Saturday, October 25, 2014

AT&T Essentially Disables Apple iPad Air 2 Universal SIM

In a development that illustrates the tensions within the mobile ecosystem, AT&T apparently locks the Apple universal SIM that comes with the new Apple iPad Air 2, a feature Apple embedded to make it easier for device users to switch mobile data plans without having to manually insert a new subscriber information module.

For Apple, the feature adds distinctiveness and value and makes easier the end user task of connecting to mobile Internet access networks.

For the participating mobile service providers, the capability makes new potential customer sampling and sign-up easier, but also makes leaving easier.

That tension between business interests in an ecosystem are not uncommon. Linear video entertainment providers and program networks routinely tussle over contracts, and service interruptions, as part of the bargaining process, are far from unusual.

Some also believe the strategic reason firms such as CBS and Time Warner (HBO) are launching over the top services is to create more pressure on traditional distributors including cable, satellite and telco TV providers.

In the mobile services business, some mobile service providers, in the past, have simply blocked use of over the top VoIP apps.

So the long term implications of the new universal subscriber information module in the new Apple iPad Air 2 are not clear. And what happens with the iPad Air likely is not the big question.

Many would be quick to note that the long-term implications would likely occur on the phone side of the business, not tablets.

If customers were able to switch mobile carriers “on the fly,” the amount of churn would likely increase, as the amount of competition likely also would increase, at least for some types of account plans.

Contract accounts would still remain relatively stable. But consumers on no-contract plans might be a bit more likely to consider switching at least once a month. The biggest change in behavior might come for consumers on prepaid plans.

The “connect on demand” feature likely is best used by device owners who only sometimes need mobile access, as it seems designed to offer most value for users who need temporary access to mobile connectivity.

The new SIM is essentially a “software-based” technology, eliminating the need for manually inserting a physical SIM to activate service from a particular carrier.

The new SIM sits in the same slot as a regular nano-sim and can be swapped out. That means a traveling user will be easily able to buy temporary or short-term access from a local mobile phone network without having to pre-order a new SIM or purchase one in a shop on arrival.

Neither Apple nor the tier-one service providers are dumb. Each will have thought about balancing potential gain and potential pushback.

For the moment, no matter the service provider, it still will make most sense for an iPad Air 2 owner to buy a long-term plan for mobile Internet access, if that is something routinely required.

The obvious value is when users are roaming, or need mobile access for a short time, for some reason.

Mobile service providers not only hope the ease of activation will encourage more sampling of mobile connectivity for the iPad Air 2, which could lead to a long-term subscription, but also increase sales of roaming service.

But AT&T seems to have concluded the downside is greater than the potential upside.

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