Why Telstra, Optus and Vodafone are blocking the iPhone’s best feature

Boost Mobile has called on the Australian Competition and Consumer Commission to force Telstra, Optus and Vodafone to allow e-SIM phones such as the new Apple iPhone onto their networks, forcing the telcos to compete on their merits and ushering in a new era of convenience for phone users.

Boost Mobile’s outspoken founder, Peter Adderton, said forcing the big three mobile networks to enable e-SIM phones would also help smaller, discount operators such as Boost to offer even lower prices to consumers, because the operators would be able to switch their virtual networks to whichever carrier was offering the best rates without inconveniencing their customers.

Apple’s new iPhone XS and iPhone XS Max phones contain a regular nano-SIM as well as an embedded SIM, or e-SIM, which allows them to be connected to a mobile phone network without the owner ever having to insert a physical SIM card.

e-SIMs can be provisioned on a phone network in a matter of minutes, using only an app on the phone, potentially allowing customers to switch networks easily and often.

With the right phone plans, e-SIMs would enable customers to use, say, Vodafone when they’re in the city, switch to Telstra for a weekend away in the bush, and then switch back to Vodafone when they come home again.

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Or they could keep their phone on a slower, cheaper network most of the time, and switch to a faster network for a couple of hours while they’re streaming a movie.

Google’s Pixel 3 phone, due before Christmas, is expected to have an e-SIM as well as a nano-SIM and it’s widely expected that many of next year’s phones will support embedded SIM technology, too.

While certain e-SIM devices, such as Apple’s Watch and Samsung’s Galaxy Watch, do work in Australia, none of Australia’s mobile phone carriers have enabled e-SIM phones on their networks.

Currently, the e-SIM on the iPhone XS is useless, and users are forced to insert a SIM card the old-fashioned way.

In the US, the Department of Justice is investigating whether America’s two largest carriers, AT&T and Verizon, colluded to cripple e-SIM technology, by creating a version that could be locked to a phone network, preventing customers from easily and quickly switching networks.

The ACCC should have a similar look at the adoption of e-SIM technology in Australia, possibly as part of its review of the proposed merger of Vodafone and TPG, Mr Adderton told The Australian Financial Review. e-SIMs would change the competitive landscape in ways that would impact on the merger, he said.

But the big telcos are skittish about e-SIMs, he said, because of the way telecommunications companies are valued, and because of the way their executives are remunerated.

The focus now is on the number of subscribers a telco has, but that number would become almost meaningless in an e-SIM environment, where customers can switch between telcos on a daily, even hourly basis.

Instead, the market should value telcos simply on their revenues, Mr Adderton said.

Telstra officials told the Financial Review  that, while they had yet to add support for eSIMs mobile phones, Telstra was one of the first telcos to support eSIMs in watches in Australia, and it would add support for eSIMs in phones “in the future as customer demand builds”. 

Vodafone and Optus were approached for comment.

Apple declined to comment, but did confirm that the Australian versions of the new iPhone still have e-SIMs, even though the carriers haven’t enabled it.

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