Author: Martin

Dean Bubley over at the Disruptive Analysis Blog has published an interesting post about the advantages of going SIM-less for next generation connected mobile devices. In essence he argues that today, SIM cards lock users to a single operator and complicate using the device in other networks, locally or abroad. He comes to the conclusion that SIM-less mobile devices are better because users then have control which networks they want to use. While I agree with his arguments, I think there are many ways for operators to deal with SIM-less devices today. It is therefore by no means certain that a device without a SIM gives a greater choice to the user.

When I look at the status quo, SIM-less devices give users much less freedom of choice than devices with SIM cards. The best example are CDMA networks, mostly used in the U.S. Here, devices have no SIM cards and are locked by default to a single operator. Using the device with other networks is not possible and when roaming, users can not use a local SIM card to reduce their costs. Switching local operators is also not possible with the device since it can only be used in one network. And finally, mobile phones can only be bought directly from an operator, so there is no competition and hence prices are unlikely to be very competitive. This approach also gives mobile operators a great degree of freedom to lock handsets down by removing VoIP, Bluetooth and Wifi capabilities that have become very popular on devices which are not locked down to the operator. In short, such a SIM-less world is far from desirable.

So while I think Dean makes some important points I am actually quite happy that the GSM standard uses SIM cards. Here are some examples of what is possible if only the SIM card belongs to an operator while the mobile device belongs to the user:

• Voice Competition: Germany, for example, has become a very competitive MVNO (Mobile Virtual Network Operator) market and prices for prepaid communication have come down over the past two years from 60 Euro cents a minute down to 9 cents or even less. MVNOs basically only sell a SIM card and users just put them into the phone they already have. If there is a better offer and the current MVNO does not adapt, his SIM card is quickly replaced. Great for competition!

• Data Competition: The same applies for prepaid mobile data. If the network coverage is bad or if prices are not competitive, the device can be quickly used with another operator or network by simply exchanging the SIM card.

• Roaming: When I go abroad I usually use a local SIM card because data charges when roaming are still ridiculously expensive. Granted, it is sometimes not convenient to get a local SIM card but if you stay abroad for more than just a day there is a quick return on investment.

• Handset prices: Today I have several choices when I want to buy a new phone: I go to the operator to get a bundle, I go to an electronics store and get a bundle, or I go to one of many online stores and just get a phone. Then I go to the next supermarket, buy a SIM card and I am set. This has had a significant effect on handset prices. Let me give you a recent example: In operator shops, an N95 is currently available for 250 Euros if taken with a 24 month subscription with a basic fee between 10 and 20 Euros a month. I can get the same mobile with the same terms and conditions for 1 euro in most electronic stores today which are not related with the network operator. In addition, the phone is usually not locked down to an operator specific software version with crippeld VoIP and other niceties. And if I don’t want it with a SIM card at all I buy it for 450 euros but without a 10-20 euros a month fee and it becomes even cheaper if you calculate the costs over 2 years. There’s no way of doing that with a SIM-less device with the current model.

So in order for users to benefit from SIM-less devices, a number of additional things need to be in place:

• Location of the certificate server: WiMAX devices are unlikely to use SIM cards from what I hear at the moment. Instead they will use built in or user loadable certificates. The important point is who issues those certificates. If they are issued by a mobile operator, then the user is stuck to one network. This is the same as the current CDMA approach. Therefore, I hope that there will also be certificates issued by an independent certificate authority. When establishing a connection the network would then have to verify the user’s credential with an external certificate authority.

• Networks using external certificate servers: The best external certificate server is of no use if networks only use internal servers. Hopefully competition will prevent this scenario as most network operators are probably happy to get additional revenue from national and international roamers.

In practice I can see networks using both internal and external certificate servers. This would allow the operator to sell devices which are locked to his network and to his control while roaming in exchange for a device subsidy. At the same time users would have the freedom to buy a device with an "open" certificate they could use in any network. They would then have the choice to pay per use, similar to the hotspot model today, or to get a subscription with an operator without being locked in.

Summary

Going SIM-less with WiMAX and other systems is a double bladed sword. If authentication is not "open", we will end up in a situation similarly to what we can observe with CDMA operators today: Users and devices are locked to a single network instead of having a greater choice. While some operators would surely prefer a "closed" authentication solution I think it would do great harm not only to users but also to the industry as it reduces competition among network operators, keeps prices up, and reduces attractiveness for users to go wireless.