eSIM: the gateway to growth
At first glance, eSIM technology looks like a welcome evolution of the physical SIM that billions of people use every day around the world to get their mobile devices connected. Instead of first acquiring, then inserting, a plastic SIM card into our phones, we’ll simply be downloading them over the Internet, in the same way we download music today instead of purchasing CDs.
But if we look deeper, eSIM is actually revolutionising mobile, and those organisations that embrace the technology quickly, will steal a march on their competition.
The benefits of eSIM, over and above quick and easy device activation, are well known. Firstly, the removal of the SIM tray in devices enables much smaller and more water-resistant devices. Then, the costs and logistics around SIM card distribution, as well as the environmental waste impact, disappear and lastly, IoT devices can now be hermetically sealed from their outside environments and allow the network provider of a large estate of devices to be changed entirely remotely.
We’re seeing tremendous support for eSIM in most consumer devices, with nearly all the major device manufacturers now adopting eSIM across their entire product ranges - Apple, Google, Microsoft and Samsung to name but a few. Although consumers are only just starting to try out this new technology, it’s only a matter of time before they start making buying decisions in favour of mobile network operators who can supply eSIM services.
The GSMA, the trade body for over 700 mobile network operators across the globe, predicts that within 5 years, more than a third of all smartphones worldwide will be connected via eSIM rather than using a physical SIM card. Even within 2 years, that figure will be 10% and likely twice that for developed countries, according to our own research. What does this mean then for operators who do not have eSIM capability in place by then? Simply put, they stand to lose 10% or more of their existing customers who will have no option but to move to other networks in order to obtain the many benefits of eSIM. As is typical with disruptive technologies like eSIM, they provide multiple opportunities for growth for those operators that move quickly to adopt such technologies – whilst at the same time, representing a significant threat for those that do not.
eSIM brings numerous benefits to network operators, starting with faster and easier customer acquisition through all channels, but most notably direct (where the real profits lie). For example, imagine a consumer seeing an advert on TV for an unlimited 5G data plan; that consumer might just have purchased an iPhone 12 which supports 5G, but their current provider doesn’t provide a 5G plan. If the consumer scans the QR code shown right there on the screen, they are taken to a “try before you buy” sign-up page, download a 5G data plan and are connected in minutes. After experiencing 5G for a couple of days, the consumer doesn’t want to give it up so arranges a 12-month contract with the new operator – all without having to leave the comfort of their armchair.
You may have come across the term, “silent roamers” – these are people who when travelling abroad, switch off mobile data on their phone for fear of getting hit with high roaming charges. Instead, they make do with Wi-Fi wherever they can get it, or purchase a local SIM card. This is a lost revenue opportunity for the home operator, and eSIM provides an easy way to resolve this issue. All the operator has to do is provide the customer with a mobile app that will show the best local deals, no matter which country they are travelling to. Everybody wins here - the customer because their connectivity problems are solved, the local operators because of new business, and the home operator because of the revenue share deal they will have negotiated with the local operators.
Thinking bigger, why are operator brands limited to the countries they operate in? Why can’t they acquire customers from any part of the globe? The physical SIM card is a major blocking point in this case – the customer has to acquire a SIM card somehow and if they’re living outside the operator’s country of operation, there won’t be any retail shops to visit, and international delivery of SIM cards doesn’t make much sense. eSIM solves all those problems – because it’s entirely digital, the operator can set up partnerships with other operators to provide global services, advertise their brand at the Tokyo Olympic games in 2021 and quickly acquire customers from all over the world.
These are just a few of the opportunities that eSIM will bring, and all the mobile network operators must do is start planning today, buy in the required technology, and at the same time, define the new innovative services. The operators that choose to sit back and wait might well end up seeing their competitors stealing a march.