The SIM-less Phone Is Coming. And It Should Scare The Shit Out Of You

The argument over the nano-SIM is a distraction. It's a sleight of hand designed to catch the industry off guard and fool it into doing something really stupid.

The SIM is designed to do a number of things; encryption, address storage, hold SMS, etc.

Most importantly, it's designed to be swappable. With GSM, you can choose your phone and your network provider separately. Want the iPhone? Hate Three's network? Stick in a Tesco Mobile SIM. Love Vodafone? Think their range of phones is crap? Buy the phone and service separately.

It means carries and manufacturers don't have control of customer behaviour. This is a good thing and allows our form of free-market capitalism to flourish with increased competition.

The reason that Apple claim their iPhone needed a micro-SIM was that the space inside the iPhone was too cramped for a regular SIM. This is hogwash.

SIM Card Sizes - by Mroach The size saved by the mico-SIM is miniscule. It was originally intended for small or embedded devices where space was at a premium. While the iPhone is a complex bit of kit, the SIM tray is already close to the size of the full SIM. It's simply not credible that the iPhone was unique and had to have a new SIM.

So what was the purpose?

Apple want to control the entire experience. You buy the Apple iPhone in the Apple Store. You download music and games from Apple's iTunes. You send messages over Apple iMessage and Facetime. They want a 100% Apple experience.

When the iPhone was limited to a single carrier per market, they also had that control over the networks. They could (and did) dictate how much the monthly tariff cost. How many minutes, texts, and MB an iPhone user would have. They even prevented the phone being sold to PAYG customers.

You may have thought you were on O2, but you were really on an Apple MVNO.

That has (mostly) changed now. You can get an iPhone and put it on any network, at any price point, with any services and wrest control from Apple. And they hate losing control.

The micro-SIM was their first move. Use a SIM which cannot be swapped with any other phone. Make it hard enough to get a normal SIM into an iPhone that most people won't bother. Yes, there are SIM cutters and caddies - this is an imperfect solution they foisted on to the marketplace. One which is backfiring as other manufacturers start using the micro-SIM.

Their next move is a phone with a "Virtual SIM" - Tomi Ahonen has a little bit of background - no physical SIM card to be swapped.

It's quite simple technically. You buy your iPhone, plug it into iTunes, and tell it which price-plan you want. You pay Apple directly and they update the iPhone's "Virtual SIM". Hey presto, you're on the network.

What network? Who knows! As far as you're concerned, you're on Apple. It may be Vodafone, it may be O2. And, at any moment, Apple could update the Virtual SIM and you'd be on T-Mobile.

I've Got A Bad Feeling About This

There are several reasons why the Virtual SIM is a dangerous idea.

  • If you're unlucky enough to live in an area with bad reception from Orange? Too bad. All the people who matter live in cities with excellent reception...
  • Reduced choice in price-plans.
  • Zero competition in price.
  • Security. Networks are very reluctant to give their encryption keys to Apple. Considering how easy it is to jailbrake an iPhone, this is wise.
  • If or when Apple go bust - you may be left with a brick. There will be no way to update it.
  • Roaming costs. Maybe Apple will do a deal with international roaming operators and reduce cost? If they don't, there's no way you can swap to a domestic SIM.
  • Want to move your number to a disposable phone if you're going partying / sailing / camping? Tough. The number stays with the phone.
  • When Apple decide to up their prices - you can't leave for another provider.
  • Phone damaged? No easy way to move your number to another handset.
  • I think you get the picture.

Luckily the operators kicked the proposal into the long grass. But I know that several parties are interested in Virtual SIMs - it's a zombie idea which will keep coming back unless we kill it with fire.

This is terrible for customers - but you can see why Apple love it so.

The Kindle Conundrum

I've used Apple as a convenient scapegoat here. They're not the only ones planning for a virtual SIM. In some ways, the Amazon Kindle was the first to try this strategy in the UK. As I've blogged about, the Kindle has a non-removeable SIM card. Well, you can remove it if you're handy with a screwdriver and don't mind voiding your warranty.

In this case, Amazon have an exclusive deal with Vodafone to provide worldwide 3G roaming on their network. If the SIM was replaced, the customer would have to pay the roaming bills.

The Kindle can only work with Amazon's services - all the browsing goes through their proxy - but that doesn't necessarily mean that it couldn't use a 3rd party SIM card. If you've no Vodafone reception or WiFi at home, it may even be worth your while paying O2 for a data-only SIM.

But the Kindle is sold as a single service. So it's acceptable. Barely.

Future Imperfect

I dread the future where devices are locked down like American CDMA phones. No choice other than what the manufacturer demands. Gone will be the days of choosing the right phone and the right price-plan. You'll take the service you're given and will have to put up with it.

For now, the operators are on the side of consumers against manufacturers. But it only takes one to start us down that slippery slope.


26 Responses to “The SIM-less Phone Is Coming. And It Should Scare The Shit Out Of You”

  1. foljs Image of foljs

    A very convoluted way to say "I don't like/trust Apple". Which might be fine in itself, but the arguments are rather baseless.

    Let's see:

    "The size saved by the mico-SIM is miniscule."

    For you, maybe. For people trying to make ever thinner phones and devices, where everything is tightly put together, not so much. Including a future with smaller phones, or devices like an iPod Mini with phone capabilities.

    Second: changing networks is not something that can only be achieved via a SIM card. Actually you could get the exact same benefits of switching on the fly, even without SIMs, say, with a virtual-SIM. Nothing that the card does that cannot be replicated in code + network standard. For this to happen you just need the carriers to agree on a on-the-fly standard for that, or the government to regulate them to agree.

    Third: "The micro-SIM was their first move. Use a SIM which cannot be swapped with any other phone."

    The micro-SIM was not an Apple invention. It was developed by the European Telecommunications Standards Institute and the Open Mobile Alliance. They used a standard SIM module.

    Now, IIRC, (I am not an American or in the US), in the US SIM card swapping was not common at all. Devices used to be sold by the carriers locked only to be used by them, and they had total control. It was actually the iPhone, among other things, that made SIM cards popular.

    "When the iPhone was limited to a single carrier per market, they also had that control over the networks. They could (and did) dictate how much the monthly tariff cost. How many minutes, texts, and MB an iPhone user would have. They even prevented the phone being sold to PAYG customers."

    No, they didn't. On the contrary. They dictated some terms to AT&T, but all those are parts where the carriers kept control of. Apple could care less "how many minutes, texts, and MB an iPhone user would have". Limits and pricing to all those was all the carriers doing, for not "overloading" their under-capacity networks. Apple would be happy for users to get unlimited MBs, SMSs or whatever, so they can sell more iPhones. And in countries where the carriers are not allowed to impose such limits, or where they traditionally do not, you can use your iPhone without any artificial limitations.

    Where Apple intervened, it was for the benefit of the customer. For example: the iPhone style voicemail interface, compared to the costly and convoluted ways the carrier implemented voicemail. Apple made iMessages, so you can bypass the costly SMS service altogether (this costs carries hundreds of millions of dollars).

    Apple added tethering to the iPhone, and while us in European countries got it just fine, AT&T put it on hold, as to not overload their pathetic network, etc etc.

    Your complains are misguided. When it comes to exclusivity to the network, limits, etc, it's the carriers. Apple could care less --they care about you buying their phones every 2 years.

    Reply
    • Terence Eden Image of Terence Eden

      Thanks for your detailed comments. Let me take your points in order.

      Take a look at some of the minuscule phones coming out of China - some with dual full-sized SIMs. Indeed, I have a wristwatch phone / MP3 player which takes a regular SIM. Yes, having smaller components will save space, but a couple of millimetres?

      It's taken years for carriers to agree on a single payment system, or a sensible way to port numbers, or a common widget runtime. What makes you think they'll be able to quickly agree on a standard to share their encryption settings? What happens when one - or several - decide they don't want to be a part of such a consortium? Or decide that they don't want Panasonic phones on their network? The death of customer choice.

      While the micro SIM was a standard, Apple were the first company to produce a consumer level phone which used it. It would be the same as them using a 2.5mm jack for their headphones. Technically a standard - but one which is rarely used and therefore incompatible with most products which people have.

      I must correct you here. Apple dictated that all iPhones had to be sold with a data package (certainly from speaking to the European operators I know). With that, in some markets, they made sure that the iPhone had a minimum number of minutes and texts. They wanted to make sure that their experience wasn't disrupted with "bill shock". I'm not saying that's a bad thing - an iPhone without data isn't much of a smart phone - but it does reduce choice.

      I agree that their OTT play in voicemail and messaging was great - both for themselves and customers. But as the tethering fiasco shows, when carriers and manufacturers collude, it's the customer who suffers.

      Thanks for commenting.

      T

      Reply
  2. pikachu Image of pikachu

    Phone and SIM has been bundle in Japan for quite a while; not surprised.

    Reply
  3. Jeffy Pooh Image of Jeffy Pooh

    Mobile numbers are linked, but not locked, to the SIM card. The network operators can still disable your old SIM and link your existing phone number to a new SIM. They can obviously do this SIM or SIMless. Network locks are in the phone itself anyway.

    The only issue is being able to use (or not) a local SIM when travelling.

    Reply
  4. Clarissa Image of Clarissa

    Welcome to the States. The vast majority of mobile providers in the USA have phones without SIM cards. Your phone is locked to the provider network forever. If you want to switch providers, you have to buy a new phone on the new provider's network. It's a well oiled machine there.

    Reply
    • Jonas Image of Jonas

      How do you go sailing for example? You can't bring a smartphone obviously (short battery life, to begin with), how do you bring your dumbphone if you can't swap SIMs?

      Reply
  5. CaptBlack Image of CaptBlack

    Ok...not great if you don't like Apple. But android this would be awesome - root the phone and roam onto any network - your choice would price, network availability, required bandwidth...a bit like wifi. Choice at the touch of a button...doesn't sound bad to me, and would force carriers to focus on their core business coverage, bandwidth, and price competition.

    Reply
    • Terence Eden Image of Terence Eden

      I really don't think it would be good on Android - or any other manufacturer. You can get dual SIM Android phones which will allow you to switch networks from software. You can also send & receive calls and texts from each number.

      Reply
      • Benjamin Schran Image of Benjamin Schran

        Actually in theory having a system with no sim and essentially every possible sim and CDMA carrier programmed into your phone would be great. If your over seas just tap Tue provider no need to buy and switch a physical sim card. To be honest I doubt it will happen just because as it was said earlier the carriers would have to share crutial security information with each other. And as we all know 99% of the carriers don't play nice.

        Reply
  6. Charles Image of Charles

    I think it's too late for Apple to do this now. The genie is out of the bottle, and there's too much competition. It might have worked back when the iPhone was far ahead of everything else, as single carrier did, but it won't fly now. Even Apple realise that, hence the availability of fully unlocked iPhones these days. If they go back to locked down carriers now then people will just switch to Android or Windows or whatever. Even US customers, who were used to lockdown and extortionate charges, have seen that there is an better alternative.

    The only way this could work would be if there was agreement between all manufacturers, as well as the carriers, and I can't see that happening. There would be too much protest, and it would inevitably lead to serious antitrust and monopoly investigations which none of those companies want.

    I hope I'm right anyway. I know I wouldn't be paying £10/month for 240 mins voice + unlimited texts and data on my iPhone4s if Apple had anything to do with it.

    Reply
  7. Michael Francis Image of Michael Francis

    I'm on the fence about virtual sims. On one hand SIM cards are redicuously huge. As someone who used to fix phones for a living I can assure you the sim card slot on the iPhone 4 (which uses microsims) takes up 1/3 of the space on the iPhone motherboard. Don't believe me? Here you go. Considering SIM cards can easily be emulated on software, or built into a secure holding area in the SoC (something like Trusted Platform Module) there is no need for such large sim cards.

    There is no technical reason that virtual sims can't be swapped, on the contrary they're easier to swap since they can be updated with software. Imagine you go on vacation to a new country, you can pick a network, enter your credit card number and boom you have service.

    On the other hand the problem is that carrier would push back on such freedoms for sure, which would make network switching impossible unless you bought a factory unlocked phone most likely because this would mean instead of using a well defined standard for sim swapping you'd have to rely on someone hacking each manufacturers particular sim storage system.

    Furthermore, swapping an account between phones would also be difficult unless the standard included a way to retrieve your secret key (what you sim card actually holds) and transfer it via some software interface, however I can't see this happening easily since simcard are designed so the secret key never actually leaves the card.

    All in all I think software simcards are actually a great idea if we can get around some of the lock-in / freedom issues they're going to have.

    Reply
    • Terence Eden Image of Terence Eden

      Almost every company ever formed has gone bust. I see no reason why Apple won't go bust - eventually. Look at Nokia; one the biggest phone manufacturer, now barely clinging to life.

      Are more likely explanation is that they'll simply stop supporting a device. The original iPhone no longer receives software updates (so I understand). Would Apple (or any other company) disable your old handset to force you to buy another phone?

      Reply
  8. Ooglek Image of Ooglek

    With the virtual SIM, shouldn't the customer own the SIM? Apple should allow me to download a virtual SIM from a carrier, then put it iCloud. Now I can store all of my SIMs securely, maybe even switch between them on my phone. They could be encrypted somehow, so even if someone stole my iPhone or hacked iCloud the encryption password or keys wouldn't be on the phone. You only need the keys or password when swapping SIMs.

    I don't think that Apple wants to be involved at all when you swap Virtual SIMs, there is nothing in it for them. The convenience of tying my Apple ID to all of my SIMs means nothing to physically lose. And maybe there will be a way to have both a Virtual SIM and a physical SIM so you can put it in phones that don't have the Virtual capability.

    And maybe Apple will bridge the gap, allowing the iPhone to turn a physical SIM into a virtual on the phone and vice versa as a intermediate step as manufacturers move to virtual. That would be pretty cool.

    Reply
  9. mtkd Image of mtkd

    Fortunately, the competition in mobile hardware ensures there will always be some manufacturers offering SIM swappable devices.

    Technical users drive the mobile market - any manufacturer who tries to force an unpopular feature usually fails in the end.

    If Apple or Google bought a network, made the service free or near free - I could see people accepting the lock-in but outside of that it's likely to be a drag on sales.

    Reply
  10. Jim Freeman Image of Jim Freeman

    Honestly they probably want virtual sim less for control and more for lowering manufacturing costs. If they could have the same case and board design for both GSM and CDMA phones, they'd save a bundle. They also might be able to make the phone a bit thinner without the sim slot.

    That said, one of the good things about GSM is network portability. If that becomes difficult or impossible with the iPhone then it's just another network locked phone; Not that unusual in the US, but annoying and terrible everywhere else.

    Reply
  11. Phlebas Image of Phlebas

    So I guess the answer is...don't buy phones from Apple or any other company that won't give you a physical sim card. If the virtual sim card idea is all that disadvantageous to consumers then there'll be sufficient demand for new phones with exchangeable sims such that some businesses will have an incentive to carry on producing them. Alternatively, you could give up buying up-to-date phones if they no longer meet your needs.

    Reply
    • Mike Image of Mike

      Manufacturers have had a history of pushing changes in a way that the consumers don't notice all the disadvantages, and just accept the change.

      Take for instance the standardization of 16/9 aspect ratio laptop monitors. Nevermind 4/3, you can't get any non-MacBook laptop made this year that's even 16/10. This is one of the few things I agree with Apple on.

      You shouldn't always expect market competition to give you choices when there are only a hand-full of companies in that industry.

      Reply
  12. Peter M Image of Peter M

    Terence, no offence, but you seem to have written this article based on limited knowledge of technology, the industry or Apple's current financial status. You make sweeping statements that hold very little substance, and say silly things like 'if/when Apple goes bust' (if this had to happen, it will happen years, maybe decades after you're 'forced' to use a virtual sim).

    Saving millimeters inside a complex electronic mobile device can often mean the difference between getting circuitry to work reliably. Obviously not, but yet you make a statement (more than once) as if you knew what you were talking about.

    Can't change number because of a virtual sim? What hog wash! Its even EASIER to change your number now.. get a new V-SIM.

    I really don't understand why you would bother writing a post based on limited knowledge and comprehension of the subject matter. It probably just sounded juicy to you and you started thinking of ways of 'poking holes' in it. Well you failed. Dismally.

    Don't get me wrong, there ARE holes to be poked in this strategy, but you were aiming blind.

    Reply
    • Terence Eden Image of Terence Eden

      Hi Peter,

      Thanks for your comment. This article is based on a decade of experience in the mobile industry, chatting with people familiar with the matter, and advising hedge funds looking to expand in this market.

      With respect to Apple's financial position; I have no expectation that they will go bust any time soon (but then, people said much the same about Enron, Lehrman Bros, etc.)

      However, this isn't just about Apple - my first 3G phone was an NEC, a company now completely absent from the EU mobile market. I have a Sharp GX-10 which I still occasionally use - would I be able to still use it if it had a Virtual SIM?

      I completely agree about saving space in complex electronics. If you look at phones released around the same time (SGS, N8, Google Nexus) they all manage to take a full sized SIM (plus micro-SD & HDMI) in a similar size, and with similar specifications.

      With regards to changing number - I think it rather depends on the mechanism. If you need to plug your phone into a computer & connect with iTunes - that could be a much worse user experience than SIM swapping. If it's using an on-screen menu, that could be useful - but depends on the billing mechanism.

      At the moment, I can go to any street vendor, hand over a few quid and get a new SIM. Depending on where you are in the world, it can be more complex than that.

      I would be interested to know what you think are the advantages or disadvantages of the Virtual SIM.

      Terence

      Reply
  13. Roger Parkinson (@RogerParkinson) Image of Roger Parkinson (@RogerParkinson)

    Here in NZ we used to have CDMA from the dominant carrier and those phones did not have a SIM. Your point about the phone+carrier being locked together was definitely in force then and it was a pain. Now we are GSM everywhere so we can swap our phones around if we want and, more importantly, we can buy them over the net if we want. This has exploded our choice of phones as the local carriers rush to keep up with overseas suppliers. Before that they just had to offer a small selection that they decided we wanted.
    Maybe the virtual SIM can fully replicate the removeable SIM but we sure don't want to lose this feature. Whatever the SIM form is it really must be interchangeable across multiple phones, easy to get to etc. Personally I don't have a 'weekend' phone and a 'good' phone, but people do and it won't always be a phone of the same brand.

    Reply
  14. Steve Harris Image of Steve Harris

    You seem to put a lot more trust in the networks than I do.

    Your example of them taking years to agree the PAC mechanism (number portability) is a good example - why would they hold back on that for so many years if they were on the side of the consumer.

    Similarly roaming (GSM (presumably other systems) routing calls back via your home network), it's not necessary technically, but otherwise it makes it hard for your home network to bill you while you're abroad. Contactless payment is the same, they're struggling to find excuses why the network should get a slice of the fees.

    Don't get me wrong, I understand the dilemma that consumers aren't willing to pay what it actually costs to provide mobile bandwidth, so they have to charge extortionate (compared to the actual cost) fees for services we are willing to pay for, but I don't think virtual SIMs would be bad for consumers at all - as long as there's a standard.

    I travel a lot, but don't spend enough times in many countries that it's worth me owning a SIM there, but if I could just reflash a virtual SIM when I arrived, that would be much more practical... or the threat of actual competition might encourage the networks to make roaming work in a more rational way.

    I also suspect you're wrong about the SIM size too - though I have no technical knowledge in that area - the space saved is pretty substantial compared to the size of the device. Also, if it was really an attempt at lockin, they would have made it electrically incompatible with the fullsize SIM and mini SIM.

    Reply
  15. maiageddeaia Image of maiageddeaia

    HI! Thanks for this blog. I am trying to figure out what to do as I currently live in rwanda, have just bought myself on ebay a iphone 4, discovered there is no sim and not quite sure what i can do. If I plug it in to itunes, should it in theory connect me to a network, or is it just a useless brick here? I.e. do simless iphone 4s only work in specific countries?

    Thanks for your insights i would very much appreciate some advice or suggestions as I am a bit stuck!

    Reply
    • Terence Eden Image of Terence Eden

      The iPhone you have *does* have a slot for a SIM card. I suggest taking it to your local phone shop and they should be able to show you how to fit it.

      Reply

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