Dreams of Increasing Connectivity: Virtual SIMs in the Cloud

Posted by PrabhasPokharel on Oct 27, 2009

People in the developed world consider the phone a very personal object, something that is always on and always with us. In many developing countries, that's not always the case. People share phones, and many don't own handsets because they are too expensive.

A new company, Movirtu (with a catchy tag line: "Mobile for the next Billion"), wants to extend coverage to so-called bottom-of-the-pyramid customers  by using a handset-independent way to connect to the mobile network.  The company's goal is to "expand the use of mobile communication by the rural poor communities in Sub-Sahara Africa and South Asia living on less than $2 a day" - in order to improve their livelihoods.  The method for doing this is to detach owning a phone number from owning a handset--and to allow users to own numbers without owning handsets. And its gaining attention: CEO Nigel Waller was awarded a PopTech Social Innovation fellowship this year, and Movirtu has been shortlisted for Africom's Changing Lives Award.

The idea

Morvirtu's idea is simple: a mobile number should not be tied to any hardware. Think of email (or any cloud-based services) today--you do not need to own any specific hardware, but need to have just a login credential to the data and associated services in the cloud. If you can't afford a computer, you go to an Internet cafe or a library, and log into these services.

For mobile phones though, a number is currently physically tied to a phone, or, more accurately in many parts of the world, to a SIM card that resides on a phone. The SIM card is a detachable smart card that contains the customer's mobile phone provisioning or subscription information and other personal data such as contact phonebooks, saved text messages, data that the customer may have downloaded, and personal settings.

Movirtu envisions a different scenario:  You would simply have your number and a password with which you could 'log in' to any handset, and have that phone tied to the desired number immediately. In this scenatio you wouldn't need to own a handset anymore--you could just go to someone with a handset, and log in using your credentials.

The Big Question

The main question with this technology is whether it will increase connectivity for poor customers. Comviva, an Indian company, recently completed a similar virtual SIM pilot in Cameroon, and saw lof of usage. But customers did not come from the poorest segment of the population, the market Comviva was targeting:

The concept was initially targeted at the financially marginalized, but it has appealed to unintended user groups, including businessmen who prefer to have a different SIM to use while speaking to a certain group of their contacts, and youngsters who prefer to have dual numbers to interact with different friends’ circles.

The idea of a phone number that isn't tied to any hardware is likely to gain traction--Voice-over-IP services like Google Voice have similar ideas. But how much is this likely to help the poor?

Even though handsets are expensive for smeone making the equivalent of $2 a day, users really only have to buy SIM cards and not handsets.  SIM cards are cheap: an MTN card in South Africa costs $0.33, for example. The act of replacing a SIM card in a handset has now been replaced with entering login credentials--but is that enough to increase connectivity dramatically?  Interestingly, Qualcomm seems to own a patent on virtual SIM technology

There are also security issues with virtual SIM accounts - if large amounts of data are available to operators in the cloud rather than stored on a piece of hardware, will that expose more data for surveillance? Or, alternatively, are users more secure not having highly personal data located on a small card that can be easily lost, stolen, or confiscated? How are already over-burdended and largely inefficient SIM registration requirements that increasingly popular by governments to monitor SIM purchases and use going to have to change to ensure a customers privacy (often absent any privacy legislation or regulations) if virtual SIMs become common place?

So far, there are no numbers available from Movirtu to assess who its customers are - the product is pre-launch.  It remains to be seen whether it is the right product for bottom-of-the-pyramid customers. We'll be watching.

Note:  We repeatedly tried to contact Nigel Waller for comment on this story; however, we did not receive a response.  We will update the post if and when we do.

[Update: We did get a response from Movirtu.

Founder Waller tells us that product is in testing phases, but strict non-disclosure agreements from operators will not let him disclose even what country the work is being done in. What he does assure us of is that this technology is highly targeted towards bottom of the pyramid customers and the scenarios encountered among those customers. He also told us that he thinks the technology is much easier and more elegant than SIM-swapping could ever be because SIM-swapping doesn't assure that users' contacts and message history is not stored on handsets. Movirtu promises individual mobile accounts that are stored completely in the cloud, and can be accessed on any GSM handset available today. Overall, it seems that Movirtu's solutions are more focused than virtual SIMs, and will have larger take-up among bottom of the pyramid custormers. Exactly how much take-up there will be is yet to be seen, of course.

Our concern about data privacy still remains, as because of technology requirements, Waller informs us that all user data will be stored on servers hosted by telecommunications operators.]

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