Could the Apple SIM bring the phone companies to heel?
On October 16, at its October Event 2014, Apple rallied the world’s media and analysts to say that Apple Pay was on track for its launch this Monday, the 20th, with more than 500 banks on board; that the iPad Air 2, an iPad Mini 3, and the new, thinner iMac with an improved screen were about to launch in the run up to Christmas, and that the Yosemite operating system was now available. Following September 9th’s impressive event to announce the launch of new and very interesting product lines along with brand new services, Thursday’s occasion was little more than to say: “Things continue to go well, and here are a few new versions of some products.”
However, hidden among the specs of the iPad Air 2 was a feature that could have huge repercussions: an Apple SIM card. Yes, you read that right: an Apple SIM card; not one supplied by a phone company, but made by Apple.
Ever since the first cellphones appeared, operators have dominated the SIM market. Quite simply, without a Subscriber Identity Module, a phone won’t work. When we want to change phone, we still have to think about our contract, and whether we were tied to the company for another six months.
The market is divided between those who bought their phone from an operator based on points they might have accrued previously, or if there was a special offer, and those who buy their phones separately, but in either case, we have to buy a SIM from an operator.
Suddenly, and without providing any information about how it has done it, Apple has launched a device — for the moment in the United Kingdom and the United States only — that comes with a SIM. You turn the device on, and for the moment, you can choose between three operators, AT&T, Sprint, and T-Mobile. In the United Kingdom, you only have EE, a joint venture between T-Mobile and Orange. Apple has sent out a very clear message that it owes no loyalty to any particular operator.
What Apple is saying to the phone companies here is that people go out of their way to buy its products, and so it is going to decide which operators will provide what are in effect its customers with a line, thus introducing further competition into the marketplace. This will have a major impact when people travel with their Apple device: we will now be able to choose a local operator rather then pay over the odds for roaming. So, while the EU has dragged its heels in ending the operators’ long-stand abuse of phone users, Apple has cut right to the chase, assuming of course that it is able to reach agreement with operators in the country we’re visiting. The outcome could go either way: it may be that the market becomes radically competitive, or that one company with which Apple has a special relationship ends up with a monopoly.
Or, Apple could simply decide to use iTunes to bill its customers, while the customer could decide which operator best suited its needs, depending on the service required and the location. In short, this is a move that could potentially cut the operators down to size, allowing us to pick and choose as we see fit.
None of this should come as any surprise if we cast out minds back to Steve Jobs’ first talks with the phone companies when the iPhone came out: he made it clear that he saw the SIM as simply a hoop that had to be jumped through to get to his customers. For Apple, controlling the SIM market is a huge step forward in its customer relations, converting the operators into a necessary evil. Let’s not forget that phone companies receive more complaints than any other sector. From now on, the phone companies will have to queue up to negotiate with Apple, on its terms and conditions.
Has Apple’s move given it the keys to the kingdom in one fell swoop? What are the potential consequences of this, and why have the operators allowed it to happen? Has Apple put the opertators’ backs to the wall, forcing them to negotiate or risk losing out? What role will the MVNOs play in all this? Will we really be able to change operator from one day to the next as we see fit, with Apple acting as a broker for the operators? The fact that Apple has chosen to launch the SIM in the new iPad Air rather than in the iPhone or all its products at the same time, and that it has not made much fuss about the move, suggests that this is testing the waters.
The potential repercussions of this could change the game: it is hard to understand how and why the phone companies have given up what is essentially their master key. We will now have to see how they respond.
(En español, aquí)
