A new specification effort, driven by the world's auto makers and largely resisted by the world's wireless carriers, could finally sever the 20-year-old link between wireless providers and their SIM cards. The result would be a device that could surf from one service provider to another with the click of a button.
This technology goes by a couple of different names. Some call it a "soft SIM," others call it a "white SIM." The GSMA refers to it as an "embedded SIM." In a patent application brought to light in 2011, Apple (NASDAQ:AAPL) called it a "virtual SIM." Whatever its name the result is the same: Users would be able to pick whatever wireless service provider they want, or switch to a new service provider, without the hassle of buying the correct SIM card and fitting it into a tiny slot.
"The technology is really not that complicated," said John Horn, president of M2M company Raco Wireless. "It's a business issue and a management issue."
And the business and management issues are substantial. AT&T's (NYSE:T) Glenn Lurie said that "every carrier in the world will fight to the death" against the soft SIM. Lurie, president of emerging enterprises and partnerships at AT&T, made his comments during FierceWireless' "Driving the business case for the connected car" event at the Mobile World Congress trade show. (When I asked Verizon Wireless (NYSE:VZ) whether it would support the GSMA's embedded SIM effort, the carrier said " we do not address our future initiatives externally.")
Indeed, The Sunday Telegraph reported in 2010 that the world's wireless carriers shot down Apple's plans to create a virtual SIM that would allow wireless customers to pick their service provider after they purchased their iPhone.
However, it looks like the world's automotive companies are going to succeed where Apple failed. "The customer set that's really making this topic accelerate is the automotive sector," said Larry Zibrik, VP of North American market development for M2M vendor Sierra Wireless.
Car makers are increasingly seeing wireless capabilities as an essential part of the vehicle, and as a result are installing wireless modules into their vehicles. According to Machina Research, 90 percent of new passenger cars are expected to have some form of connectivity by 2020. In addition, the firm predicts that the connected car market will reach $600 billion by 2020--making it the world's most valuable M2M sector.
Zibrik explained that auto makers have several unique requirements that can only be solved through a dynamic SIM. He said that wireless modules are in most cases soldered into the body of a car in order to meet shock and vibration requirements, which makes removing the SIM card difficult. Further, automotive companies typically ship the same model car to a wide range of countries, and would prefer to be able to remotely update the SIM in the vehicle to whatever local carrier they have an agreement with.
Finally, cars are mobile, which means that auto makers want to be able to switch from an Italian wireless operator to a French operator if that motorist decides to take a road trip--or if they relocate.
"The idea of removing a SIM card is not really feasible in the automotive environment," Zibrik said, noting the situation is different for other M2M scenarios. For example, vending machines are stationary and routinely restocked, offering plenty of opportunities for swapping out SIM cards.
In response to the needs of auto makers and other M2M customers, the GSMA began work on its "embedded" SIM initiative in 2010 with the goal of having commercial products using the technology on the market by 2012. However, the association is still working on the effort and is now targeting the middle of this year for a launch of its specifications.
"I don't think it's a matter of 'if,' I think it's a matter of 'when,'" said Raco's Horn. Sierra's Zibrik added that support for the GSMA's embedded SIM specification could even become a selling point for wireless carriers looking to capture new M2M customers.
Do does this mean that iPhone users, or other smartphone users, will soon be able to switch wireless service providers as easily as they can switch from one Wi-Fi hotspot to another? Probably not.
"Embedded SIM technology is applicable for the entire M2M market, including mHealth, mAutomotive, mEducation and Smart Cities. We believe automakers and energy companies are likely to be at the forefront of the deployment," the GSMA said in response to my questions on the topic. "The GSMA's work in this area, at present, is only focused on machine-to-machine communications."
Nonetheless, the introduction of a dynamic SIM would represent a major evolution in the way wireless service currently works. Benoit Jouffrey, VP of M2M Value Added Services for SIM card giant Gemalto, explained that the technology would allow M2M companies to shop for the best and cheapest wireless service available, and then remotely switch their modules over to that new service provider. He also said that the only way for the technology to really take off is for all of the world's carriers to agree to support the GSMA's embedded SIM specification. "It can only work when people are working together," he said. It's worth noting that Verizon and other wireless carriers are participating in the GSMA's embedded SIM endeavor and would therefore presumably support any specification that was produced.
Gemalto's Jouffrey said the company is already working to meet the demand for soft SIMs. Gemalto teamed with Audi, BMW and others to show off the technology at the recent Mobile World Congress trade show. Ericsson, Oberthur Technologies, Movirtu and others conducted similar soft SIM demonstrations.
Jouffrey declined to speculate on the size of the market for embedded SIMs.
Will the introduction of the GSMA's embedded SIM specification pave the way for a consumer application of the technology? It's true that most consumers today can change service providers by switching SIM cards. But imagine if switching to a new wireless operator was as easy as signing into a new Wi-Fi network? (Assuming you're a prepaid customer with a device that can access the network.) That's the promise of the soft SIM, and that's the capability that will soon be available to the world's M2M customers. I'm not surprised that the world's wireless carriers would want to "fight to the death" to prevent wireless customers from being able to browse through wireless carriers like they would with different bars of soap at a grocery store. If you were able to select your wireless service provider from a list of carriers that currently offered service in your location, then the only other factor determining your selection would be price. And that's a level playing field that most wireless carriers wouldn't want to compete on. --Mike | +Mike Dano | @mikeddano