What, How and Why's of SIM Cards!

Published: April 11, 2023

What, How and Why's of SIM Cards!


We have been using SIM cards ever since mobile phones became part of our lives. These days, SIM cards are also utilized in various gadgets that we frequently refer to as connected technologies or M2M communication. Have you ever wondered how and when it came to be in the first place? Or, more specifically, what it does and how it works? Have we ever considered whether there are any gaps that physical SIM cards cannot yet bridge? This article attempts to tell you the story of SIM cards’ emergence as well as a perspective on their problem-based evolution. So let’s dive in.

Why do we have SIM cards in the first place?

Consider the late 1980s, when there was no digital telephone but analog mobile communication in those devices. These devices were hard-coded with serial numbers called Electronic Serial Numbers (ESN). Their purpose was to identify the user of the device on the network so that the user could be billed. This ESN was hard-coded into the device, which became a problem.


The ESN could be read and written into a different device, cloning the machine. The cloned machine could then be used to make calls and bill the original user. This was a growing issue that needed to be addressed. To address this issue, ETSI formed a new technical group in early 1990 to develop a specification for digital mobile, or GSM, as it is known, with the goal of defining specifications for a new standard: a SIM card.

What, How and Why's of SIM Cards!

What is a SIM & What does it do?

SIM stands for Subscriber Identity Module. A SIM card identifies and authenticates a user and their device to the network. SIM cards use a different technology called smart cards. These smart cards are also found in banking cards and passports and these can be read wirelessly. This technology has been used in SIM cards for nearly 30 years. A smart card is a minicomputer that includes a CPU, RAM, input, output, and even a file structure to store all of the information. This technology-based card stores necessary operator credentials in a file structure so that the it can be used to access the mobile network.

How it latches to Network

SIM Card stores information like SMSC address, Phonebook, preferred network list (PLMN), etc. It also includes other critical details like IMSI, Authentication algorithms, and Secret Keys, that are used to communicate with the network. Therefore, this information has been programmed into the SIM cards by manufacturers. SIM Card manufacturers create a profile containing this information and they term it SIM Profile. Once programmed and manufactured, SIM cards are distributed in the market to POS stores, retailers, etc.

When the device is turned on, it transmits the IMSI to the Mobile Network Operator (MNO), allowing the MNO to determine which user is attempting to connect to the network.

The network sends the challenge down to the device and into the SIM card via the Authentication Centre (AuC). A SIM card must use this challenge, which is just a random number, and run it through the authentication algorithm with a secret key to generate a response to this challenge, which is also just a number. This number is then sent to the network and compared to the number calculated by the network using the same information because it also has a copy. If the numbers match, the device has been properly identified and authenticated and can now connect to the network. The network may reject the device if these two numbers do not match.

For more than three decades, SIM card technology has served the industry with no or low-security issues on occasion. Some SIM cards have been hacked, but this is usually due to poor management at the manufacturing design stage, but the principle has remained consistent for several years. The authentication algorithm has changed over time. The original authentication algorithm comp-128 was discovered to have flaws and was improved with several versions of the algorithm before the new algorithm MILENAGE, which most operators now use for 3G and above technologies.

What, How and Why's of SIM Cards!

What are the issues with Physical SIM Cards?

To fully comprehend the rationale for eSIM and why specific eSIM features and capabilities were created, we must first thoroughly comprehend the problem that is Easy to solve. Now, we’ll take a look at two different markets. We’ll start with the M2M market, also known as IoT today, and then move on to the consumer market.

Vibration, humidity, or water can be a few problems for a specific M2M application in M2M use cases. There are a few more issues. These issues can be better understood with the help of a couple of use case examples, as mentioned below.

Vehicles are manufactured in various parts of the world in the vehicle manufacturing industry. The Vehicle Manufacturer/OEM needs to know which country they will be in so that they can insert the appropriate SIM card. Otherwise, roaming fees would apply, which would be an inconvenient option. The alternative is to stockpile SIM cards for each country, which presents a logistical challenge for OEMs.

Several Utility Meters have been installed around the world, and the electrical company may now have to choose a specific network operator that provides a SIM card before installing these utility meters. Now, if the services are not found to be satisfactory, the energy meter company must go to each house and change the SIM card.

Next, let’s look at the problems with physical SIM cards in the consumer market.

The first issue is that users must first receive the SIM card before using it. The user has two choices: go to a retailer or wait for the SIM card to arrive by mail. For the user, both are inconvenient.

The majority of SIM cards are the same size. Although the market is still using nano type, the user may need to use a smaller version after a while. In that case, they must look for a jacket that fits the smaller size or change the SIM card from the operator, which is extra work and time-consuming.

In comparison to the other components, the SIM card slot in mobile devices takes up a lot of space.

SIM card distribution is a logistical process that involves issuing cards to two operators, who then distribute them to distributors and retailers.

Every year, billions of SIM cards are manufactured, and much plastic is wasted.


SIM card technology has been evolving since its inception. The goal is to make it more secure, sustainable and to lower carbon footprints. This is why, we are moving toward the use of eSIM and iSIM, while the physical SIM card remains. Many factors contribute to its existence, and we cannot expect it to vanish overnight. However, there is more awareness than ever before, and it is only a matter of time before physical SIMs become obsolete.

Rajat Shukla
Rajat is an eSIM enthusiast working as Global Sales Director at Redtea Mobile. He has extensive years of experience in the SIM, eSIM, and IoT industries. He has been consistently focused on solving the problems of mobile network operators and providing a complete end-to-end eSIM solution to them and other related enterprises in the simplest way.
Sayon Sinha Ray
Sayon is a marketing professional with a wealth of experience spanning diverse roles and industries. Currently serving as the Director of Marketing at Redtea Mobile. His passion lies in elevating awareness of eSIM technology, charting a course for seamless cellular connectivity and the boundless possibilities it brings to the world of IoT.