The SIM card is a vital part of most GSM phones, allowing devices to authenticate themselves to a cellular provider's network. Without a working SIM card, GSM devices cannot usually access their provider's services, preventing them from making calls or using cellular data. As such, a SIM card may be required in order to use some phones as a hotspot, as wireless tethering requires a cellular data connection in order to work.

Role of SIM Cards

A SIM card is a small chip that you insert into a special slot in your phone. It stores your International Mobile Subscriber Identity, a 15-digit number that is unique to each cellular subscriber. When you power a GSM phone on, the SIM card automatically sends its IMSI number to its network provider. If your provider has that IMSI number on its list of subscribers, it will grant your phone access to the network.

Wireless Hotspots

A wireless hotspot is a device that uses a cellular data connection to act as a modem for Wi-Fi-only devices. Hotspots effectively convert a cellular signal into a Wi-Fi signal that other devices can connect to. For example, you could use a smartphone with a hotspot feature to provide Internet access to your laptop, even if that laptop was not in range of any “regular” Wi-Fi networks.

SIM Cards and Hotspots

SIM cards are always used to authenticate a given device to a cellular network. As such, the role of a SIM card in a wireless hotspot is to confirm to the network's equipment that that hotspot device is eligible to receive cellular data. Once the hotspot has joined the cellular network and is receiving data, the SIM card's job is done, as the SIM itself does not have a direct role in the transfer or storage of information.

Hotspot Devices

SIM cards are most commonly associated with phones, as many phones require a SIM to perform any communication function. However, some routers, tablets and laptops also have SIM card slots, with some of these devices able to act as hotspots in their own right by taking a cellular signal and re-transmitting it as Wi-Fi. Cellular routers in particular may give better hotspot performance than some phones, as they have the advantage of router-grade transmission aerials and network configuration software.