How is eSIM impacting telecom ecosystem?
By : Sukriti Bhanawat
Introduced in 1991, the SIM card that we use today revolutionized the telecom industry and drove us into the world of portable communication. In February 2016, at Mobile World Congress, GSMA announced eSIM (embedded SIM) as a standard and opened pathways of new opportunities for consumers, telecom operators and device manufacturers.
eSIM is a programmable SIM card that is permanently soldered into devices. An eSIM enabled mobile device gives the end user the capability to select and switch between multiple mobile networks without physically changing the SIM. eSIM technology was originally introduced for applications in IoT devices and eventually made its way into consumer devices like wearable gadgets and mobile devices.
What is e-SIM or virtual SIM?
eSIM or virtual SIM cards are dynamic embedded SIM cards that can be permanently fitted into devices and provides the functionality of remote provisioning to the user. That means that the user would be able to download an operator profile as per her preference and can switch between profiles easily without the need of physically changing the SIM cards. The requirement of new SIM and the time delay that occurs every time you switch carriers will be totally eliminated.
eSIM works in a mobile device manufacturer centric ecosystem. This means that the eSIM will be completely standardized across the manufacturers and the mobile network operators will have to deal with the hardware OEMs (such as Apple, Samsung, LG, etc.) and the users will then be able to download the network operator’s profile as per preference.
In 2014, Apple released its own SIM card—the Apple SIM and installed in iPad Air 2 and iPad Mini 3 tablets in the United Kingdom and the United States. The Apple SIM allowed customers to select a network operator dynamically, directly from the device giving users more freedom with regard to network selection. It changed the competitive landscape for operators and disrupted the heavily relied-on structure of distribution channels and contractual hardware subsidies.
eSIM and telecom industry
With the introduction of eSIM, the telecom industry is set to face the greatest impact. On one hand, the capability of switching between network operator profiles without any hassle will reduce customer stickiness for telecom operators, while on the other hand they will have the opportunity to get a leading stand in IoT market. The mobile network operators can leverage eSIM as a tool to acquire more customers and have a greater control on user data if they can ensure value-added services, right pricing and engaging marketing campaigns.
Companion devices and IoT is the segment where network operators can gain by providing eSIM technology enabled data plans. Users can get access to shared data plans where they can connect several devices to a single plan.
eSIM will also have a potential impact on channels and operating models of the telecoms.
Customer touch points
eSIMs will eliminate the need for users to visit a store for getting new SIM or signing up for new service. Since stores are a point where the operators tend to influence a customer’s decision, they will have to figure out new and more engaging ways to keep the customer looped in with their services.
Customer loyalty and churn
Since customers will be able to switch between networks and offers more easily than ever before, churn rate will definitely increase. But this increase will not be multifold. Products and offers do matter but at the end, users always lookout for superior experiences. If your network is able to provide personal, seamless and intelligent customer experience, the user is likely to stay.
Sales and marketing
eSIM can enable users to connect to multiple IoT devices, smart gadgets and wearables to the main data plan of one network. This opens up a window of opportunity for telecoms to upsell and cross sell multiple plans to the consumer. However, users have the power of switching network as they need which weakens the position of network in the mobile value chain. eSIM technology gives customers the freedom to opt-out as and when needed.
The telecom’s approach to new advancements in eSIM technology, its capability to introduce a whole new ecosystem and its strategy to adapt to the processes accordingly will play a major role in deciding how eSIM will impact telecom industry as a whole. Mobile network operators, mobile-virtual network operators and resellers will have to rethink their customer experience game as the complete customer journey of sales, marketing and retention will undergo a drastic shift. Internet of Things (IoT) is set to take connectivity to next level and eSIM is the key enabling technology behind it. It will no longer just be about smartphones, laptops and tablets but electrical devices of every type would join in the next phase of internet evolution.
Gartner estimates that by 2020, the number of connected devices in existence will reach 20.4bn, and by 2025 it could be as high as 82bn. It is the perfect opportunity for telecoms to build new revenue streams by enabling cloud capabilities for OTT service providers, minimizing infrastructure and operational costs and monetizing user data. It will be interesting to watch how telecoms utilize AI and advanced analytics to leverage the user data that they will harness from eSIM technology and integrate it across all their solutions to deliver intelligent customer engagement.