Q&A: Telematics and the evolution of the SIM card

As demand grows for personalized content and services delivered to the connected car, whether consumer-driven or part of fleets, new challenges arise for identifying individual vehicles. As network operators strive to meet these challenges while providing new services and expanded billing mechanisms, they're working on more flexible models for vehicle identity.

How is the role of the SIM evolving in the M2M world?

It's moving from connectivity support to an enabler, with more services in the background—potentially coming from the mobile network operator, as it moves from a plastic SIM and is now folded into devices for M2M that have more requirements, higher retention rates and quality indicators. With traditional SIMs, it could be that the user of the system may feel more challenged or more bound to the MNO that they have a contract with. That's why the need has come up for a so-called ‘white’ SIM or ‘neutral’ SIM card, to bring peace of mind to the business users of the SIM card to have more flexibility over time. They will also have other business-case options with the new neutral SIM card. (For more on M2M, see Industry insight: Telematics and machine-to-machine communications.)

What are some of those options?

You can swap operators. There are conversations going on to make sure this is a secure and reliable solution. Telenor is actively participating in standardization discussions. Several different use cases are thought of. There is a fast-track program going on to produce these standards, in cooperation with SIM card vendors and mobile network operators to work together to agree on common standards. The GSMA has a fast-track program, and we're also involved in some GSMA proof-of-concept programs to test these in the automotive environment.

What do you think is the best approach for in-vehicle SIM cards?

We are one of the first supporting the global SIM concept. We know it's difficult that you can't modify the car and localize it once the SIM is installed. One global SIM also has some limits, even if it's proven robust for low-data volume services. If you want more flexibility and higher data volume services, which are coming more and more, the white SIM could be one of the solutions to solve that, for example, if you want one global SIM but, based on your business model, want to have the flexibility to change operators by region.

Will we see a white SIM and a regular SIM in the same car?

It depends on the brand of the car. There will be a mixture of solutions to solve the different issues or challenges in the car industry and the services ecosystem. There will be an additional cost involved for neutral SIMs. There may be a situation where vehicle-centric services will be using an embedded SIM where there is full control of the connectivity but where the consumer's private SIM can be used for more user-centric services. This is really a question about how much control the automotive OEMs want to have over the entire delivery of services in the vehicle.

Telenor is embracing the neutral SIM. Why are some MNOs not so enthusiastic?

Behind everything, there is a business case. We see the benefits, if Telenor Connexion is focused on the M2M business, but we also see challenges. You must be able to calculate the business case up front. There must be some certainties on policies and when to switch. That has been the issue everyone is facing. It's new, and you have to figure it out. I don't think operators in general want to lock in customers. If this is only method by which you can keep your customers, you are doing something wrong. (For more on the business case for M2M, see Machine-to-machine telematics: Ready to grow, part II and Machine-to-machine telematics: Ready to grow, part I.)

How will neutral SIMs influence B2B customers' choices of providers and systems?

In general, they won't feel as locked in with a provider who supports that openness. Still, there is a limit to switching. The business case must be recalculated each time. You can't say, ‘Today I'm Telenor and tomorrow I'm Vodafone.’ But you have the benefit to have the opportunity to switch and maybe, even through a partner on the MNO side, to work with several mobile network operators, maybe as a consortium. That way you can overcome a bit the hurdle of meeting the needs of different regions. Some regions might need a really local approach; also there might be local price competition, for example. Also, in general, there's benefit to not having to leave something in there for a long time. A car's lifetime is about 15 years, and that of a normal consumer device is two years. To bring these two sides together is a good first approach.

Are there technical challenges to moving to the neutral or white SIM?
On the technical side, the progress is gaining momentum. The business side still has challenges and needs a lot of cooperation among operators to make it fly. Everybody should not expect that this is the solution. It's maybe a solution for one sector, maybe the M2M space, but this is one of many solutions or ways to solve some connectivity challenges in the M2M space. It's important to have an open-minded approach to understanding and building the business cases together with actors in the whole ecosystem. If done properly, the white SIM will be an enabler for new business.

Susan Kuchinskas is a regular contributor to TU.

For more on SIM cards and connectivity, see Industry insight: The connected car.

For everything connectivity-related, visit Content and Apps for Automotive USA 2012 on December 4-5 in San Diego.

For all the latest telematics trends, check out Telematics Munich 2012 on October 29-30 and Telematics for Fleet Management USA 2012 on November 13-14 in Atlanta.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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