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The future of the SIM hangs by a single wire

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Mobile World Congress SIM manufacturers still have some of the largest stands here at Mobile World Congress, but not as big as last year and with a lot less to show on them. Now the industry is betting that proximity payments will be their future, and if they're wrong there'll be a lot of empty space here in Barcelona come 2009.

The GSM SIM chip started its development in January 1988 as a user-operable removable security module, but since then has struggled to be anything more than that. The SIM industry is now hoping it can shackle contact-less payments to the operator's SIM and breathe more life into the this business.

The SIM business is still big, but the contents of those expansive stands are getting increasingly desperate: Gemalto has been reduced to colourful displays of alternative packaging (environmentally-sensitive SIM boxes anyone?) and demonstrations of competition-winning applications that lack deployments.

But every SIM stand is dominated by demonstrations of Near Field Communications (NFC).

NFC is no-doubt a cool technology, wave your phone near a screen and your photographs are transferred; near a door and it opens; near a till and your bill is paid. But much of that requires a secure module of some sort that doesn't need to be the SIM.

The capabilities of a SIM have been skyrocketing in the last few years, with fast processors and multi-megabyte capacities squeezed into the diminutive package. But getting operators to pay for those capabilities has proved much harder and even the adoption of a new, fast, interface (USB) has done little to spark operator interest. But the adoption of USB leaves one pin free on the SIM face, and it is over this single wire that the SIM can, in theory, communicate with NFC hardware on the handset.

The Single Wire Protocol (SWP) was approved as a standard in October last year - though the Host Controller Interface isn't expected to be specified until the end of this month - so the time is right for handsets to start embedding NFC and handing control of that NFC hardware over to the SIM, assuming the handset manufacturers see any incentive to do so.

The problem is that handset manufacturers don't. They're happy to see the secure module embedded in the handset, as Nokia has done with its 6131NFC handset: why give control to the network operator when you can own the whole value chain?

Publicly, the SIM industry claims all the major manufacturers are signed up to making SWP handsets, but privately they admit that unless network operators start demanding it the manufacturers will be pleased to keep NFC under their control.

Some can already see the writing on the wall: the secure module embedded in handsets for the London NFC trial is running a platform from Giesecke & Devrient, a platform originally designed for use on SIM chips.

Making SIMs is still big business, and as GSM expands and more networks migrate to 3G (which generally requires replacement SIMs) that business won't get any smaller. But unless NFC proves to be an astounding success, and operators demand that manufacturers implement the SWP quickly, then a secure module for telephony access is all the SIM will ever be. ®

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