Current trends – March 2025

The presentations at MWC 2025 in Barcelona showcased significant excitement around the IoT eSIM (SGP.3X). After a lengthy standardization process, finally completed in January 2025 just before MWC, the new standard has been eagerly anticipated.

The SGP.3X standard is poised to replace the widely-used SGP.0X M2M eSIM in the automotive industry once product certifications are finalized. This transition is well-justified: SGP.3X offers a far more cost-effective solution for verticals. It eliminates the need for costly dedicated SM-SR tied to Mobile Network Operators’ (MNOs) or proprietary SM-DPs and—most importantly—enables IMSI switching to other providers without requiring approval from the previous MNO.

This shift empowers verticals, including automakers, to regain control over their MNO strategies throughout the lifecycle of vehicles, which often spans 15 to 20 years.

However, adopting SGP.3X is only part of the solution.

The emergence of Software-Defined Vehicles underscores the need for robust, ubiquitous, high-quality connectivity to facilitate over-the-air (OTA) software updates throughout a car’s lifecycle. These updates not only ensure optimal performance but also unlock new revenue streams for automakers. While SGP.3X adoption is critical, it alone is insufficient. Automakers operating in a global market face significant challenges:

Country-Specific Regulations and Restrictions

1. Permanent Roaming Bans: An increasing number of countries are introducing permanent roaming bans, often monthly, necessitating localized connectivity solutions. These solutions, each requiring specific SDKs, complicate the global management of connectivity.
2. Data Sovereignty: A growing number of countries impose strict data sovereignty rules, which vary significantly. Some prohibit user data from leaving the country, others mandate that all processing occur domestically. These requirements impact cellular connectivity, necessitating alternatives like local mobile network break-outs, with broader implications for fixed telecom infrastructure and data centers beyond the cellular network.

Challenges with MNO Limitations and Changes

Automakers already face numerous hurdles related to existing MNO setups and decisions:

1. Legacy Network Sunsets: The uncoordinated shutdown of 2G and 3G networks by MNOs creates a fragmented landscape. This disruption impacts existing deployments for all verticals. Specifically for carmakers there is still no clear future for eCall services in legacy fleets (2G/3G based)..
2. Frequency Variability: Cellular spectrum allocation differs widely across regions/continents, requiring automakers to use varied modems/TCUs (and SDKs). This complexity is even greater for private 4G/5G networks.
3. Latency Constraints: Even in countries where permanent roaming is allowed, low-latency requirements often necessitate dedicated local break-outs. These can be costly or impractical in certain cases.

Emerging MNO Challenges

In addition to these existing hurdles, new challenges are arising:

1. Evolving Roaming Costs: The GSMA’s new Billing Charging Evolution system allows fees based on metrics beyond usage volume, adding significant costs for verticals. This threatens the profitability of connectivity-dependent services for cars.
2. Open Gateway Initiatives: The GSMA’s standardized open APIs (mostly for 5G services) reduce integration efforts but could impose new fees on verticals, further straining budgets.
3. Future Network Sunsets: With vehicles expected to remain operational for 15 to 20 years, automakers face uncertainty about the longevity of 4G networks, complicating long-term planning for connectivity solutions.

The Need for Agility and Collaboration

Automakers must approach this dynamic connectivity landscape with agility and a long-term vision. A flexible strategy is essential—one that leverages a diverse toolbox of solutions capable of adapting to specific circumstances and regions.

Additionally, automakers should collaborate more effectively, presenting a united voice to regulators and MNOs. This coordinated approach can help ensure the availability of affordable, high-quality, and ubiquitous connectivity for the long term.

As new Advanced Driver Assistance Systems (ADAS) evolve and autonomous driving becomes a reality, these connectivity challenges will only grow more critical.