1. Agenda
• Introduction to SIM card
• How OTP can bypass operators
• SWOT
• TOWS
• AOM

2. Introduction to SIM Card
• Subscriber Identify Module & UMTS
– UICC - Universal Integrated Circuit Card
– A Smart card with memory and capable of running USIM application is used in
UMTS networks
– Stores ICC-ID, IMSI, Ki, LAI & Operator specific information (GSM11.11)
• Different form factors
– Mini SIM
– Micro SIM

3. How SIM card works
• Key is the IMSI (International Mobile Subscriber Identity)
• First 6 digits identifies the mobile network. The radio network will check
the first 6 digits and then forwards the data to network elements. (If it’s
roaming it is fine as long as there is a contract with the foreign operator)
• Authentication keys are secret and typically the manufacturer (some times
operator) knows them and the keys are stored in the AuC (HLR)
• These are the fixed parameters and the rest can be changed/managed by
the operator or 3rd party or the end user
• If need to change remotely then there are lot of security considerations
and 3GPP is still working on the standards to “remotely modify the
parameters”

4. Agenda
• Introduction to SIM card
• How OTP can bypass operators
• SWOT
• TOWS
• AOM

5. How OTP players can bypass operators
• If Apple or other smartphone manufacturer wants to take full (or majority)control, it can be done in few ways. Below are the relatively easier
ways to do
• Remotely change the SIM card parameters
– Apple can implement a system with iTunes
– New subscriber just logon to Apple Store and purchases the iPhone (with SIM card)
– Activate via iTunes. IMSI + Ki will be based on the operator selection. Apple need to get the IMSI & Ki from Operator
– When the subscriber need to change operator then the same process via iTunes.
– Similar to App Store where Apple managed to bypass Operators.
– If subscriber chooses to have post paid plan + voice plan, then he still need to have a contract with Operator.
– If subscriber chooses pre-paid, he still need to purchase from Operator.
– However for pre-paid, it can be Apple can become a mediator. i.e. Apple purchases the volume or time from operators and let users select via iTunes.
• Apple to get their own IMSI & Ki from SIM card manufacturers
– Apple provides Apple SIM cards
– Apple will have roaming agreements with all operators
– Subscriber can purchase the data volume from iTunes based on volume or period (1GB or 1day). However this is Pure DATA plan only.
– To provide voice plans, Apple can use “facetime” which is tested and enjoys prioritized QOS from various operators
– It will be able to fully bypass operators from the PS value chain as the control is completely within Apple
– Apple can provide substantially cheaper roaming deals to iPhone sub. They may even sell backup or redundancy. (if StarHub network fails then sub
can auto switchover to SingTel)
– The biggest challenge for Apple would be the “roaming agreements” and friction from Operators.

6. Agenda
• Introduction to SIM card
• How OTP can bypass operators
• SWOT
• TOWS
• AOM

7. SWOT-1
Strengths Weaknesses
1. Standards should be ready pretty soon. Able to 1. Subscriber still bound to Operator contracts and
start in the near future no full/real control for Apple
2. Bypass Operator for the activation but not head- 2. No additional streams of revenue
on with operators 3. No experience with prepaid charging, not able to
3. Somewhat similar to Amazon operations model offer bundled charging (no complex rating
(Kindle charges are globally managed by Amazon) engine)
4. Major economies supporting ‘Net neutrality’ and
OTP’s can benefit
Opportunities Threats
1. Better bargaining power with operators 1. Regulatory constraints and operator hostilities
2. Potential “incentives” for apple subscribers in 2. Administrative and compliance issues with
roaming deals based on prepaid tariff roaming contracts, charging methods and
3. Preparation to move towards ‘Open market’ maintenance of iTunes
where Apple can become largest mobile 3. Delay in standard ratification and security issues
operator. (like RIM)

8. SWOT-2
Strengths Weaknesses
1. Complete control of end subscriber and totally bypass 1. No voice plans and need to rely on apps like FaceTime or
Operator VoIP or 3rd party tools
2. Own IMSI and own Ki hence and able to manage 2. Not yet standardized in 3GPP
resources much better 3. Subscribers not willing to be “locked” by device
3. Similar to MVNO operations hence established process & manufacturer
‘know how’s’ 4. Potentially higher charges compared to ‘local’ TELCO
4. Major economies supporting ‘Net neutrality’ and OTP’s charges
can benefit 5. Complex and highly bureaucratic roaming agreements
with operators
6. No experience in TELCO business and no control over end
to end Network (operator network still will be in the value
chain)
Opportunities Threats
1. Disruptive model with competitive service offerings and 1. Regulatory constraints and extremely high hostilities with
new avenues for revenue in roaming business operator
2. Offer value added services and potential 2. Need to setup infra to support and need to become
‘redundancy/backup’ plans for business groups almost a mobile operator
3. Open new markets in M2M and other new technologies 3. Duplication from competitors and deviation from Apple
core business
4. M2M or new technologies may be saturated by operators

9. Agenda
• Introduction to SIM card
• How OTP can bypass operators
• SWOT
• TOWS
• AOM

10. TOWS-1
SO (Maxi-Maxi) ST (Maxi-Mini)
1. Lobby for net neutrality and push for open 1. Be a MVNO or small operator in one nation to
markets have roaming agreements with Operators
2. Bargain with operators by leveraging scale of 2. Promote VoIP and target LTE (all data network)
iPhones in network
3. Offer cheap roaming rates to pull subscribers to
use pre-paid roaming
WO (Mini-Maxi) WT (Mini-Mini)
1. Bundle pre-paid data for additional stream of 1. Start a MVNO to overcome regulatory limitations
revenue and mutual roaming agreements if any.
2. Provide bit pipe for subscribers (no class of
service) and pure data transmission service
3. Encroach in pre-paid market

11. TOWS-2
SO (Maxi-Maxi) ST (Maxi-Mini)
1. New service offering which operators cannot 1. Own IMSI and be a small operator (like offshore
compete due to regulation and interconnect banking)
agreements 2. Infra can be leased from operators similar to
2. Entice new class of users from Businesses with Cloud services
new model (e.g. Redundancy, cheap etc) 3. Target ‘apple’ or ‘otp’ loyal customers to
3. Encroach new domains and capture market share overcome the friction from subscribers
WO (Mini-Maxi) WT (Mini-Mini)
1. Head on with operators but build a strong base of 1. Setup or lease infra for VoIP or Voice calls
loyal users who push operators to accept apple in 2. Create a new standard and make the entry to
the network market more complicated for
2. Agree same or similar prices with local operators competitors/replicators
based on Apple volumes and sub base.
3. Focus on LTE markets first to gain foothold and
publicity
4. Wholesale roaming agreements similar to M2M
operators (e.g. jasper, fujitsu)

12. Summary
• In summary, APPLE or a OTP with strong market presence and customer loyalty can launch a product
and bypass Operators totally for Data business
• Google may be a bigger player given the ‘android’ outselling iPhone and open nature combined with
Google Voice.
• Commercial services (Telenor, Jasper etc) are available with fixed SIM in M2M space
• Similar concepts (e.g. Soft SIM) may gain momentum
• There are strong benefits to end customers in terms of roaming charges and cross bundling which can
be positive for Apple
• Recent threat from EU operators (removing subsidies for iPhones) may not be valid in the future.
– Apple can simply offer an interest free 24 month equipment loan
– Reduce prices and margins to get money from usage
• LTE can be a big game changer as the focus is on DATA
• Net neutrality initiatives and GSM work items are favoring Apple/OTP
• Major obstacle or hindrance to the plans of bypassing operator would be
– How strong Operators can stop Apple from coming in to the market
– Remove the QOS for Apple Apps and no longer offering preferred treatment
– Regulatory restrictions/lobbying
– Subscribers becoming ‘anti-OTP’ due to the perceived ‘locking’ or other soft aspects

13. AOM

14. END

15. Other Considerations-I
• Standards are not ready yet. So if Apple were to launch they need to wait for 3GPP to ratify which
would be around 2012. Until then there is no way Apple can launch a proprietary solution as EU
mandates all equipment must comply to 3GPP
• How many people would be interested in Roaming. Today what % is roaming and how much
revenue they are getting? If Apple offers similar charges worldwide how many people are willing
to go for it (sure the charges would be slightly higher than local data bundling)
• How about the Regulatory concerns. E.g. LI, or other reporting.
• Telenor launched e-sim http://social.telematicsupdate.com/content/telenor-connexion-deploys-
esim)
• How about cust care? If there is a problem with SingTel in Singapore, does the customer expected
to call SingTel or Apple. It should be Apple as the purchase is from Apple, but does Apple or other
OTP’s have necessary skills and resources to manage global customer care?
• May be end up like different SIM’s for different reasons (Soft SIM for embedded consumer
devices, soldered or fixed SIM for M2M, Built in SIM for some who like complete control over the
phone/equipment, )

16. Other Considerations-II
• Compete with OTP’s is not an easy task given their global reach, scale and perceived value from
end customers. (Today people are happy to wear Apple or Google t-shirt and they are seen as ‘cool’ . Why we don’t see any
SingTel, StarHub or M1?)
• Innovation in TELCO’s is driven by vendors typically. To head on with OTP’s we need to built or
convert our existing networks to “Innovation-ready networks” where new applications can be
launched with bare minimum cost to the operator. Today new application launches typically takes
months and costs five figure sums. It should be weeks or days and less than few thousands.
• Local regulator might force operators to share the radio network or Operators go for sharing
agreements which challenges OTP position of redundant networks (e.g. TRAI evaluating it in emergency
services or disaster recovery for telco’s. Or like in Finland the 2G, 3G, LTE sharing between all operators)
• Bundled roaming plans across the regions or new agreements to reduce the roaming charges
across regions. Roaming is still very much limited to specific destinations hence operators can
offer customized or cheap plans.
• Explore virtualization and modular architecture to enable long tail services with a proper
framework to remove failed services quickly.