Out With The Carriers, In With The Handset Makers?
I feel like there is something I’m missing here:
European chipmaker STMicroelectronics NV dropped a heavy hint about eSIMs at an investor day in May, saying it expected to deploy its own device in a major mass-market smartphone by the end of the year. Whether it’s talking about this year’s iPhone will become known on Wednesday, but it’s hard to see how the mobile phone operators can resist this technology for long given its usefulness for consumers. Apple will certainly argue it that way. It’s already used in some iPads, and STMicro supplies an eSIM for the Apple Watch.
Apple can’t totally dismiss the concerns of the big phone carriers. After all, they spend huge sums on marketing the iPhone, and sell it in their stores. But the California giant is willing to throw its weight around, as shown by the DoJ complaint.
While the eSIM might reduce some logistical costs for carriers such as Verizon and AT&T, in the longer term it will become harder to differentiate between network providers. As Northstream telecoms consultant Bengt Nordstrom says: “From a user perspective, if you ask what service they’re using, they’ll say they’re an iPhone or Samsung user, not the operator.”
Whether the SIM card is physical or not physical, wouldn’t the carriers still have the ability to decide which phones to allow or not allow on their networks? I mean, Verizon didn’t even have SIM cards for the longest time, and if anything having a physical SIM card should make it easier to skirt their rules. The GSM carriers, which have always relied on SIMs, have historically been far more open than CDMA carriers which didn’t. Further, regardless of what Apple can and cannot do with SIMs, you still have the basic incompatibilities between the two largest carriers. You can unlock an AT&T phone to play on T-Mobile’s netwrok, but you not Verizon’s.
But if the carriers are fighting eSIMs so far, there has to be a reason, right?
This is one area where I am something of a radical on the subject. I don’t think carriers should be allowed to keep phones off their network, or prevent them from reading SIMs physical or otherwise. I do, however, feel somewhat less passionately on the subject now than I did then. The proliferation of discount carriers has lead to competition of a sort. My phone will only work on AT&T’s network, but there are a number of carriers competing with one another to give me minutes. That may be the future of the industry as a whole, though AT&T and Verizon are holding back some key features (most notably mobile hotspot) for their own customers.
I just left AT&T for Sprint because AT&T was getting too strict regarding the handsets they’ll allow (charging me $40 a line in ‘Access Charges’ so my unlocked phone could use their network).Report
Interesting! AT&T used to be second best as far as this goes (after T-Mobile). Unfortunate that they’re being buttheads about it.Report
We have been coasting on a legacy unlimited plan for over a decade, but AT&T has been slowly increasing the cost of that plan, so we finally decided to dump it for a cheaper 10GB plan. However, if your phone is not under contract or if you are not signed up for AT&T Next, you get hit with a $40 access charge per phone. Which meant that we’d be saving a whopping $10/mo. Of course, when I told them I wanted to switch to the 10GB plan, and that I wasn’t interested in their Next program, they failed to mention the $80 in access charges I’d be paying, and then they refused to waive those charges.
So I dumped them. They lost a long time customer (since 2006) over this.Report
How odd. We’re not on AT&T Next and not under contract and don’t pay any sort of fee like that. Like you, we would probably threaten to leave over that.Report
How long have you been on your current plan? AT&T Next and (I think) the access charges are relatively new (3-4 years?).Report
We signed on in January.Report
Promotional waiving of the charge, maybe?
Either way, they wouldn’t remove the charge and wouldn’t escalate me to someone who could, so I dropped them. Took about a week to get new SIM cards and get the phones switched over (I didn’t feel like going to a store). It wasn’t as easy as it should have been.Report
My guess is carriers dislike it because it reduces the costs of switching carriers. Carriers have always wanted high costs to switching. The fighting over number portability is one example. I am quite convinced the fight was not about cost or complexity but lock-in.
With the need for physical SIM the user has to go obtain a SIM which costs time and money. With eSIM it looks like you can switch carriers almost instantly on-line.Report
I agree with you about barriers, but I just don’t see how it raises them all that much. As things stand now, there is no out-of-network phone you can bring on to Verizon’s network, and I’m not sure how this changes that except to make it easier for AT&T and T-Mobile to do the same.Report
I suspect, if eSim is adopted widely, what you will see is the return of contracts. Sign a two year contract, get a heavily discounted plan. That kind of thing.Report
In Canada mobile phone carriers are not allowed to sell locked phones, or to charge money for unlocking phones bought before the regulations came in. What’s the situation in the States?
I guess in theory a carrier could refuse to accept you as a customer if you show up with a phone you already own – nobody is required to enter into business with anybody, and cell phone owners are not a protected group under the Charter.
But I can’t imagine why they would refuse to do so, when you show up asking to pay them money for a service they’re in the business of providing. In practice, bringing your own phone with you generally means you get equivalent phone plans for cheaper.
If I understand right what an eSIM does, it would just make it slightly easier for a person to switch carriers, as they’d no longer need to go to a physical store. (Well, slightly easier for able bodied folks in cities and larger towns. Potentially much easier for people with mobility issues or in remote areas)Report
This is an area where the Canadian regulatory regime is far better than the American one. As I understand it (and correct me I’m wrong) not only can’t they lock the phones, but the phones will work across different networks because they’re required to use a set of standards.
Here, most of the phones won’t actually work on any other network. Incompatable technology that came from different technologies underlying different networks. Verizon and Sprint came from CDMA, and AT&T and T-Mobile came from GSM. There were no regulations telling them what standard they needed to use, as is the case in Europe and (I think) Canada.
However, some of the carriers (all of them but T-Mobile, actually) go a step beyond and hobble any phone that isn’t theirs. Verizon and Sprint in particular simply won’t let the phones work. As for why they would erect these barriers, historically it’s to sell phones and put people under contract making it more difficult for people to leave. That is apparently the tradeoff for making it more difficult for them to leave someone else for you.
But there is something I am overlooking, that may answer my question. We have four (soon to be three) main carriers. Beneath them, though, we have the discount ones. Those run on the networks of one of the big four. And those you can switch between. My AT&T phone will work on Cricket, SmartTalk, H2O and others. So if you’re in the market for a discount carrier… then maybe an eSIM would be helpful? Though half of them are owned by a big carrier, like Cricket is owned by AT&T. But that’s at least a scenario I understand.Report
I asked on Twitter if anyone knows how much of the customer base is on discount carriers. My impression is that it’s a small percentage, but I might be class-skewed on this.Report
The CRTC did bandwidth auctions at various times, but I’m not sure how much the interoperability is a product of regulation, and how much of happenstance.
It works pretty well though. At the big music festival we go to there’s one little spot behind one stage where all of a sudden there’s cellular reception; there’s often a little crowd of people standing around the one spot who need to be in touch with someone at home. You can tell someone where it is without asking them what carrier they have – there’s effectively one thing that is “cellular reception” not “Telus but not Rogers or Bell reception”. I don’t know whose tower you’re actually picking up, and don’t have to.Report