Friday, 28 May 2010

Bill in US Congress threatens availability of prepaid SIM cards

SIM card vending machine

A bill introduced this week in the US Senate threatens to cut off online availability of prepaid mobile phone (cell phone) “SIM” cards.

S.3427 is ostensibly intended to make it harder for terrorists and criminals to make phone calls anonymously. As I discuss in detail in an article today in the Identity Project blog, the last people the proposed law would actually cut off from phone service would be terrorists, identity thieves, and other criminals who could easily afford and find ways to circumvent it.

But among the people who would most negatively be affected would be international travellers, including both people from the USA going abroad and foreign visitors to the USA.

For a decade — since I first got a cell phone, in fact — I’ve relied on prepaid SIM cards whenever I’ve travelled outside the USA. I carry an unlocked multi-band GSM cell phone (I’m partial to the tri-band Ericsson T39 for its superb active noise cancellation; a first-generation Motorola Razr V3 is one of the cheapest widely available quad-band choices). When I arrive in a new country I’m going to be in for more than a week or two, one of the first things I do is buy a prepaid SIM card with a local number.

Typically, incoming calls are free, and outgoing calls cost no more than 10-20% of what I’d have to pay if I used my US SIM abroad. If this is all unfamiliar territory, but sounds attractive, see the details in the section on communications in the latest edition of The Practical Nomad: How to Travel Around the World.

This wouldn’t necessarily change if S.3427 is enacted, except that in the USA (and any other countries that follow our bad example) you’d have to go to a shop, show your ID, and fill out a bunch of paperwork to buy a SIM — as I’ve had to do in some police states — instead of being able to put a five-pound note in a vending machine like the one pictured above at Heathrow Airport in London, and walk away with a prepaid SIM and a UK phone number in seconds.

The problems with the proposed new law would be when you aren’t going to be staying very long in any one country, or when you need to know your roaming phone number before you leave home (to give to friends or family or business associates for emergency use, to set up uninterrupted call forwarding, or perhaps because you will need it immediately when you arrive and can’t be certain that local SIM cards will be available at the airport when your flight gets in).

Today, you can get a SIM card with a local number in your destination in advance (for a substantial premium over the local price, in exchange for the convenience), or get a global roaming prepaid SIM with rates that are higher everywhere than local prepaid SIM’s, but still much lower than rates for roaming with your regular SIM from the USA or your home country.

The catch is that foreign SIM’s and global roaming SIM’s are a small niche market for a limited number of international travellers. It’s hard to find a shop that sells them in New York or San Francisco, and impossible to buy them over the counter in most of the USA. They are readily available, but only online, mainly through specialty companies like

S.3427 wouldn’t explicitly outlaw online SIM sales in the USA, but it could well have that effect by requiring SIM card sellers to collect (and report to cell phone carriers, so they can make it available to the government on request), “Any other personal identifying information that the Attorney General finds, by regulation, to be necessary.”

The bill would place no limits on the amount or intrusiveness of the information the Attorney General could demand, as long as it is spelled out in regulations. And there’s nothing in the bill to stop the AG from making the verification requirements so onerous as to amount to a de facto ban on online or mail order sales of prepaid SIM card or cell phones, as Ken Grunski, president of, immediately picked up on when we sent him a copy of the bill:

The level of verification that the bill requires is critical to e-commerce providers… because they can only verify an identity to a certain extent online. For example, if the bill just required that the billing address match the shipping address, we can do that easily. But if the bill requires a state or country issued identity card, we can’t do that online. You are essentially saying that the product can’t be sold online anymore, because you can’t verify the identity of the person making the purchase.

Despite the obvious market niche for a global roaming SIM for travellers, attempts to market them have repeatedly been frustrated by countries imposing ID requirements for SIM sales that online retailers couldn’t meet. Uptake of prepaid SIM cards in the USA has lagged behind other countries, but the lack of ID requirements has made it possible for companies like to import and sell a wide range of country-specific and global roaming SIM’s. Now S.3427 threatens to put them them out of business. The bill would also forbid unauthorized resale of prepaid SIM cards and cell phones, so you couldn’t sell your SIM and leftover credit to some other traveller when you’re leaving the country.

Prepaid SIM cards with local phone numbers would remain available, in some shops, to those with local addresses. But prepaid SIM cards for travellers, either with foreign numbers or with global roaming service plans and tariiffs, which are currently available mainly or exclusively online, could disappear or become impossible to obtain outside of a handful of specialty stores in international airports or gateway cities such as New York, Miami, S.F., and L.A.

The presumption behind the bill — that there is something inherently suspicious about using a prepaid SIM card rather than having a “normal” postpaid phone contract — shows once again how out of touch Congress, and the USA in general, sometimes is with the world.

Even in the USA, the majority of new cell phone subscriptions are prepaid. Worldwide, the majority of all phone numbers correspond to prepaid cell phone SIM cards. Prepaid cellular phone service has made telecommunications financially accessible to literally billions of people who could never afford it before. Having a prepaid cell phone or SIM card is not, and should not be regarded as, deviant or suspicious.

if you’ve ever used a prepaid cell phone or SIM card, you don’t want to have to show your passport or go through a limitless amount of paperwork to do so and you want them to be available online, and you don’t think that should make you a terrorist suspect, let your Senators know what you think of S.3427.

[Addendum, 1 June 2010: Case studies on the difficulty of enforcing an ID requirement for prepaid SIM cards, and the extent to which it is hurting business for mobile phone carriers: In Vietnam, 90% of mobile phone accounts are prepaid SIM’s, and 90% of them are registered with false personal information. In Sierra Leone, in order to comply with government orders, mobile phone companies have deputized freelancers to conduct a house-to-house census of SIM cards, collecting not just name, address, and phone number but a digital photo of each subscriber. Nigeria is gearing up for a similar doo-to-door, shack-to-shack, and hut-to-hut outsourced census by a private contractor of its 70 million current prepaid mobile phone subscribers. In India, intermediaries send in a copy of an ID document with a report on each SIM card sale, but there’s no way to verify whether it really corresponds to the purchaser. In Greece, prepaid mobile phone subscribers — apparently including even those customers who want to roam in Greece with SIM cards from abroad — are being threatened with termination of service on previously purchased SIM cards unless they register them in person at an office or shop of the phone company (how does that work with a foreign roaming SIM?) and provide information including, in some cases, a Greek tax number and proof of legal residency in Greece (does that effectively preclude Greek roaming for visitors?). In South Africa, where World Cup fans will have to show ID to buy new prepaid SIM cards, half a million current local local subscribers are under threat to have their phone service cut off because they don’t have the government-issued ID credentials needed to comly with the new registration requirement for previously-purchased SIM cards.]

Link | Posted by Edward on Friday, 28 May 2010, 17:09 ( 5:09 PM)

Interesting thoughts. I agree with you that this bill will do nothing to stop terrorists and instead inconvenience legitimate users.

As an American ex-pat who buys prepaid phone cards when he travels home, I'm always struck about how undeveloped this market is in the USA compared to Europe. Even at major international airports airports (Dallas and Atlanta for example) I've never found a store selling prepaid cards.

I've always had to show a driver's license and address to buy a card in the US. I'm not sure what the exact requirements are, but I believe it is the individual phone companies that set their own policies and nothing is imposed by the government, but I imagine that a foreigner with only a passport and no "address" could have problems.

Finally, within the last year I've bought prepaid phones in Italy, Brazil and Japan and every time I've been asked to show documentation. Japan and Brazil were more demanding asking for paperwork that would have made it difficult or perhaps impossible for non-residents to get a phone. In Italy a passport was sufficient, but there was a one or two day "waiting period" while the paperwork was processed and before the phone was activated.

I'm not sure what the government rules where in each of these countries, but it seems the de facto requirement was to require some form of documentation to get a phone. Unfortunately it seems America may go down this same track...

Posted by: Ben, 29 May 2010, 05:12 ( 5:12 AM)

I've bought prepaid SIM cards in, among other places, South Africa, the UK, Argentina, Australia, Tanzania, China (Hong Kong), Turkey, Syria, Yemen, and Egypt.

In some (but not all) places I had to provide an address, but an unverified hotel address, or the address of the shop where I bought the SIM, was acceptable. In some cases a salesperson filled out the form for me, and supplied their own address and/or national ID number on the form.

In some (but not all) places I had to provide an ID (passport) number on a form, and in some (but only a few) places the shop photocopied my passport, presumably to make a copy available to the government.

The extremes were Ethiopia and Eritrea, police states where prepaid SIM cards were unobtainable at any price, even for locals, and the UK where SIM cards can be purchased anonymously for cash from vending machines, as shown above.

Activating the SIM and getting a working phone number has generally taken 30-60 minutes. I budget this time on arrival, since SIM card sellers at the airport are more likely than phone shops elsewhere to speak English, know how to walk foreigners through filling out the forms, and know how to switch the voicemail and top-up menus to English, if that's an option. I prefer not to leave the shop until I have tested that I can make and receive a call, retrieve a voicemail message, and top-up the prepaid balance.

In the USA, I've purchased global roaming SIM cards online, without providing a passport, drivers license, or any other ID number. I could have used an anonymous prepaid Visa, Mastercard, or AmEx debit card for those purchases.

I've recently seen both USA prepaid SIM cards (I forget which brands) and eKit global roaming SIM cards for sale for cash, without filling out any forms, in an airport shop at SFO. Oddly, it was after security in domestic Terminal 3 (North Terminal), near the United gates, not at the international terminal. This was the first time I'd seen global roaming SIM cards for sale over the counter anywhere in the USA.

As for prepaid phones (which mostly work only in the USA), you can buy a TracFone for cash at Walmart, or many other stores, without the need to fill out any special forms or show ID.

Posted by: Edward Hasbrouck, 29 May 2010, 10:07 (10:07 AM)

A recent episode of Desperate Housewives introduced a new character, and you knew he was shady because he, gasp, used a pre-paid phone.

This cultural coding is, of course, beneficial to the telcos, who want you to commit to buying dozens or hundreds of unused minutes per month.

Posted by: Paul Karl Lukacs, 30 May 2010, 14:28 ( 2:28 PM)
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