“eSIM is not enough, it is time to move beyond” Ludovic Lassauce (Interview)

Will eSIM replace physical SIM on the next iPhone ? That’s a good question, among many others we’ve asked to Ludovic Lassauce, Chief Product Officer at SIMO Corporation, and expert of this domain. Ludovic comes back on the history of this technology which is linked to the mobile phone and explains us why it needs very soon improve to a much higher level.

The Europeanscientist : What is eSIM? Can you explain us how it works in a few words?

Ludovic Lassauce : Apple is trying to make its way to the current tech news feed completely hijacked by ChatGPT. eSIM would be one most revolutionary feature with iPhone 15. You may have noticed the furtive rumor about it. For the first time, Apple does not get as much attention on its rumor-based communication strategy.

eSIM is a technology to enable authentication of a device to a mobile network. There are two different versions of eSIM, one for Machine-to-Machine and one for consumers targeting smartphones, tablets, laptops, and smartwatches. While they have different ways of working, both eSIM standards require a physical chipset that is soldered to the device’s electronic board instead of being mounted on a removable plastic card.

The eSIM chipset embeds secure credentials that connect to a mobile network, as well as basic programming functionalities to manage different mobile operator credentials. 

In simpler terms, think of an eSIM as a customizable keychain that allows you to decide which key you want to add or remove to the key chain at any given time, so you can choose which door to open.

TES. : It seems impossible to understand this technology without explaining the history of SIM Cards. So, can you summarize for us the big steps please?

LL : The first major patent for a secure memory chip on a plastic board was developed by Roland Moreno in the 1970s. Over the years, many companies competed to standardize these smart cards. In the 1990s, with the deployment of the first mobile networks, SIM cards, a type of smart cards were specified by the European Telecommunications Standardization Institute (ETSI) to securely host mobile operator credentials to authenticate phones on the network.

A SIM card is like a keychain, but it can only store one key and cannot be modified after loading it into the keychain. This means it only allows access to one door, and to access another door, you need a new key and a new keychain. 

In the late 1990s, most mobile operators adopted SIM cards as the easiest way to authenticate any consumer’s terminal to a network. Only a few countries, like the US, resisted the European standard and instead used a mechanism to distribute their key directly into the mobile phone. However, the first iPhone in 2007 put an end to this practice in an attempt to free consumers from being monopolized by US mobile operators.

TES. : How the idea of the first eSIM did come to exist? What was at stake?

LL :  Initially, mobile networks were only designed for making phone calls, as Internet did not even exist yet when the first generation of networks was deployed in Europe. Nobody in the early 90ies really thought mobile networks would be used the way it is in 2023 i.e., for everything else but making phone calls, expect may be the founders of General Magic who already had the vision back in time. Most telecommunication standards were made in Europe at the time, and Internet was often depicted as an initiative bound to fail in the old continent.

In the beginning of 2000, the 3^rd generation of mobile phone was coming up together with the worldwide adoption of the Internet. Vendors and Operators needed to find a justification for the costly deployment of 3G and the high licensing price to pay to government. A project in Australia called mNet had inspiring perspectives for 3G networks, by targeting business applications rather than the download of ringtone and logo a bit faster. The idea of Machine-to-Machine (M2M) was born! 

M2M would become a major driver for the development of eSIM because unlike mobile phones, M2M devices do not have a human to operate them. They are often spread in wild remote locations with difficult access. Moreover, the industry could not accept to be held hostage by mobile operators on prices. M2M providers wanted a way to put in competition mobile operators periodically without being held hostage by the barrier to change SIM Cards into each device.

TES. : The automotive industry did play an important part in the development of this technology why?

LL : Most mortal road accidents happen in the countryside, as they are discovered too late. But with mobile technology, an alert could be dispatched automatically in real-time when accident occurs for much quicker emergency response time. The European Union wanted to reduce mortality on its roads and did not lack political will to make the industry rolls its sleeves to execute on this idea. 

eCall technology requires a telematics unit to be installed in every new car. This unit uses a SIM card to connect to the mobile network and send information such as location to emergency services in the event of an accident. This exchange requires the highest availability and the widest coverage as possible.

However, car manufacturers faced several challenges with traditional SIM cards. Inserting a different SIM card for each mobile operator in Europe during the manufacturing process was not feasible since cars can be sold in different countries. In addition, using a removable SIM card in an environment of intense vibrations and temperatures for at least 10 years was challenging. Moreover, automotive companies wanted to put mobile operators into competition periodically to obtain better prices. Eventually, the new economic model of eCall was challenging for mobile operator accustomed to devices using much more data.

Back in Europe, in 2004, one of my strategic project with PSA to support emergency call in cars would be the beginning of an industry transformation. But automotive was not the only industry that played a role into moving the lines. Energy industry for which around the same time, the E.U. conducted its deregulation of the energy market for electricity and gas was eying on using similar solutions facing the same challenges.

TES. : But then the technology hasn’t found spontaneously its market. Why?

LL : The adoption of eSIM technology has been hindered by the traditional structure of mobile operators on one hand, which operate under a pseudo-monopoly. Once a SIM card is inserted into a device, the operator gains a recurring revenue stream with little incentive to change rates or offer alternative options, especially for M2M devices deployed in remote locations. 

On the other hands, many device manufacturers were hesitant to invest extra dollars for M2M eSIM. ETSI specified in 2009 the first format of a chipset SIM Card (known as MFF2) that can be soldered on the electronic board of devices instead of using a removal plastic card. The new format could address long term longevity, reliability, and resistance factors as well as offer remote personalization of the operator keys. This was the first know standard for eSIM called M2M eSIM. 

However, its implementation was a nightmare and high integration costs between networks, devices and personalization servers were necessary for it to work. M2M eSIM standard was not enough, because customers wanted to maximize network coverage in each country and cherry pick their operators. This eventually hampered the growth of M2M eSIM (or called now IoT).

TES. : Why do you think the time has come for eSIM? How can you predict this? Are the consumers ready for eSIM?

LL. : In the 2020is, the era of all cloud and AI being connected to an affordable, reliable, and pervasive network become a universal need like the access to electricity or water was in the 1950is. That’s what consumers want, eSIM is a mean, not the end for consumers. That’s why explaining eSIM value to consumers is difficult.

With 4G networks, mobile networks were all about data. With data, you do not need a mobile phone number, you just need to connect with an IP address. The idea of a physical SIM Card which in people’s mind is associated to a phone number became weird to connect data only devices like tablet or laptop. This is even more true these days when everybody uses messenger apps like WhatsApp and no longer places phone calls.

Adding more connected devices, consumers became reluctant to be tied into endless new subscription plan. Roaming became an issue too. Why would I be taxed so much to access my in-car navigation system when I cross the border? Why my sport watch stops working when I go on a trek in other country? Due to lack of space in those tiny devices, MFF2 chipset was a must. It could simplify manufacturing and save space in device. eSIM also open the door for a fully digital distribution for mobile operators through new channels, driving their customer acquisition cost down.

This was a call for an eSIM available to consumers. However, its first version was only finalized 6 years later after difficult battles. The standard is different from the original M2M eSIM as more interoperability and controlled were introduced. Mobile operators controlled the release of such innovations and feared its impact on their business. Eventually, Samsung launched the first consumer eSIM based smartwatch in 2016.

Consumer eSIM journey is different from M2M eSIM. The Consumer must first find another network like Wi-Fi or Bluetooth to download the operator eSIM. The consumer can download more than one key from various mobile operator, but each time needs to pay a new subscription to each mobile operator. This can make the need to connect on multiple networks a very expensive journey!

TES. : You seem to say the carriers did everything possible to impeach this disruptive instant to come to reality…. Is the Telco industry facing disruption?

LL. : The mobile industry is in constant evolution. New technologies like eSIM have the potential to fundamentally change how consumers interact with mobile networks and how mobile operators compete. However, while some mobile operators may resist these changes and try to maintain their dominance over their customers, they would impose tighter rules on how to use eSIM or delay its adoption.

Imagine building a highway with a few lanes and allocating each lane to one mobile operator. As traffic increases exponentially, traffic will naturally spread over all four lanes until saturation and no matter what the cost of each lane is. The one with less traffic perceived as more fluid will be used by new car coming on the highway. As more lanes are created, you will still maximize and naturally distribute your traffic across all lanes similarly. Each lane is represented by the frequencies band allocated to each mobile operator by governments and its network capacity represents the size of a lane.

Currently, the concept of SIM Card or eSIM makes it hard for a customer to change lane like a car can do on the road. If you choose one lane, you will never be able to use temporary another lane to overtake the car in front of you. You must slow down and wait. This would be very odd if road traffic was implemented according to this principle? I would imagine the number of murder cases on the road would surge dramatically!

Why can’t the eSIM be smarter and attach to a different operator when poor performances are encountered at a given location? This is one big limitation that would slow down the adoption of cloud services as applications need more quality of service and bandwidth. The current eSIM standard is far to be finished to meet future industry needs.

5G networks have been designed to support 500 billion devices and data consumption is bound to continue to grow exponentially. Unlike voice consumption that has the physical limit of human population, data consumption has virtually no limits. As computing power increases, the amount of data exchanged is larger. For example, we are now dealing with 8K video over mobile when a few years ago we were only using 720p video. Mobile operators’ financial health is not under any threat soon.

TES. Why are you so enticed to this technology?

LL. : This is really a good question; I am one amongst many who dedicated years to find the right answer to the above issues so tech innovations could fly at a much faster pace.

Eventually, the increasing diversity of mobile devices and deployment of 5G network pose new challenges. We already experienced very uneven speed and coverage with 4G networks. It will be even more true with 5G. So why should we lock up consumers or devices to one network? The current standardization of eSIM is still too operator centric.

The concept of virtual SIM offers much wider perspective than eSIM as network resources can be reallocated on demand dynamically between customers, so that the overall pipeline across multiple carriers can be shared. This is basically following the concept of the shared economy adopted by Airbnb and many others that can maximize asset utilization and return on asset. 

Imagine instead of juggling with a few keys inside your key chain that you can swap your key chain with someone else to maximize your service at any point of time. Instead of buying so many subscriptions, as a consumer, you can loan yours when you don’t need it and acquire one from some else that is better fitted to your need. Here you have born the concept of virtual SIM that works whether your key chain is made of SIM Card or eSIM.

While the mobile industry will always fear disruption, it also must realize the infinite revenue growth opportunity behind data network and perhaps dare to allow different perspective to emerge. We are now at a new tipping point where regulations may need to take place to open new possibilities and rethink the organization of network differently. Perhaps virtual SIM could be a central element of answer in this transition.

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Ludovic is the Chief Product Officer at SIMO Corporation, Silicon Valley company providing always connected experience for consumer devices such as MiFi, CPE, Tablets and Laptops. He has 25 years’ experience in the wireless industry and digitalization of networks. Ludovic has a master’s degree in telecommunications and IT engineering from ESIGETEL-EFREI, and an MBA from University of Chicago, Booth School of Business. He is member of the Forbes Tech Council.

This post is also available in: FR (FR)