SIMs and SIM credentials have always been bastions of operator ownership.  Together they are an operator’s last line of defence in the battle to protect its customer base.  Operators’ absolute and uncompromising control of the SIM and the associated identification credentials (the SIM credentials) has made sure that only a customer who was prepared to swap out the physical SIM card could ever escape from Alcatraz Mobile.  All that however is about to change.  Recently there have been various industry developments that erode those ownership bulwarks and could lead directly to the commoditisation of operator access.

First is the development of the enabling technology to allow SIM credentials to be downloaded to SIMs remotely.  From one perspective this is obviously a good thing.  Consider the Internet of Things (IoT) where the terminals may be inaccessible meaning that the cost of physically changing the SIM or even of having a SIM card slot at all can be disproportionately expensive.   In this case the ability to download SIM credentials for a particular network that has good coverage in the relevant area is a cost saving method which benefits all players. To achieve this, the mobile industry has been working on a set of standards to let this happen in an industry wide compatible fashion.  Clearly this will be welcomed as a way of keeping costs under control, and avoiding IoT devices being un-connectable due to being locked into a single vendors proprietary solution.

This solution however does open up some other interesting opportunities that will be much less welcomed by the mobile operators.  For instance consider the above case where an IoT device, say a water or gas meter, is actually within coverage of two mobile operators. In this case, since the service from either mobile operator is acceptable, the choice of which one to use could suddenly become purely commercial. No longer would there be a need to swap out a physical SIM in the IoT device (if that were even possible) in order to move from one mobile operator to another.

Currently mobile airtime contracts are renegotiated on a periodic but infrequent basis, often in some form of deal that has volume-price curve, some minimum commitment, and some period of guaranteed business.  That could all change if mobile operators become hungrier for business once the constraints and defences relating to SIMs and SIM credentials have been eroded.  The limit condition what we expect to emerge is that operators will offer downloadable credentials with no minimum commitment and purely a bulk price volume deal. As this happens the service providers will have the opportunity to operate arbitrage far more frequently between the operators offering these deals. Effectively this would commoditise the access provided by the operators.  As with any other commodity market in operation today, spot prices would emerge and would be used in a much more dynamic fashion than is possible today.

That is all very well for the IOT world, but in actual fact there is little to stop a similar techniques from being used with standard terminals.  It is true that there are some other complexities in making the service seamless, such as the way incoming calls are handled, but most problems are solvable when the economics are compelling. If and when that happens, then it will not just be IoT service providers that are choosing what network to use on a dynamic basis.

The second development to consider is an approach that is being used by some terminal suppliers and service providers. It is, in some ways, a poor man’s version of what I have described above, but it is in operation today, and works like this. Conceptually instead of downloading new SIM credentials to terminals, the interface between the SIM and the terminal is removed/abstracted to anywhere in the world. The actual physical SIM is then housed in a SIM bank and selected dynamically when the terminal requests a service.  This can be done in a very dynamic fashion on the basis of terminal location and cumulative terminal usage. The net effect is that an end user (or a service provider) will have access to many different tariff plans from many different operators, and can then choose which plan to download to a particular terminal.

This second aspect works particularly well for data services where the ability to intelligently use allowances and to change tariffs based on location can result in significant savings.  It also affords the opportunity, contract allowing, to share the allowance bundles on the pool of SIMs between multiple customers.  There are however some issues with this technique. For instance, if there is not a good co-operation between the service provider and the operator supplying the SIMs, then if a SIM is apparently used in England and then an hour later in Australia, it will almost certainly trigger a velocity check fraud alert that could result in the operator deciding to deny that SIM access to any services.  Conversely, if there is co-operation between the mobile operator and SIM bank operator this could be handled.

So where does that take us to?

Looking ahead, all of the technical enablers are being put in place to allow the dynamic loading of SIM credentials into terminals. As this matures there is a likelihood that a set of service providers will emerge, possibly operating across multiple territories, which will use this technology to provide the best available tariff to the end customer in a highly dynamic fashion.  Some incremental value-added functionality might be needed to ensure that the service is seamless to the end user.  Ultimately, the effect of this would be to further commoditise the role of the mobile operator and to create a segment of service providers that have a genuine cost advantage over a single MNO for the first time.