A SIM card for the phone is like having a small computer in your computer. The SIM card stores a lot of data such as your messages, whether text or pictures, your phone number, reminders, files, value added services etc. What determine the phone number are actually the card and not the phone. In fact the mobile phone company keeps track of all your calls whether incoming or outgoing through your SIM card. They can identify the precise city and country that you have taken the phone to. In this way, the company charges you for the calls.

The SIM card is actually called a Subscriber Identity Module and is the size of a thumb impression. This tiny chip is a small microprocessor, but it packs in a lot of data and information. Its inserted into the back of the cell phone that one is using and only then can the cell phone be activated. As soon as the cell phone is activated, its connected to the network of the cellular phone company. Thus one can start making and receiving calls.

Therefore when you switch over to another mobile company, you need to purchase another SIM card to make and receive calls. SIMS can have a memory of 16kb to 64kb as of today. Of course with convergence happening, SIM may have larger memories to take care of many operations.

There are two types of connections for SIM cards. One is a prepaid connection where you for a fixed calling value, lets say $10, can get for example 100 minutes of talk time. The second option is that of post paid. After every billing cycle, the cellular company will charge you upon the usage.