Justice Department Probes U.S. Wireless Carriers' Work on SIM Card Alternative -- 2nd Update

By Drew FitzGerald and Brent Kendall

The U.S. Department of Justice is investigating whether U.S. wireless carriers and an industry trade group teamed up to make it harder for cellphone subscribers to switch providers, according to people familiar with the investigation.

The agency in February sent civil investigative demands to the four major U.S. wireless carriers and the GSMA, an international standards organization responsible for eSIM technology, the people said. The eSIM standard lets wireless subscribers move their phone number to a new carrier without having to remove a physical SIM card.

The department for more than a year has had its eye on the issue of SIM cards and phone portability, with a focus on the two largest carriers, AT&T Inc. and Verizon Communications Inc., though the February subpoenas represent a new stage of the inquiry, the people said.

Spokesmen for the Justice Department and the London-based GSMA declined to comment. A Verizon spokesman confirmed the wireless provider has been cooperating with the department's probe for several months.

"The accusations regarding this issue are much ado about nothing," Verizon spokesman Rich Young said. "The reality is that we have a difference of opinion with a couple of phone-equipment manufacturers regarding the development of eSIM standards. Nothing more."

News of the recent probe was first reported by the New York Times.

An AT&T spokesman said the company is aware of the investigation. "Along with other GSMA members, we have provided information to the government in response to their requests and will continue to work proactively within GSMA, including with those who might disagree with the proposed standards, to move this issue forward," he said.

Most mobile devices won't work without a SIM card -- subscriber identity module -- that contains a customer's account information. In the U.S., SIM cards tend to be usable only on the cellular network of the carrier that issued it.

An eSIM, or embedded SIM, is typically a chip inside a device that cannot be removed. It allows consumers to store multiple carrier profiles on the same device and switch between their networks, though only one can be used at a time.

The technology is already available on some consumer devices, such as the Apple Watch Series 3, Samsung Gear S2 smartwatch and Microsoft's Surface Pro LTE tablet.

One of the first smartphones released with embedded SIM technology is the Google Pixel 2, which the Alphabet Inc. unit started selling last year. It is testing the technology with its Project Fi wireless service.

Apple Inc. has helped advance efforts to replace the traditional SIM card. In 2014, it introduced an iPad with a built-in SIM card that allowed users to turn their cellular data plans on or off or switch between three of the four big U.S. providers. The iPad's "soft SIM" sparked speculation that it might put similar technology into its popular iPhones, but that has yet to happen.

"Apple's desperate for this technology to be there because they want to make the phone smaller and thinner," said Kyle Wiens, chief executive of iFixit, which tears down iPhones and writes an iPhone repair manual.

He said that eliminating the SIM would create more space for a larger battery or chips to boost performance. "The ideal phone would have no buttons, no ports, nothing, so you know the SIM card has to drive them crazy from a design perspective."

Apple declined to comment.

--Tripp Mickle contributed to this article.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

April 20, 2018 19:01 ET (23:01 GMT)

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