The Embedded SIM: only a simple form-factor change, or is there more to it?
July 18, 2016 - What is the impact of the new embedded SIM?
Machine-to-Machine (M2M) has been around for several years now, and will continue to grow. The M2M industry has developed a new, embedded SIM form-factor to accelerate this growth, by enabling the updating of SIM profiles remotely. At first glance this may seem a simple form factor change, but the introduction of embedded SIM (eUICC) will affect the distribution cycle and, in fact, business models of the mobile industry. This impact on the current M2M ecosystem will introduce some new challenges in interoperability and also in bringing the eUICC to consumer devices like wearables and smartphones.
A new world with new roles
The SIM has evolved to become a fully embedded SIM chip soldered onto the handset baseband that cannot be removed or easily accessed. ETSI and GSMA have standardized the eUICC defining two types of eUICC M2M form factors (MFFs); MFF1 solderable & socketable or MFF2 soldered only which is cheaper but both still have the same PCB footprint.
Adoption of the eUICC will reshape the current M2M SIM ecosystem. It will change the structure of the industry and how industry players interact with each other. It will introduce new roles and the arrival of new actors, not to mention that it raises diverse technical & legal questions, with security and ownership rights issues among them. Roles represent logical grouping of functions, and an actor is a physical entity (person, company or organisation) that can assume a role in the functional architecture. The new world of eUICC introduces two new server based roles and actors called the SM-SR (Subscription Manager Secure Routing) and the SM-DP (Subscription Manager Data Preparation):
Figure 1: Key Roles in the M2M eUICC Ecosystem
Note1: ETSI view MNOs as Service Distributors
In addition to these new roles and actors some of the existing actors’ roles have also changed. As noted above, the UICC vendors now assumes the role of the eUICC manufacturer (EUM) and they also have the opportunity to deliver the role of the SM-SR and SM-DP, but a bigger change in the whole ecosystem is the fact that the Modem and Device vendors now play a more centralized role in the ecosystem where they need to insert eUICCs into their products and test the device as a whole. All of these changes result in the focus of the whole ecosystem changing to become more Service Provider (SP) centric.
Challenges for all eUICC ecosystem players
The very nature of the eUICC’s core functionality means that multiple MNOs need access to the same chip, which requires added security. This is facilitated by the use of SCP03 AES embedded/tunneled in the SCP80 or SCP81 transport layer.
But profile interoperability then became an issue where any profile could not be loaded on any eUICC during version 2 of the eUICC specifications. Therefore the introduction of SIMalliance Interoperable Profile format and the development of SCP03t (based on SCP03 but involving TLVs instead of APDUs) to secure the transport SIMAlliance Interoperable Profile was necessary. GSMA and GP includes testing and certification of SCP03t but the testing of the SIMalliance Interoperable Profile is still in its infancy.
Standardization and Certification needs to be in place for the whole ecosystem, but currently only eUICC certification provided by GlobalPlatform (GP) is in place. GSMA and GP are working with the SM vendors to deliver the testing and certification of the server components as defined in the Remote Provisioning Architecture for Embedded UICC Test Specification (SGP.11).
Predictions indicate that M2M is going to be huge so the MNOs need to be prepared to scale their network infrastructure to deal with the increase in traffic caused by new profile management services whilst still delivering a reliable service. The MNO network infrastructure tends to be an unstructured amalgamation of many systems which tends not to lend itself to the provision of scalability, capacity & reliability. The actual content of all this additional traffic and overhead of managing so many subscriptions and their movements then requires similar scalability, capacity & reliability as the network infrastructure for the M2M platform.
All the above points impact the eUICC life-cycle and the change in business drivers due to the embedded nature of the technology introduces new roles with the division between roles starting to fade leading to a new life-cycle model.
Depending on how these issues will be tackled, there will be different operating modes of eUICC ecosystem for the new roles and new players, especially since it is possible for an actor to assume multiple Roles in the same functional architecture.
The new life-cycle model
The current SIM life-cycle model in M2M has a standard industry division of Pre-Issuance and Post-Issuance activities with a well-defined distribution model and channel set-up. However, in the eUICC life-cycle model, the MNO Selection and associated personalization moves to become a post-issuance step. The distribution (which also includes the physical embedding of the eUICC in the device) then changes the dynamic and now falls mainly into the Pre-Issuance side. The Post-Issuance processes now mirror the device distribution model and channels.
Figure 2: GSMA eUICC - A change in SIM life-cycle model
The assembly of the eUICC into the device and the subsequent distribution is where the biggest impact lies for the Device and modem vendors. The biggest change for MNOs is that they will only initially ‘own’ the eUICC and will have to relinquish ownership when the profile is switched.
Given this change in the life-cycle model there are two likely business processes:
- The EUM acquires MNO profiles and provisions the eUICC with initial default profile and optionally MNO profile. The SP selects EUM (also implicitly selects MNO) then selects new devices. The EUM then provides the device manufacturer with eUICC for installation in the devices which is then deployed by the SP.
- The MNO selects eUICC vendor who provisions the eUICC with the initial default profile and potentially the MNO profile. The SP selects a new modem/device vendor then chooses their preferred MNO. The EUM on-behalf of the MNO provides device manufacturer with the eUICC for installation in device which is then deployed by the SP.
The EUM plays a more key role in the management of the overall process. But irrespective of which deployment model is used, the SP is central to the process and can in fact issue eUICCs themselves albeit with the help of the EUM.
Extending this new dynamic a bit further, it could be foreseen that the role of the Device Manufacturer evolves to the point where they also assume the role of the SP. With the MNO taking a ‘back seat’ in the distribution channel for each of these potential models, it can be seen that their current relationship with the SP as technology provider and partner becomes weakened. This weakening of the MNOs relationship with their customers is offset by the lure of massive increases in business with existing and new customers.
Accompanying the eUICC life-cycle model is the server side of the M2M ecosystem where the Subscription Manager infrastructure has a key role to play in delivering the eUICC services. It remains to be seen how much of an impact the loading of the eUICC attributes into the SM-SR and the profiles into the SM-DP actually requires, but this could evolve to become a key step in the eUICC life-cycle model.
The eUICC domain is evolving to address B2C relationships introducing a new dynamic into the M2M market for MNOs/MVNOs, namely the consumer. The Consumer RSP Architecture (SGP.21) & Technical (SGP.22) specifications were released January 2016 and they will soon be updated to enable full support for embedded SIM in smartphones and wearables. It is expected that current SIM business models will be re-used to block constant profile switching, but Consumer RSP will also introduce change in the M2M market life-cycle model which itself is immature and still evolving.
The introduction of eUICC impacts the existing SIM ecosystem, as well as the supply chain. An eUICC based M2M and Consumer RSP market opens up the opportunity for new actors and existing ones to assume the new roles that are required beyond the the traditional market boundaries. The biggest change for MNOs is no longer ‘owning’ the eUICC and although this has been solved in a technological sense, there are still many legal and business details that need to be set in place regarding the relinquishment of eUICC control post profile switching. All these changes will result in a new telecoms ecosystem not only impacted by the introduction of eUICC, especially considering the role that eUICC will play in the booming world of the Internet of Things (IoT), but also by the shifts in the dynamic of the ecosystem potentially changing it in unexpected ways that will deliver benefits to all involved.