i… have the power?
The traditional relationship between manufacturer and network has had pretty clear dividing lines; one provides the hardware, the other makes the connection. Apple’s decision to include a programmable SIM card changes that, giving the manufacturer a more active role in connecting the customer. If this were to take off, manufacturers would be able to leverage popular handsets against the networks’ need to offer them. That said, Apple didn’t have much to lose in putting the ‘soft SIM’ in an iPad because tablets are not products predominantly sold with a reliance on subsidies from networks, whereas an iPhone is. Whether manufacturers choose to pursue a ‘soft SIM’ strategy with contract-driven devices will be the critical factor. Although as Phil Kendal, director global wireless practice at Strategy Analytics says, the potential shift in the dynamic is clear to see: ‘It certainly diminishes the strength of operators in the overall value chain. It’s good news for consumers and puts the operators on a little bit of the back foot. The devil is in the detail, it really depends on what the devices are. The reality of the tablet space is that consumers are not buying 3G and 4G tablets from operators. Already the power to some extent is in the hands of the consumer. The ‘soft SIM’ will give the customer a greater ability to churn through providers. The operators will have to come to an agreement with the manufacturers to be one of the options available to customers using a soft SIM device.’
Price comparison or an exclusive agreement
Removing physical obstacles from the process of changing service providers is always going to simplify the task of switching. But the possible ramifications of ‘soft SIM’ adoption go beyond that – the device could become a price comparison tool in itself. The consumer could compare different tariffs from multiple providers and assess what is right for them, all as part of the device’s setup. The difficulty that comes with this is, of course, that this requires a large enough number of participating providers to offer a table to compare different tariffs. Currently, with the iPad’s ‘soft SIM’, customers will have a choice of one – EE – which obviously means that there would be less choice. The networks with the deepest pockets would be able to establish a monopoly on the most popular products through exclusivity agreements.
High end, low end
The Apple iPad is clearly a high-end product aimed at a smaller number of customers compared with the iPhone, and therefore it’s reasonable to expect any impact to be slower. There is a strong argument for the notion that the competitive potential that the soft SIM possesses won’t truly be realised until it features in a product that appeals to both ends of the market. Unsubsidised products would be one area where the ability to choose the best deal with even greater ease would come into its own, Phil Kendal, director global wireless practice at Strategy Analytics, explains: ‘You look at some of the Google Nexus products, they have £200 smartphones in the range. Being able to choose your provider on this type of device would make sense.’
The tablet market is one that hasn’t been fully exploited by mobile operators and they remain products that are largely bought outside contracts as one-off purchases. There has been a big push in recent years from the networks to try to sell these products to the consumer, with mixed results. One of the major problems has been that customers have been buying tablets that don’t have any cellular connectivity and function purely through Wi-Fi. The ‘soft SIM’ presents a new route for networks to use to try to make the most of selling connections into these products. The fact that Apple is including a SIM that can be programmed or switched out will benefit all networks looking to sell connections into tablet devices. The wider adaptation of ‘soft SIM’ technology actually has the potential to benefit all networks, and many are looking to encourage the technology in the near future, as a Vodafone spokesperson told Mobile: ‘We are working with the wider industry and the GSMA to develop global standards for such interoperable SIMs and these are expected to be deployed in 2015.’