A new generation of connected devices requires a new kind of subscriber identity module (SIM). Here's what you need to know about the embedded SIM (eSIM)
Q: Why do we need a new kind of SIM?
A: Historically, the job of the SIM was to securely store the subscriber's identity when the device connected to the network. Security was paramount, so operators made SIMs hard to access physically and very hard to hack.
This worked in an era of mobile phones and voice, but it's not so good for cars, meters, and other machine-to-machine (M2M) devices. It's equally unsuited to new connected consumer products like watches, wearables, and toys.
Q: What is the solution?
A: In October 2013, the operators' trade body, the GSMA, revealed it was developing a new kind of SIM that could be soldered in place and then programmed to connect to a chosen carrier remotely. It called this the embedded SIM, or eSIM for short.
Q: What does this mean for mobile telecom operators?
A: Creating a programmable SIM does potentially have an impact on churn: make it easier for users to sign up with a network and you also make it easier to switch away from one.
But the market opportunity is huge. The 2016 Ericsson Mobility Report projected that, of the 28 billion devices that will be connected by 2021, almost 16 billion will be IoT devices. Operators want to ensure they are the ones connecting them.
Perhaps the greatest area of potential for eSIMs is in consumer devices such as cameras and smartwatches. The IoT market for consumer electronics devices, which didn't even exist in 2014, is predicted to be worth €160-190 billion a year (approximately US$178-211 billion a year) by 2020, according to an analysis by EY, and Beecham Research says that automotive and consumer electronics will comprise two-thirds of all connections by 2020.
Q: What other benefits do eSIMs bring?
A: Jean-Christophe Tisseuil, Head of SIM Technology at the GSMA, says: "The space saved by embedding a SIM can be as much as 90% on a physical card. This helps OEMs free up space for other uses, such as batteries. Also, embedded M2M eSIMs are far better at withstanding vibrations and heat, so they can be soldered inside engines and still function."
This is why analysts believe car makers will be among the first to adopt eSIMs. General Motors, Jaguar Land Rover, Renault Nissan, Scania and Volvo Cars have already publicly committed to the standard.
Q: What needs to happen in order for eSIMs to be effective?
A: An eSIM is of little use if it cannot easily switch between any available network. That's why, in response to signs of fragmentation in the market, the GSMA brought together 40 players from across the ecosystem to agree a standard.
Security was a priority. An eSIM is not software: it is a physical product, so it is extremely hard to access. However, sending profiles over the air could, in theory, raise the prospect of hacking. To combat this, the partners worked together to guarantee the secure encryption and transportation of operator credentials.
Q: What other issues are there?
A: One glaring shortfall is in the user interface. For example, the first consumer device containing an eSIM, the Samsung Gear 2 watch, requires users to go into their phone settings and select "provision an eSIM profile" to connect the watch. Taking that a step further, how do you connect a device with no screen?
Everyone is aware of the issues, especially at this stage when devices are generally connected through a phone. But this will change when devices are able to connect independently.
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