The impact of the eSIM-only iPhone on the telecoms industry
While they aren’t the first to do so, Apple’s eSIM announcement is certainly the most significant to date. And as a historical trendsetter among telecoms OEMs, this decision will undoubtedly spark a seismic shift in how service providers (SPs) onboard customers. So how will the eSIM shift impact the market? Here, Hamish White, CEO of eSIM as a Service provider Mobilise investigates.
Apple’s iPhone 14 launch saw a huge change from the handset manufacturer for its US customers — the latest upgrade will only support eSIMs. The latest data from GSMA suggests that 88 per cent of operators globally plan to offer eSIM services by 2023. And 98 per cent will do so by 2025. As awareness of eSIMs' benefits becomes commonplace among manufacturers, SPs and consumers alike, what impact will the technology have on each of these groups?
Original equipment manufacturers
As one of the most popular handset manufacturers, Apple’s decision to go eSIM-only in the US will initiate a ripple effect among its competitors. At the moment, while the number of eSIM-capable devices on the market is increasing, the technology has only become commonplace among manufacturers over the last few years. Coupled with longer customer device cycles, which mean that consumers aren’t replacing their handset as often, there’s a lag in eSIM adoption despite the capability’s inclusion in a wide range of newer handsets.
In general, access and affordability of smartphones are improving, thanks to developments like Google and Jio Platforms’ JioPhone Next, released in India in September 2021, which is the world’s cheapest smartphone. But for eSIM to truly take off, more affordable handset manufacturers need to adopt the technology.
It’s not a matter of if, but when other OEMs launch eSIM as standard in all their devices. The addition of eSIM does not make devices more expensive. Instead, it has a positive impact on manufacturing costs in comparison to a physical SIM. Nevertheless, to widen price ranges and drive wider customer reach, other, smaller OEMs need to launch more models with eSIM capability, especially for the developing markets.
The move to digitalise yet another element of the customer journey will benefit end users, especially as 70 per cent of telco customers consider the quality of their digital experience as an important marker when selecting their SP.
eSIMs improve the digital customer experience (CX) in a few different ways. A key change from the traditional physical SIMs is that multiple eSIM profiles can be stored on a single device simultaneously, allowing the user to switch profiles depending on how they’re using their devices. So, for travellers, it eliminates the hassle of sourcing and physically swapping physical SIMs depending on your location. And for workers, it’s possible to have your work phone and personal phone on one device with two different numbers, to maintain a work-life balance without carrying two devices.
On top of this, some SPs are offering multiple eSIM devices on a single contract for companion devices, such as smartwatches, laptops and tablets. While it can sometimes be complicated to activate them with a traditional cellular plan, with eSIM, activation is much simpler, offering a more seamless onboarding experience.
Despite the undeniable benefits, consumer awareness of eSIM is still low. The GSMA reported that while 28 per cent of consumers have read about eSIM in an article, only 15 and eight per cent were made aware of it either from a device manufacturer or from promotional materials respectively. So, SPs will need to produce and promote educational content on how eSIMs work and the benefits for customers to boost awareness, and therefore adoption.
There were 232 operators offering commercial eSIM services for smartphones across at least 82 countries at the end of 2021, more than double since 2019, with North America taking the top spot for adoption among SPs. With greater access to the resources, knowledge and technology to launch eSIM capabilities, it comes as no surprise that mobile network operators (MNOs) currently dominate the market. But if devices are to become eSIM-only, mobile virtual network operators (MVNOs) and enablers (MVNEs) will have to adapt too.
Removing the physical infrastructure and logistical complexities, while also reducing the cost of subscription provisioning, eSIM lowers the barriers to entry and opens the market for smaller SPs. Physical SIMs are the last physical component to be digitalised to enable SPs to take the leap and become fully digital, with no physicality required aside from the consumer’s handset.
But despite greater accessibility to products and services, the magnitude of the task of digitalising the entire subscription provisioning process is still large. It’s understandable that MVNOs may feel dwarfed by the challenges of eSIM adoption. From budgets to technology sourcing, to regulatory red tape, there’s a lot to consider.
Mobilise has developed a solution to support smaller operators to launch their own eSIM capabilities quickly and effectively — eSIM as a Service. It’s a comprehensive end-to-end management solution that empowers any provider looking to launch eSIM services to consumers. Fully compliant with the GSMA’s SAS-SM certification, eSIM as a Service allows consumers to provision their subscription remotely by downloading over-the-air credentials through their provider’s app. As a result, SPs can offer the premium level of CX through in-app provisioning, without the resource and investment-heavy tasks of in-house development.
It's clear that Apple’s move will impact every link in the telecoms value chain, with every player needing to prepare their eSIM capabilities to remain relevant. While eSIM is transforming telecoms’ existing applications, it’s also creating a world of opportunity elsewhere, with potential for embedded connectivity through eSIM emerging in adjacent markets too. There’s no denying it — the era of the eSIM is here.