Use of standardised embedded SIMs would accelerate growth of the 'internet of things', study finds

Beecham Research highlighted cost savings and growth opportunities for manufacturers and mobile network operators (MNOs) (29-page / 1.61MB PDF) should a new specification on embedded SIMs, developed by the Global System for Mobiles Association (GSMA), become widely adopted.

Its report said the specification's adoption by industry would accelerate the rise of the so-called 'internet of things' (IoT), a term that has been used to describe the increasing connectivity of devices and associated transmission of data between those devices.

Earlier this week, GSMA announced that a number of MNOs, including Telefónica and Vodafone, had launched new embedded SIMs that complied with specifications it had developed. It said that the operators' actions showed that there is a growing appetite for "a single, common and interoperable specification that will accelerate the M2M market, reducing fragmentation caused by proprietary solutions".

SIM cards are used to store data in devices but the Beecham Research study, commissioned by GSMA, identified potential issues in the use of traditional SIMs within new equipment that manufacturers are building in the age of the IoT, such as connected cars or consumer wearables.

The report said that some MNOs have developed their own proprietary SIMs that can be permanently embedded into devices and which can transmit data over wireless networks. However, it said that the adoption of a standardised specification for those devices, such as the one developed by GSMA, would stimulate growth in the machine-to-machine (M2M) market and deliver further benefits for both manufacturers and MNOs.

Widespread adoption of the GSMA's specification on embedded SIMs, or eUICC (embedded Universal Integrated Circuit Card), would offer particular opportunities for businesses operating in the automotive and consumer electronic device markets, the report said.

The adoption of standardised eUICCs would help manufacturers of consumer devices grow into international markets faster, it said.

"Proprietary solutions are less likely to ensure the global penetration of [consumer electronic device] products," the report said. "Instead, GSMA embedded SIM specification provides an easy route for global adoption of all products."

By 2020, there could be 639 million M2M connections across all sectors if GSMA's specifications are adopted, compared to 478m if industry backs non-standardised eUICCs, it said.

Mobile network operators (MNOs) could generate nearly $9 billion in network revenues in 2020 alone if the level of connectivity that is forecast through adoption of the GSMA specifications for embedded SIMs materialises, it said. Nearly two-thirds of that revenue would be generated within the automotive market, it said. MNOs would also have additional revenue opportunities on the retail side as a result of the increasing connectivity of devices, it said.

The smaller size of eUICCs compared to traditional SIMs, and a streamlined manufacturing and retail process are among the benefits offered by GSMA's specification, it said. Traditional SIM cards are inserted into equipment at "point of use" and this creates "logistical issues" for M2M applications, particularly those made in high volumes across the globe, the report said. Other problems with traditional SIM cards are that they are "very difficult, if not impossible" to remove once installed and yet are exposed to a "high risk of theft" if they are accessible.

The need for SIM card holders and connecting devices for traditional SIMs also introduces additional associated costs and raises further potential issues relating to "physical conditions" such as heat, humidity and vibrations that the card holders and connecting devices are exposed to. In addition, the shape of the SIM cards "reduce the degree of freedom in design" for equipment manufacturers, it said.

"Our vision has always been to unite all stakeholders behind a single, common and global specification that will help accelerate the growing M2M market," Alex Sinclair, chief technology officer at GSMA, said. "It has also been our intention for the GSMA embedded SIM specification to become the de facto industry standard. Industry-wide adoption sets us on the path for the long-term growth and development of the industry and we welcome the news that the M2M community is ready to do business using the specification."

GSMA has also issued new device and application connectivity efficiency guidelines which it said should help accelerate the rise of the IoT.

"The guidelines will help IoT device and application developers expand the number of devices connecting to mobile networks, whilst preventing service outages and ensuring optimal performance that will ultimately enable the market to scale across a diverse range of sectors including automotive, transportation, utilities and health," GSMA said in a statement.