Apple SIM: bad news for mobile operators?
Apple SIM quietly introduced
Anyone who saw last week’s Apple keynote (where the company predictably introduced new iPad, Retina iMac and Mac Mini models) probably missed the moment when Apple quietly introduced its carrier-neutral Apple SIM in cellular versions of the iPad Air 2 and iPad Mini 3, in what could prove to be a disruptive move for the mobile industry.
The Apple SIM might sound inconsequential, but it lets Pay-As-You-Go customers easily switch between mobile operators without having to swap SIM cards; and today most people rarely change networks simply because it’s a rather cumbersome process. But as it stands very few networks are onboard yet – it’s currently limited to AT&T, T-Mobile and Sprint (but not Verizon) in the U.S, and Everything Everywhere (EE) in the U.K. Vodafone and 3 have said that for the time being, they won’t be supporting it.
As a consumer, do I want to be able to select the network that I want quickly and painlessly? Absolutely.
What is it?
The Apple SIM is a standard size data only nano-SIM that comes preinstalled in the iPad Air 2 (the only device that supports it, for now). This means that instead of having to swap out SIM cards, customers can simply select any of the supported operators from the iPad’s settings menu.
Traditional SIMs contain details such as the MSISDN (the customer’s phone number) and an IMSI (International Mobile Subscriber Identity), a unique number that identifies the actual subscriber. The Apple SIM contains a degree of flexibility in that some of the information it stores can be changed in software.
Unfortunately, it can only be used to access data services rather than voice calls – and it remains to be seen whether it will ever be compatible with new technologies such as Voice over LTE (VoLTE), if that’s even supported on the iPad one day.
Despite the fact this type of SIM card has been reported in the media as being a virtual SIM (or soft SIM), it is still a long way from being a true virtual SIM that lets consumers pick any operator in the world. In fact, it’s not a virtual SIM at all – there is still a physical card in the device.
As Apple’s own website says:
The Apple SIM gives you the flexibility to choose from a variety of short-term plans from select carriers in the U.S. and UK right on your iPad. So whenever you need it, you can choose the plan that works best for you — with no long-term commitments. And when you travel, you may also be able to choose a data plan from a local carrier for the duration of your trip.
For now, the Apple SIM is not available to purchase separately, but it could be just a matter of time before it’s bundled with every new iPhone. That is a prospect that may scare the operators, who are reluctant to make it easier for customers to chop and change networks at will. After all, most users will identify the cheapest network and switch instantly. For example, using AT&T but notice that there’s a cheaper data rate on T-Mobile? Just select the one you want on the iPad’s menu.
Haven’t we been here before?
When news of Apple’s strategy spread, shares in French digital security company Gemalto took a nosedive not only because of the Apple SIM but compounded by Apple’s recent move into wireless payments with its NFC-based Apple Pay, that went live on Monday.
To Apple, this isn’t a new idea – it has been contemplating the soft SIM concept for some time. Back in November 2011, the US Patent and Trademark Office (USPTO) published Apple’s patent (filed for in 2010) for an embedded virtual SIM which is described in more detail here. The Apple SIM is therefore just one step closer to a virtual SIM…
Besides the convenience for users of doing away with a physical card, no doubt Apple would love to go totally SIM free, not least because it enables them to create slimmer devices. And everybody knows how much Apple is obsessed with slimness.
A couple of years ago, Apple already suffered a backlash against embedded SIM cards with the major networks threatening to stop subsidising the iPhone if Apple went through with its plan. That’s why this time, Apple needs to tread carefully in order not to alienate the networks. Perhaps that’s why there was hardly a mention of the Apple SIM during the keynote…
A threat to the networks, or an opportunity?
The main advantage of Apple’s new SIM is that there is no need to be tied into a contract with any one mobile network, and you can basically get data on your iPad whenever you need it. You have the freedom to use any network that has a deal which meets your needs. As Apple says, when on holiday abroad you could choose any data plan from a local network rather than pay roaming fees. As long as there’s a network that supports it…
Apple’s new iPads launched last week may begin a material shift in operators’ attitudes towards SIMs – Barclays
How will it affect the networks? As soon as you discover a network that supports the Apple SIM, you might also notice a special deal available with cheap data prices, so you could switch networks for a while. Then you might change again later on to take advantage of a better deal with someone else. The upshot is, the networks might be forced to become much more competitive.
Imagine if this was available for the iPhone – you would switch it on and see a selection of networks all competing for your custom. Apple could even become a virtual operator who charges levies all data charges, but would be able to constantly find you the best deal and network.
Will the Apple SIM eventually be available on the iPhone? It seems unlikely for the time being – it currently makes sense for the iPad which tends not to be subsidised by the operators, but there is less incentive (for the networks) to offer this for the iPhone, as the handset’s true cost is usually subsidised and they want to lock customers in for 2 year contracts. If Apple did bundle it with a new iPhone in future, the operators would most likely fight tooth and nail.
But in the short term, operators will probably realise it’s better to be on the list of networks available through the Apple SIM, as a smaller slice of the pie (or bite of the Apple) is still a slice after all. On the upside, it could be a chance for the networks to make at least some revenue from tablets, a category that doesn’t yet make them much as much as smartphones.
The Apple SIM is definitely a step in the right direction, and has been almost universally praised by the tech press and various consumer websites. But most of the operators are, for the moment, keeping schtum about their intention to get onboard.
Let’s hope that Apple exerts its considerable influence to bring the benefits of increased consumer choice to the market with a future version of the iPhone…
