Apple's "Integrated SIM" Plans Thwarted?—Not So Fast

iPhone SIM

There's been a lot of fuss about Apple's plans for a next-gen integrated SIM card in iDevices, and new reports even suggest that Apple's now abandoned the plan, for the iPhone at least. But does all the fuss even make sense? Not necessarily.

The rumor that Apple's pulled back from it's digital SIM plans comes from the slightly unlikely source of the U.K.'s Sunday Telegraph newspaper, which notes that Steve Jobs' company has now officially abandoned the idea. The reason is direct pressure from European cell phone operators—we'd learned that they were getting uppity about the idea, even threatening legal action. The Telegraph has spoken to sources in the industry that suggest these machinations have been successful. "Apple has long been trying to build closer and closer relationships and cut out the operators," says the source, adding "But this time they have been sent back to the drawing board with their tails between their legs." This is a pretty venomous comment, given how often the networks themselves been the subject of legislation to force them to be fairer to both their customers and competitors.

But actually Apple's plan was never to "cut out" the cell phone networks. How could it? Apple is not going to build, lease or operate its own cell network in multiple countries across the world—it's not a viable plan. When it sells the iPhone to consumers, it's relying on another industry to operate the devices. Because the iPhone is such a hot property, and Jobs is a clever negotiator, the computer firm has had more success than other manufacturers in breaking the stranglehold the networks hold over their users (arguably in all of our benefits) but it still needs them.

The integrated SIM card would have worked exactly like a physical SIM card: The chip in a SIM card contains a limited lump of encrypted data that digitally identifies the user and the phone it's plugged into to the relevant network. The only difference Apple's plan would've involved is that the SIM would be virtual—the codes would work the same way as the code on a SIM's chip, and the phone would identify and connect to the networks in exactly the same way as it does nowadays. The move simply places control of activation of the SIM in Apple's hands, which gives the firm more control over the security of the device. But control over the contract would remain with the network: Apple would have to request a phone number and other data from the networks to activate each iPhone. The network even gets to save money, as it needn't produce and package millions of SIMs.

The one thing the networks wouldn't be able to do is "lock" the phone to their service, which forces consumers to stick with a particular network even if they terminate their existing contract. That will definitely have irked many cell phone operators, even if it doesn't make sense: If a particular network wants to keep a consumer to itself, then it should do so by offering the best service, rather than crippling their phones—or so the logical argument runs.

The Telegraph notes that Apple may still continue with its plan in iPads, since these aren't carrier subsidized. And while that may be true, it also weakens some of the anti-Apple arguments, as E.U. networks often don't subsidize the phone's price either.

So where does this leave the story? It's not clear. The Telegraph may be wrong, and Apple may still be pushing ahead with its integrated SIM plans, aided by moves made by the international GSM organization itself, and quietly negotiating deals with cellphone operators around the world to manage virtual SIMs. It may have merely been testing the idea out, for incorporation not into 2011's iPhones, but 2012's or even later.

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