Are we seeing the end of the SIM card?

There has been quite a bit written in the telecoms press about various initiatives that will see the death of the SIM card as we know it. This is very significant for mobile marketing for a number of reasons, but primarily there could be a major shift in customers’ relationships with their operator. For mobile marketers it means the brand engagement in mobile could shift with it.

Firstly I’ll explain what the change in the technology and business model will be. Since the advent of GSM, the defining technology has been the SIM card. The rectangular card with the corner cut off. Technically it’s not a SIM card at all, but a UICC. SIM is the subscriber information (such as the mobile number) embedded in the card. We will stick with the SIM term as that is what we all understand. At the moment, the SIM comes from the mobile network operator, which has the mobile number and operator information hard coded within it. That’s been good news for the mobile opeartors as they have complete control over the access and billing for that phone. It means that handsets can be sold below cost as the operator has a guaranteed revenue. The operators call it a ‘subsidy’ but technically it’s really a loan, as consumer pay for the cost of the handset (and much more) through their monthly tariff.

However, the change is that the SIM will no longer be hard coded. In the future, the SIM information will be able to be remotely programmed by anyone prepared to provide a service. Apple are showing a particular interest in this for a few reasons. Perhaps the biggest one is that there will no longer be a SIM card in the iphone. Instead you will buy the handset from Apple and the whole thing will be activated via something like itunes. Thus they have cut out the operator from the whole sales model. Apple managed to do it with content, with the app store cutting operators out of the content business, so there’s every reason to suppose that it could happen with the SIM information as well. What this means from a brand perspective is that media ownership will be even further entrenched with the likes of Apple and Google.

By having a remotely programmable SIM, it allows many different things to be done. For starters subscribers are no longer tied to an operator and can jump around from one to the other. No need to get codes and new SIM cards. It also makes it easier to create other SIM embeded devices, such as smart metering. It also means that other information to be programmed into the SIM. One area that would obviously benefit from this is NFC, or Contactless Payments. Apple are beginning to show a keen interest in this area, whilst all the major credit card companies (not to mention the GSM Association) have already invested heavily. The idea is that there will be a standard protocol (not yet agreed!), so any phone with an NFC chip will work on any reader. The specific card company information can then be remotely programmed into the SIM. So, you won’t have to buy a Barclaycard phone, you just get your handset reprogrammed.

The GSM Association are also interested in remote SIM programming. Some observers have thought that a strange position as it makes the operators into providers of even dumber pipes than present. However, when you think of it in terms of NFC, then it makes sense. The operators want to be in on payments and this could be the way to do it.

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