AT&T goes all in on eSIM

Smartphones that don’t use physical Subscriber Identity Module (SIM) cards make it easier for subscribers to switch networks, and AT&T says this is an opportunity to grow its customer base. Ever since Apple announced the iPhone 14 will be eSIM-only, AT&T has been touting embedded SIM (eSIM) technology as a way to facilitate switching onto its network. This week at its labs in Redmond, Washington, the carrier showed off its eSIM technology, noting that its engineers have been working on this for almost a decade.

“We started with the iPads in 2014, and the next big step was probably the Apple Watch,” said AT&T's James Hamilton, one of the carrier's lead eSIM engineers. “As soon as the iPhones could support it we started that in 2018.”

Jason Sikes, AT&T assistant VP device architecture, said the launch of the iPhone 14 “has gone very well” for AT&T. His colleague Jeff Sebastian, another lead eSIM engineer, demonstrated the interface that subscribers can use to move their phone number to an eSIM device to another with just a few clicks.

Sebastian demonstrated three scenarios: setting up a brand new phone with eSIM, transferring a number from one AT&T phone to another, and moving an unlocked eSIM phone from a competitor’s network to AT&T. All were accomplished in minutes.

The engineers did not demonstrate the transfer of a number from the AT&T network to a competitor’s network. When asked about this, Sikes said that process would be almost as smooth as going onto the AT&T network. “It’s going to be roughly the same experience … depending on where you’re going,” Sikes said.

Until recently, AT&T and its competitors didn’t publicize eSIM too much, perhaps because it does make switching easier. But with Apple’s iPhone 14 launch the train appears to have left the station, and AT&T is definitely on board.

"This year was a huge, huge step with the iPhone 14 being eSIM only," said Sikes. "It is now without question front and center, and so that has driven a lot of effort both on the technology side and the business side."

Technology that makes it easier to switch carriers could favor AT&T if Q3 2022 trends continue. AT&T reported more postpaid phone net adds (708,000) than Verizon, and its postpaid phone churn was 0.84%, versus 0.88% for both Verizon and T-Mobile.

AT&T ended Q3 with just under 69 million postpaid phone subscribers, behind T-Mobile at almost 72 million and Verizon at just below 75 million.

Try before you buy

T-Mobile was the first U.S. carrier to leverage eSIM technology to allow consumers to give its network a test run before committing. People who have unlocked eSIM devices can use the carrier's Network Pass to move their phones onto the T-Mobile network and use unlimited data for free for three months with no obligation to subscribe.

Now, AT&T has made a similar move with its Cricket prepaid service, and is offering the free trial even to users who do not have an eSIM device. Sikes suggested other AT&T services might follow suit if the Cricket offer is successful. “We’re starting there and we will see how that goes and see how that expands,” he said.

SIM swap fraud

Although embedded SIMs make it easier to move a phone to a new carrier, they do not necessarily make it easier for hackers to hijack a phone by switching it to a new network. With the SIM embedded into the hardware, it is no longer possible to separate the subscriber’s identity from the actual phone.

Physical SIM cards attract hackers because they can be purchased for less than $10. Scammers gather as much personal information as possible about their victims and then call carriers impersonating the victim, and report the victim's phone stolen. They ask the carrier to port the number to a new SIM card so that they can get connected. Once the number is assigned to the hacker's SIM card, s/he can often access many of the victim’s accounts using two-factor authentication.

Hamilton said eSIM makes fraud “physically harder” but added “in terms of the safeguards we have in place to authenticate customers before we would enact any change like that, it doesn't really change the picture.” Ultimately, many SIM swap frauds involve customer service agents, and AT&T has numerous protocols in place to prevent agents from mistakenly reassigning identities.