functionality is currently limited to tablets and smart watches and to only users from the US and the UK, it won’t be long before Australians will be able to take advantage of this emerging technology as well.

Sources :

There has been a degree of tooing and froing over whether Apple will become and MVNO and start to sell phone plans themselves for some time. Apple have a habit of ‘changing their minds’ about this sort of statement in time, when it is to their advantage to do so. We will see : http://www.businessinsider.com/apple-in-talks-to-launch-an-mvno-in-the-us-and-europe-2015-8?r=UK&IR=T

Business Insider also have some great vision about what will follow the smartphone and how Apple will be involved in the evolution : http://www.businessinsider.com/death-of-the-smartphone-and-what-comes-after-2017-3

 

 

 

 

 

 

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.