In case you missed it, SIM specialist Kigen hosted a webinar earlier this month about smart metering – but more about the impact of embedded SIM (eSIM) technology, actually, for the whole IoT market – which presented a thorough view of the varying rates of innovation, standardisation, and commercialisation of eSIM-related technologies, and how they stand to bring flexibility and simplicity, plus tangible value, to cellular IoT deployments.
Kigen was represented on the session by Paul Bradley, vice president of solution sales at the firm; he was joined by Allan Nielsen, project lead for IoT connectivity at Danish meter maker Kamstrup, and Andy Haig, smart metering development manager in Vodafone’s IoT unit. The trio proceeded to paint a picture of a smart metering market that is ready to expand significantly with cellular IoT, with clear parallels for other vertical sectors.
The webinar is available on-demand here; and here is a summary of the discussion…
1 | The quickening pace of eSIM innovation (decoupling airtime usage and provision)
The first point of order, from the webinar session earlier this month, is about the accelerating rate of innovation with SIM-based technology. The humble SIM has evolved and mutated over the years, of course, from a credit-card sized first-gen form factor (1FF) in the early 1990s, through mini-SIMs (2FF) in the mid-1990s, micro-SIMs (3FF) in the early 2000s, and nano-SIMs (4FF) in the 2010s. But all of these have been designed for consumer phones, generally.
“Looking at the old specifications, there was no flexibility – and from the 1/2 [FF] versions, it was 20 years before [the industry] thought something else was needed for M2M,” notes Nielsen at Kamstrup. Indeed, a second family of ‘machine’ (M2M/IoT) SIMs has emerged over the last decade; new embedded SIM (eSIM) technology, allowing for remote carrier provisioning uses the second-gen machine-form (MFF2), soldered into a device during production.
It should be noted, the MFF2 SIM is the first component in a two-part eSIM solution; the other, based in software, is the universal integrated circuit card (UICC), to enable dynamic control of the SIM’s carrier functions, plus some security aspects. Nielsen goes on: “There was a consumer version and an M2M version, and then there was a standstill for 10 years – until the 31/32 release, and we are now pushing 41/42.”
To explain the 32/42 references, and to attempt to simplify a rather complex narrative: the GSMA published the SGP.31 eSIM architecture and requirements for remote provisioning of eUICCs in low-power IoT devices last year (2022); the market is still waiting on its technical implementation specification, called SGP.32 (see below), which introduces a new IoT manager (eIM) function for remote orchestration of eSIM units.
The whole package is referred to as SGP.31/32. It also specifies a wider list of protocols, including CoAP/UDP/DTLS for low-power cellular IoT (NB-IoT and LTE-M) devices. Paul Bradley at Kigen explains: “[It is about] openness – no longer having to integrate those who wish to consume connectivity with those who wish to provide [it]… so any eUICC in the field can receive a profile from any operator. It is something a lot of folks want to get their hands on.”
The SGP.41/42 specification, referred to by Nielsen, and a key part of the discussion (also covered below), goes further by enabling in-factory provisioning by IoT makers like Kamstrup. It is a developing focus in GSMA working groups, but remains a longer-term play. Still, Nielsen’s point is that the pace of change is quickening. He says: “The speed of evolution… is positive for the whole cellular industry… because [it will] support… IoT uptake on cellular.”
As a final point on cellular SIM innovation, the webinar also put focus on the GSMA’s new IoT SAFE standard, launched back in 2021, which seeks to create some kind of order out of the chaos of IoT security. The SAFE in IoT SAFE stands for SIM applet for secure end-to-end communication; developed as a JavaCard application, it works with all SIM form factors, including old-school physical SIMs, as well as eSIMs and integrated SIMs (iSIMs).
The logic is that device makers and service providers can use the cellular SIM as a standardised hardware-based ‘root-of-trust’ to authenticate and authorise IoT devices and protect IoT data. Bradley says: “IoT SAFE [is] a critical part of the vision to… guarantee chip-to-cloud security – to secure enterprise data and to authenticate and protect the integrity of transactions, whether between a device and a remote service or peer-to-peer.”
2 | The slow pace of eSIM standardisation (for global consistency and simplicity)
As fast as the ideas are now flowing, in response to heightening demand in the market, their commercial realisation and completion is a drawn-out process. Such is the way, of course, with a globally-standardised technology. Bradley at Kigen suggests the GSMA timelines for the SGP.32 specification “bring us somewhere towards the middle to Q3 of 2024”, meaning their commercial implementation will likely start to arrive six months thereafter.
He comments: “Then I think we’ll start to see certified products from the eUICC community a few months after the certification scheme is published. And then I guess it will take a bit longer to design those products into actual [smart] meters that are sitting in the field.” The reference to smart meters might be swapped for any variety of static IoT devices. The SGP.41/42 schedule, meanwhile, is buried inside GSMA working groups, and hard to discern.
But logic says that, if SGP.31 was published in April 2022, and SGP.32 will likely appear – in market, in volume – in IoT devices from April 2024, say, then we should expect a two-year delay on the SGP.41 architectural blueprint before commercial SGP.42 arrives to enable in-factory eSIM/iSIM provisioning. And, of course, the SGP.41 blueprint is nowhere in sight, as yet, which perhaps shunts proper OEM provisioning controls to the back-end of 2026.
This is guess work, clearly. The pace of innovation is constrained, ultimately, by the standards process, but also made consistent and effective by it, notes Andy Haig at Vodafone. “We are inside those working groups, moving them along. We will always be guided by the GSMA standards as to the launch of any commercial products. The demand is clear,” he says, suggesting as well that proprietary SGP.31/32 variations should be treated as experiments.
“There have been some regulatory accommodations in some territories – would be the best way of expressing it – to try and enable remote SIM provisioning even without SGP.31/32. What’s a good idea in local regulation doesn’t necessarily translate to a good idea from an engineering perspective. So we want the standards to… catch up with the demand.” Of course, Vodafone and Kigen have combined on a number of high-profile eSIM/iSIM experiments.
Their work with German pharma firm Bayer on printable iSIM smart labels remains a seminal piece of work in the IoT field, which will inform future use cases. The point is to distinguish between at-scale experimentation, which pioneers a market, and mass-scale commercial operations, which make a market. Kigen, for its part, has a pioneer position in the whole SIM game, and is already offering a pre-commercial SGP.32 system, and even a putative SGP.41 solution.
In the context of the focus on smart metering, Bradley explains: “Kigen offers a complete solution…. On the management layer we support the M2M and IoT flavours of the remote provisioning standard (SGP.32), as well as an early version of the in-factory specification (SGP.41) – which [supports any] connectivity provide… from the point of device customization through to the infield management of connectivity providers for end customers.”
3 | The big impact of eSIM innovation (when multiplied for scale in IoT)
But innovation is everywhere, it seems – so why is the mood about new eSIM/iSIM innovation so triumphant? Bradley at Kigen has an anecdote about a utility posting a card through his door to request a meter reading – to be collected from his doorstep at a later date. “It is an antiquated system in this modern age; there must be a better way,” he says, opening the whole discussion about remote access to IoT data, and also to remote control IoT airtime provision.
Later on, in response to a question about the impact of eSIM/iSIM on the business case for low-power wide-area (LPWAN) based IoT generally, he comments: “It’s about coverage [and remote] access and control. [It’s about]… my analogy with the postcard earlier on. Yes, okay, you have alternative mesh and other [LPWAN] technologies, but cellular is a no-brainer in lots of cases. And regulation requires the possibility to change connectivity providers.”
But Kamstrup is the one to really hear from – as a business trying to make a business from packaging IoT in smart meters for end-customers. Nielsen explains the functional difference between the in-field SVG.31/32 and in-factory SVG.41/42 specifications, and why it is pushing hard for the latter. He says: “[SVG.31/32] is a good solution for devices with good coverage… But water meters, say, are in cabinets in basements, behind metal pipes and so on.”
He explains: “We don’t live in a perfect world for radio [coverage], and exchanging a SIM profile over-the-air takes significant life from an IoT device… If you burn up two or three years of battery to change a SIM profile, then it doesn’t make sense. Which is why we are pushing for in-line factory provisioning… so we can deliver local profiles without hassle to customers around the world.” Which is all about the efficacy of the final IoT solution, effectively.
But there is a manufacturing angle, too, of course – relevant to the cost of production for the manufacturing company, and to the cost of the solution for the customer. Kamstrup has manufacturing facilities in Denmark and the US. “And Denmark is not a low salary location for factory workers,” says Nielsen. But like any industrial company, it is pursuing “high-grade automation” to reduce costs. Plastic SIMs get in the way of this; they are fiddly and labour-intensive.
“[We] have four workstations where we have full-time workers sitting 24 hours a day, seven days a week, inserting SIM cards. This is not a viable solution [for] scaling up to millions of devices. We are currently crossing the million device number per year in terms of SIM card usage. So we need to go through some kind of automation where we can use eSIM instead – without having the explosion of SKUs in our semi-finished goods to support multiple MNOs.”
Nielsen goes further to put (vague) numbers on the final bill-of-material (BoM) cost for production of SIM-based meters versus eSIM-based meters – as well as for production of eSIM-based meters with single and multiple profiles. “With the labour costs and everything, eSIM is about half the price – if we have only one profile,” he says. “[But] it builds hugely to have all different [carrier profiles] mounted early in the process, when we are making the prints.”
He explains: “If we can reduce this to a single model in semi-finished goods, and then provision or personalise the eSIM at the very end of the assembly process [via the in-factory SVG.41/42 specification], then it would half the price [of a multi-profile eSIM SKU]. And then when you multiply with a few millions of SIM devices being manufactured every year by Kamstrup, then that’s our business case. That’s our return on investment.”
4 | The big opportunity of cellular IoT (plus some RedCap myth-busting)
Another point from the session, against this backdrop of device-level hardware/software innovation, is that cellular infrastructure now extends far enough that cellular IoT is a feasible option for IoT makers selling products into global markets. Haig at Vodafone says: “Utilities are increasingly comfortable with cellular for metering operations. The volume of [cellular meter] roll-outs is building significantly, which is a vote of confidence from the utilities themselves.”
But it’s not just about coverage, of course; the cost of cellular IoT, covering network airtime and hardware modules, is now inarguably competitive, reckons Nielsen at Kamstrup – to the point that utilities are turning away from private mesh solutions, which they have utilised for 25 years, as well as from rival non-cellular LPWAN technologies, which (in most cases) require private networks to be constructed and maintained.
Nielsen says: “The metering business is very competitive. [But] the competition is not really with generations of cellular, but with private [mesh and non-cellular] networks. We have to measure the cost of the complete solution – which [with private networks] includes the network, itself, plus the security, the backup, and so on. Which is why… we see a move towards cellular. Because it is a more secure and future-proof way for utilities to run their comms.”
But there was a warning, as well, that cellular IoT, which has struggled for over a decade to find its mark at the cost-sensitive LPWAN-end of the market, will be rejected out-of-hand if hardware costs suddenly jump – because NB-IoT and LTE-M are effectively retired, say, in favour of trendy reduced-capability 5G (5G RedCap), for example. “If the cost goes up – if it doubles, let’s say – then utilities will stay with the private networks.”
Nielsen’s position on RedCap during the webinar is telling – as much about the hype machine that appears to dictate the agenda in the cellular industry. “Even a single mode 5G RedCap module cost more than the complete meter itself. We cannot afford to use those kinds of technologies yet,” he comments.
5 | The crucial issue of data privacy (and why MNOs hold sway over MVNOs)
This point has been retold in a separate piece, but is telling again; a summary goes like this… In response to a question about how utility companies go about choosing connectivity technologies and connectivity providers, Kamstrup suggests that cellular is the go-to option because of performance and value (see above), and also because national mobile network operators (MNOs) bring corporate stability and data privacy.
The last point is interesting given the buzz about international mobile virtual network operators (MVNOs) in the IoT space – which suggests they have solved the challenge of LPWAN cellular in a fragmented global market place in a way that parochial MNOs have not. Nielsen comments: “Many countries require that the data does not leave the country. That is one of the main reasons we have to work together with local telco providers.”
He adds: “In some cases, data is not allowed to cross the border. Which makes it complex to make metering solutions… because many of these – let’s call them MVNOs – that are providing global solutions do not have a core [network] system.” There is a distinction to make between ‘light’ MVNOs, piggybacking on MNO infrastructure (except perhaps for home location or subscriber registry) and ‘full’ MVNOs with their own core network, plus other bits.
But Nielsen says even full MVNOs probably do not host their core network in-market, where meter data is to be retained. “Some [have] a core system, but [even] then the data leaves the country. Plus, you cannot be sure they’re [going to be around] in 20 years. So we have a lot of complexity in that [ connectivity decision, which] is the reason Kamstrup only works with local MNOs that can secure and run [local] systems.”
