The GSM Association (GSMA) has done a powerful job, over the years, of promoting the interests of its mobile operator members worldwide, influencing regulatory and competitive policy as well as technology developments. However, the more far-sighted operators know they need to accept that their role in the 5G era will change significantly, and they will need to take account of new types of wireless service providers, whether as new competitors or as partners.
Arguably, the GSMA is not adapting as quickly as it should do, in order to represent the MNO community in a modern, 5G-centric context, rather than clinging to an old order that will be inadequate to meet the demands of enterprise markets in future. The Association’s reluctance to change its viewpoint was highlighted when it was forced, following a US Justice Department (DoJ) investigation, to open up to more input from non-operators.
In this case, the change related to its eSIM (embedded SIM) specifications, but the GSMA’s concessions to the DoJ could affect its broader procedures for setting standards. Following a two-year probe, the DoJ concluded that “the GSMA and its mobile network operator members used an unbalanced standard-setting process, with procedures that stacked the deck in their favour, to enact an RSP Specification that included provisions designed to limit competition among networks”.
The GSMA has drawn up revised procedures which ensure that non-operator inputs are incorporated more easily, addressing some of the DoJ’s concerns about restricted competition for end users. The Department has sent a ‘Business Review Letter’ to the GSMA, accepting the voluntary remedies.
“I am pleased that the GSMA is ready to use its standard-setting process to create a more consumer-friendly eSIM standard,” said assistant attorney general Makan Delrahim. “The GSMA’s old procedures resulted in certain eSIM rules that benefited only its incumbent mobile network operators at the risk of innovation and American consumers. The new procedures proposed going forward significantly reduce that risk and should result in new innovative offerings for consumers.”
“The Justice Department reviewed millions of documents covering a multiyear and complex process to establish common standards for eSIM technologies. Its Business Review Letter is conclusive that the agency found no violation of antitrust laws,” the GSMA said in a statement.
But the interchange highlights several important issues related to the new 5G ecosystem. One is how entrenched mobile interests have sought to limit MNOs’ exposure to risk even when they have been forced to accept a more open platform. Nothing could be more emblematic of MNOs’ power to lock in users than the SIM card, which has allowed operators, exclusively, to provision, control and monitor users’ connections and behavior.
But the individual provisioning of each device and SIM card would clearly be impossible in the future IoT environment, which might involve many millions of devices per network, with rapidly changing requirements. Operators had no choice but to accept that an embedded, remotely configurable SIM technology would be essential to IoT economics, but that it would raise the spectre of human users, too, being able to switch between networks far more easily, eroding MNO power to an even greater extent than removable and dual-SIM solutions.
With eSIM, handset makers like Apple, or IoT service providers, can control the SIM and adapt it for any operator remotely. So while the GSMA appeared to be attacking the interests of its own members when it led the development of eSIM specs, it was clearly doing so in order to preserve as much power as possible for the MNOs, compared to allowing other would-be SIM standards setters, like Google or Apple, to take the lead.
Even with the GSMA in the driving seat, the big device platform companies are using the technology for their own ends. Google, for instance, proclaimed “the first major smartphone with eSIM”, its own Pixel 2, and followed last year with the Pixel 3, which can switch between several operators’ networks.
Ralph Steffens, CEO of international MVNO Truphone, said of eSIM: “This new technology signifies a massive shift in the telecommunications industry. It’s having an impact on everyone from phone providers to chipset manufacturers to mobile network operators. But most importantly, it directly impacts businesses and consumers by offering them more flexibility over their mobile connectivity.”
Apple also included eSIM support in 2018 iPhone models, prompting ABI Research to increase its forecasts for the technology – it now predicts that 420m eSIM-compatible handsets will be shipped by 2022, 100 times higher than in 2017.
However, in April 2018, the eSIM space was hit by scandal when the GSMA, and the US operators, were accused of collusion. Accusations, reported to have been initiated by Apple, claimed that AT&T and Verizon colluded with the GSMA (which represents MNOs worldwide) to force the market to adopt their preferred format for the eSIM, thus strengthening their hand against the device/app providers in the battle to control the primary relationship with the mobile user.
The GSMA has been making progress towards eSIM specifications which are largely friendly to the interests of its MNO members in recent years, despite periodic efforts by Apple and others to drive the standards themselves. Pending the outcome of the investigation, the GSMA said it had suspended its eSIM activities, until last week’s agreement.
The New York Times reported that the Department of Justice was investigating whether the two US carriers, and the GSMA, were trying to establish eSIM standards which would make it hard for users to switch between operators. “At least one device maker”, thought to be Apple, has complained that the proposed standards would allow devices to be locked to specific networks.
One of the hoped-for outcomes of introducing an eSIM, to replace the physical SIM cards, was that it could be remotely activated and updated. This would allow non-operators, such as device vendors or enterprise IoT administrators, to assign devices to new networks without intervention by the MNO; or for the user to swap between carriers directly from a menu on the device.
That, of course, could significantly change the balance of power between the network operator and the device supplier by severing yet another tie between the user and the MNO – a relationship which has already been weakened by the brand power of Apple and Google, but has been held together by two instruments of control for the MNO. One is the billing relationship; and the other is the MNO’s exclusive ability to assign and manage the SIM, tying the user to its network (though even that has been weakened by swappable SIMs and multi-SIM handsets).
So a lockable eSIM would help the MNOs cling to their traditional customer relationship where this suited them, while accepting a more open model where manual SIM management would be impractical (mainly with the massive device numbers that could emerge on the IoT).
In a statement, the GSMA said it was working with leading operators, device suppliers and SIM makers worldwide on global eSIM standards, and these did indeed include the “option” for the eSIM to be locked. However, it stressed that the option would be selected by the user, not the operator.
“In the United States, consumers would have this option,” the GSMA said. “However, [the consumer] would need to explicitly consent to this under specific commercial agreements with their mobile operator, for example when purchasing a subsidized device.”
Google and Apple have both been laying the groundwork for a market in which the connectivity provider is virtually invisible to the user, and can be changed at will, as in WiFi. In 2014, Apple introduced an iPad with a ‘soft SIM’, providing a choice of operators which could be selected by the user online; and Google’s Fi MVNO allows customers to switch between Sprint, T-Mobile and WiFi networks.
However, the carrier-independent iPad is reliant on operators supporting this option. T-Mobile and Sprint do so, but others in the US do not, so Apple warns users: “If you buy one of these models at a carrier, the embedded Apple SIM might be locked to that carrier or disabled.” This may not matter for the relatively small tablet market, but sets a vital precedent for smartphones, no doubt prompting the latest action.
The battle has been brewing for years, and not just in the USA. One of the first major spats was centered on Europe, in 2010, and resulted in a victory for the large MNOs. In that year, Apple tried to bulldoze an embedded SIM card into the industry before it was ready, but was forced to retreat under intense fire from European MNOs, which threatened to refuse to sell an iPhone with a SIM card that Apple could provision remotely.
By 2014, when the eSIM iPad made its debut, times had changed. Operators had accepted that eSIMs would be essential to make it workable to support huge numbers of connected devices. Soon after, many had signed up for the GSMA’s eSIM effort – no doubt hoping that the specs would, at least, have carriers’ interests at heart if they were defined by the MNOs’ own association rather than the device segment.
But there is still a big leap for MNOs, to accept an unfettered handset, rather than seeing the eSIM in devices where they have less control anyway, like tablets, wearables and even cars. These items often do not usually come with their own cellular data plan, or they may be part of a bucket deal in which the primary billing relationship still centers on the handset – that bundle itself tying the user to the particular MNO.
Even then, some operators have resisted the change – Verizon sold soft SIM iPads with its own separate SIM, disabling Apple’s, though of course this is impossible with non-removable eSIMs, which started to appear in some devices, including the iPad Pro, in 2016.
But the smartphone remains the chief source of usage, revenue and opportunity for the operator to communicate with the user and promote other offerings – and that is Apple’s next frontier. A report by Strategy Analytics said: “Short of offering its own MVNO, from a carrier perspective an eSIM iPhone would be the most destabilizing change Apple could make to their existing iPhone business model. With an eSIM equipped iPhone a customer need never directly interact with an operator again, instead provisioning service and switching from carrier to carrier at the customer’s whim. Adding an eSIM to the iPhone would be a direct shot across the bow of carriers. With eSIM, Apple’s grip on the customer will become even tighter.”
DT’s NuSIM gains momentum:
Deutsche Telekom has driven the development of nuSIM, an alternative to eSIM which eliminates the separate physical SIM card altogether.
The German telco is working with various partners – mainly specialists in IoT chipsets and security – on the project, which aims to move all the SIM functionality from the physical card directly to the chipset, to support mobile IoT applications.
nuSIM is specifically focused on low cost IoT devices with a long lifespan, such as asset trackers or smart motion or temperature sensors. Getting rid of the physical SIM card will simplify the form factor of a low power device and reduce its cost, package size and likelihood of failure. It will improve battery life still further and also remove the need for the logistical activities associated with SIM cards, such as inventory processing.
DT said nuSIM would provide a common set of specs to enable “minimum hardware and software footprint for cost-efficient implementations with minimal power consumption”. The operator’s credentials would be placed on the device at chip level during manufacture, using a simple and standardized digital process, the telco continued.
Last month, it was announced that nuSIM had been chosen by Qualcomm for use in its 9205 LTE modem, which supports NB-IoT, LTE-M and 2G IoT connections. Huawei’s chip subsidiary, HiSilicon, followed suit, using nuSIM in its Hi2115 NB-IoT system-on-chip, and demonstrating the connection in a Quectel module, the BC95-G.
This is a big development in the world of IoT-focused eSIM, as the vendors try to reduce hardware costs to facilitate wider adoption. With these two giants opting for NuSIM, rather than their own solutions, the technology is well on the way to becoming the standard choice.
nuSIM was unveiled in the run up to this year’s Mobile World Congress in February, The launch supporters from the semiconductor side included Altair, Commsolid (Goodix), HiSilicon (Huawei), Nordic Semiconductor, Qualcomm, Samsung and Siemens; plus module makers Quectel, Sierra Wireless, Telit and u-blox. Giesecke+Devrient (G+D) also came on board from the digital security segment.
Major SIM security players Gemalto and Idemia were noticeably absent from that list, but since the launch, Gemalto has signed up; and other new additions include Fibocom, Gosuncn, MeiG, Neoway and SIMcom. Deutsche Telekom says it has 16 design wins to date.