The End of an Era for the SIM. Welcome eSIM.

The first SIM card was developed by the German company Giesecke & Devrient GmbH , which later sold three hundred cards to the Finnish operator Radiolinja that began commercial operation in 1991 . It was unique to each phone line, so the operator that you chose added your identifying data and the services offered.

SIM cards are available in 4 different formats: Full size (1FF), Mini SIM (2FF), Micro SIM (3FF) and Nano SIM (4FF) and their evolution has gradually downsized over time. The SIM has been a faithful companion of phones, and now smartphones and some tablets for quite some time, but there is a fundamental change coming your way and it is already happening.

eSIM for consumers, a mobile telecommunications game changer

Traditional removable SIM cards are being replaced by dynamic embedded SIMs/eSIMs

The SIM card revolutionised the Telecom industry and spurred us into the world of portable communication which moved onto smartphones. Twenty five years after its first integration, the humble SIM card is now possibly facing the end of an eventful life changing life span.

As was announced as a standard in February 2016 at the GSMA Mobile World Congress, the eSIM specification describes a SIM on a chip that is soldered directly onto the circuit board of the connected or mobile device. Once a device is eSIM enabled, the end user is able to select multiple mobile networks without physically changing the SIM card. The eSIM therefore does away with the need to insert a physical SIM card into the device.

An eSIM is a programmable SIM card that can be permanently fitted into devices.

However, it’s important to note that the eSIM is different to the SIM cards, which are essentially chips from plastic SIM cards that are inserted into where a SIM slot would be on a device. Soldered on SIM cards are still tied to a network operator and provided by a specific mobile network.

Once eSIM technology in both mobile network carriers and devices is widespread, there will be a visible shift in how connected devices can operate and how business is done in this arena.

The new concept replaces the physical SIM by an integrated electronic device, thus eliminating a slot to house the same or disappearance of different numbers with different cards such as Dual SIM devices. Real estate inside a smartphone is expensive, as evidenced by the removal of the 3.5mm headphone jack from phones such as the iPhone7.

The SIM card as we know it will eventually come to an end. There is a new SIM in town, and it will make switching telecom providers a lot easier for everyone.

SIM cards will eventually be replaced by the eSIM.

The concept of the “embedded SIM”/“eSIM”/ “Virtual SIM” card for mobile devices has been around for a few years now. 

So, what exactly is an eSIM or Virtual SIM Card?

The term "eSIM" relates to a new standard promoted and approved by the GSMA - the association that represents network operators worldwide. Traditional removable SIM cards are being replaced by dynamic embedded ones.

In theory the term “eSIM” refers only to the functionality of “remote provisioning”; that is, the ability to download an operator profile to an in-market SIM and also potentially switch between profiles or delete them. This contrasts with the traditional methods of pre-provisioning specific, fixed profiles into SIMs during manufacture. Most SIMs today have a particular operator’s identity and encryption credentials set at the Personalisation bureaus. This is true of both the familiar removable SIM cards used in mobile phones, and the “soldered-in” form used in some M2M devices.

The eSIM will come in the form of an integrated SIM chip, one that cannot and need not be removed from a device - something that consumer electronics manufacturers are also keen to adopt for connected products around the house as part of the Internet of Things(IoT).

The information on it will be compliant or re-writable by all operators, meaning a user can decide to change a Telecom operator with a simple phone call or eventually online. A new SIM will not be required, nor should there be any time delay in switching the eSIM to its new purpose. There will also be no physical swapping ever required by the user.

Traditional removable SIM cards are being replaced by dynamic embedded ones. What might this disruption mean for the industry?

Will the eSIM be the same SIM across manufacturers?

The basic premise is that the eSIM will be completely standardised across manufacturers, although Apple has already got something similar - Apple SIM - that it uses in US iPads predominantly. EE also supports Apple SIM in the UK.

It is likely that Apple will continue with its own version, but it will technically have to comply with GSMA standards.

The use of consumer eSIMs means that the chipset manufacturers will negotiate with hardware Original Equipment Manufacturers (OEMs) such as Apple, LG, Huawei, Samsung, etc directly, and the industry value chain might be reconfigured. The manufacturing and distribution of physical SIM cards becomes (partially) obsolete, although pre-configuration and profile-handling services already form a significant part of the value created for traditional SIM-card vendors. Physical SIM cards however, are not expected to disappear from the market within the next few years. Instead, a relatively long phase of parallelism between existing SIM technology and the new standard is expected. Countless existing devices will still have to be served continuously, and developing markets, in particular, will have long usage cycles of basic, traditional SIM phones and devices.

Mobile Device Manufacturer Centric eSIM Ecosystem:

From Telecom industry resistance to acceptance of change

In 2011, Apple was granted a US patent to create a mobile-virtual-network-operator (MVNO) platform that would allow wireless networks to place bids for the right to provide their network services to Apple, which would then pass those offers on to iPhone customers. Three years later in 2014, Apple released its own SIM card—the Apple SIM. 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.

This technology gave users more freedom with regard to network selection. It also changed the competitive landscape for operators. Industry players were somewhat resistant to such a high level of change, and the pushback may have been attributable to the fact that operators so heavily relied on the structure of distribution channels and contractual hardware subsidies. In fundamentally changing the way consumers use SIM cards, Apple’s new technology was sure to disrupt the model at the time.

As a technology, eSIM’s functionality is similar to that of Apple’s MVNO and SIM, since it also presents users with all available operator profiles. Unlike Apple’s technology, however, e-SIM enables dynamic over-the-air provisioning once a network is selected. Today, the industry is reacting much more favourably. One driver of the shift in sentiment is the recent focus on the push by the GSMA to align all ecosystem participants on a standardized reference architecture in order to introduce e-SIMs. What’s more, machine-to-machine (M2M) applications have used this architecture for built-in SIM cards for several years now with outright great success.

Image Credit: Taisys

How will the eSIM benefit you?

Not only will it give you the freedom to switch operator at the end of a contract if you so wish without having to wait for a new SIM in the post or visit a mobile phone shop, you will be able to upgrade your account from a pay-as-you-go plan to a contracted one for example with the minimum of fuss.

It should also be easier to swap devices when you upgrade. Currently, you might switch from a device that requires a micro SIM to one that only supports nano SIMs. With an eSIM, you only need to register the new device.

The "e" stands for "embedded" and means that the SIM card is pre-installed in the device. This new standard will replace the current SIM card in the future. In this case, the eSIM profile is transmitted electronically. It contains all the relevant information for access to the mobile network. Machine-to-Machine (M2M) technology applications have used this architecture for built-in SIM cards for several years.

Consumer devices will require a more dynamic pull mode to request electronic profiles than the passive push mode of M2M technology. This requirement translates into a big incentive for device manufacturers and over-the-top players to support the industry-wide adoption of eSIM standards. It is becoming increasingly clear that future consumer wearables, watches and gadgets should ideally be equipped with stand-alone mobile-network connectivity. Together, these developments have contributed to strong industry support from mobile operators for the GSMA’s Remote SIM Provisioning initiative.

As a result of both the strong growth in the number of IoT and M2M devices plus the development of consumer eSIM specifications by the GSMA, the distribution of eSIMs is expected to outgrow that of traditional SIM cards over the next several years by a large margin.

An eSIM is also called eUICC i.e. a soldered on Universal Integrated Circuit Card (UICC) which is not easily accessible or replaceable. It is not intended to be removed or replaced in the device it is installed and it enables the secure changing of subscriptions. The UICC is the electronic and hardware platform for the SIM application.

Consumers will have more control with eSIM. They will be able to connect to operators’ networks in the same way they now choose WiFi networks

The GSM standard will not change because of the new SIM technology. It functions the same way, except for the fact one need not replace SIM cards — one just switches between different profiles. The use of eSIM will allow for a sleeker handset design because there will be no need for physical SIM card slots. That’s good news for device manufacturers as it will be easier to create dustproof and waterproof designs, as well as to make devices thinner. To a greater extent, eSIM adoption will pave the way for many wearable vendors who will design smart watches or fitness trackers: such devices will be able to get their long-craved autonomy from handsets or WiFi networks and become permanently connected.

Handset vendors will get a head start in their interaction with mobile/telecom carriers who traditionally exercise control of the device market. Nowadays vendors have to negotiate their cause with telecom carriers in order to deliver their products to the shelves then onto the customers, but they will be able to leverage eSIM and establish direct connection to the retail market.

Vendors will be able to sell their products through their branded online stores, offering users a choice of subscription with eSIM, vendors can remotely ‘switch’ on and off any operator) or even better a default operator subscription. This is why some of the major telecom carriers strongly oppose the roll-out of eSIM; they are used to playing the main part in the telecom carrier-subscriber interaction and are not going to let it go easily. However the future is is going to be different.

Smart appliances, wearable gadgets and a variety of data-sensor applications are often referred to collectively as the Internet of Things (IoT). Many of these devices are getting smaller with each technological iteration but will still need to perform a multitude of functions with sufficient processing capacity. They will also need to have built-in, stand-alone cellular connectivity. eSIM technology makes this possible in the form of reprogrammable SIMs embedded in the devices. On the consumer side, eSIMs give device owners the ability to compare networks and select services at will directly from the device.

Architecture and access

The future standard will most likely require a non-provisioned or new device to connect to an online service (for example, an eSIM profile-discovery server) to download an operator profile to the handset. Final details on the eSIM operating model including the required components for a provisioning architecture should be finalised by original equipment manufacturer(OEMs), network operators, SIM vendors and the GSMA.

While no change to the current environment is expected for most of the architecture components, the industry group needs to agree on a solution for how the online discovery service will establish the initial connection between the handset and the profile-generating units.

The use of consumer eSIMs means that the chipset manufacturers will negotiate with hardware OEMs such as Apple, LG, Samsung, etc directly, and the industry value chain might be reconfigured. The manufacturing and distribution of physical SIM cards becomes (partially) obsolete, although pre-configuration and profile-handling services already form a significant part of the value created for traditional SIM-card vendors.

Profile-generation unit. eSIM profile generation will take place via the same processes used for SIM profile development. SIM vendors will use authentication details provided by network operators to generate unique network access keys. Rather than storing these details on physical SIM chips, they will be saved in digital form only and will await a request for download triggered by the embedded universal integrated circuit card (eUICC) in the consumer’s handset.

Profile-delivery unit. The connection between the eUICC in the device and the profile-generation service is established by the profile-delivery unit, which is responsible for encrypting the generated profile before it can be transmitted to the device. While theoretically, all participants in the new eSIM ecosystem could operate the profile-delivery service, those most likely to do so will be either the SIM vendors or the mobile network operators (MNOs)—physical and virtual—themselves. Independent ownership is preferred from a consumer perspective to ensure that all available operator profiles and tariffs are made available for selection without the need to state a preference for a specific provider. Enabling over-the-air provisioning of operator profiles requires a standardized architecture with agreed-upon interfaces and protocols across all ecosystem participants.

Universal-Discovery (UD) server. A UD server is a new key component in the eSIM architecture; previously, it was not required for provisioning physical SIM cards or M2M eSIM profiles. In a consumer eSIM environment, customers will obtain either a device that is not associated with an operator or one that has been pre-provisioned. In the former case, they will be required to select a provider, and in the latter, they may have the option to do so. In both cases, the UD plays a pivotal role, as it is responsible for establishing the link between the device and the profile-provisioning units. Consumers would most likely prefer that an independent party be responsible for operator-profile discovery to ensure that all available profiles in a market (with no restrictions on tariffs and operators) are presented without commercial bias.

A possible alternative to a separate UD server might be a model similar to today’s domain-name-server (DNS) service. This can provide the same level of objectivity as the UD, but it would require more intensive communication between all involved servers to ensure that each provides comprehensive profile information.

Advantages of the eSIM

The advantages that the eSIM is going to offer users is that it is going to make things a lot easier and save a lot of time if you ever want to switch telecom providers or data plans within our current telecom carrier.

Upgrading devices is going to be a lot easier. For example, if your current device uses a micro SIM, but the device you want to get uses a nano SIM. In this situation switching devices and info can be a real fuss. With eSIM all you have to do is register the new device, and you’re done! e-SIM enables dynamic over-the-air provisioning once a network is selected. It will make annoying, time-wasting processes disappear by probably being able to do all the transactions to get a new phone number digitally.

Changing the operator will be faster as the chosen operator will only have to upload its profile to the user’s phone. In that way, we will avoid the tedious process of talking to operators or their agents, changing the SIM card and so on.

Several operators can be used in a device, and thus the user can check the best tariff in every moment and make a call or surf the Internet with the cheapest operator and the best phone coverage, for example. There may be potential applications to automate these changes.

Roaming to disappear; it is possible that local operators will send us an SMS to load their profiles to our eSIM once we activate our phones abroad, so that we can obtain local prices in a few seconds. Roaming has disappeared in the European Union since June 2017 hoping the European Commission maintains its commitment visa vis Brexit. EE has already confirmed to its customers that there will be no roaming in Europe from June 2017.

The greatest advantage of eSIM cards for customers is that they will need less time to do the tasks they need to do with their telecom carrier companies.

eSim disadvantages.

As mentioned earlier, in order to enjoy the advantages of the eSIM, it needs a suitable smartphone device, and if you do not have it, you have to renew/replace what you have, which means that is an expense before you utilise the eSIM advantages.

eSIMs are great in cases where unattended connectivity is needed (i.e. for devices not operated by humans) but they are not good for mobile phones where humans want to have more control.

Security is another issue of concern. Some critics believe that it will be easier for hackers to hack into the cloud storage apparatus that will be the mainstay of the eSIM technology. In the recent past, there have been far too many cases of data theft so far, let alone the possibilities of new avenues occurring with the eSIM.

There are other future disadvantages to think about of bureaucratic nature to do with the rethinking of the operators’ offers, such as: disputes because of long-term contracts, or convergent offers, those which include more than one service (Internet + TV). So in this respect, technology will be available first but we will wait for the law to play its part before we enjoy it.

Telco Profiles in the eSIM

The eSIM is going to hold the profiles of all of the associated companies, but only the ones you are using will be activated. Each profile will be a different company, just like every traditional SIM has its own telecom carrier. It is these profiles that are going to allow you to also have lines from a different telecom carrier, just like you would in a device with two or even three SIM cards in the same device. For now, you can only have one profile activated, but the idea is to have multiple profiles running simultaneously.

The End of Roaming

As cited earlier, you can also say goodbye to roaming because once you land in a foreign country, you can easily get a local line while you still hold on to the line you’ve always had back home.

There are already some devices with eSIM (sort of), such as the Samsung Gear S2 smartwatch. The smartwatch features 3G connectivity, but you don’t have to open it to insert a SIM card – it is built in. This is going to allow more devices to be used as a phone, regardless of their size.

The eSIM craze is going to have two parts; The first part is going to affect the wearables, tablets, and other devices, while the second part is going to be exclusively for the smartphones. Thanks to the eSIM, you are going to be able to connect multiple devices to a single plan with the telecom carrier you have chosen. We still have to wait and see when the second part starts, but some say that it will start in June while others say that it will begin by the end of 2017.

Image Credit: Deutsche Telecom

Benefits of moving to an eSIM powered mobile ecosystem

Smaller devices

With the absence of a physical SIM card slot, manufacturers will be able make devices smaller. Wearable devices such as smart watches (the Samsung Gear S2 and S3 watches are already eSIM enabled in some markets) and IoT devices such as sensors and smart meters can be streamlined, possibly opening up new markets for connected devices such as wearable rings.

Streamlined connectivity

As an added benefit of being a smaller size, eSIM enabled devices which previously relied on “intermediate” forms of communication, such as wifi or bluetooth, can now talk directly over the mobile network to the Internet. Eventually, as low data tariffs continue to evolve, it will be simpler to have a wearable device connect straight to the Internet rather than via a local intermediate gateway, e.g. bluetooth to the end user’s smartphone as the intermediate connection. This also has the expected benefit of further uptime since there are less potential points for loss of connectivity to occur. Every device is self-managing.

More reliable

Doing away with the need for a physical SIM card slot can allow the device to be weatherproof and dust proof, reducing the potential for the device to be damaged in harsh environments. And while it’s quite reliable already, doing away with the “moving part” of a SIM sliding into a slot and being held in place by a bracket or spring will be an added benefit in industrial high impact environments, such as smart sensors on construction machinery.

These benefits project a lot of promise and potential for innovation for the consumer and M2M markets.

What does eSIM mean for the telecoms channel and IoT market ?

With the uptake of eSIM, Mobile Network Operators(Carriers) will feel the most impact. While some embrace the eSIM and the flexibility it offers, others are opposed to the eSIM rollout and are inclined to hold out with the traditional plastic SIM model as long as possible. Sometimes the decision is hard to make for the MNO because the introduction of the eSIM is a two way street—end users will have the ability to move between networks as they wish, whilst the MNOs have a new tool to easily win end users to their own network (if their service is up to scratch, or if their prices are reflecting the service they offer or their marketing campaigns are good enough to get the attention of prospects).

With this new found freedom, the power goes to the end user. If you don’t like the service, move to a new telecom carrier on the spot! In the eSIM world, there is no need to wait for a new SIM card to arrive in the post or make a trip up to the high street  .

When these same principles of flexibility are applied to a large IoT estate, consisting of millions of SIM enabled devices, there is a major change. MNO’s, MVNO’s and resellers have to up their customer centric and business service game, as the entire approach to a sale, support, and retention of the customer’s estate drastically shifts. No longer can a provider with an IoT SIM estate consider that estate as “safe” as the previous rules about stickiness do not apply anymore. Having a few thousand of one’s SIM cards deployed all over the country doesn’t mean the customer is tied to one’s service. It would be entirely possible (within contract limitations) to move the entire base to another network on the spot.

New products based on tariffs will also appear. For example, if a reseller had eSIM tariffs available from four MNOs, they could start packaging together combo services, as it is the eSIM which moves between networks, not the SIM having a multi network roaming agreement. It will be interesting to watch this space and see what new and exciting products and services emerge. There a lot of ideas that can be developed further into independent business units.

Security also benefits, as there is nothing physical to remove anymore. Gone will be the days of people grabbing USB dongles with SIM cards, or removing the SIMs themselves to put in their own phones and tablets (this is a big issue in some low overhead markets such as in taxi companies). And if the device itself is stolen, as soon as it's powered on it will register on a network, or simply be disabled, so there will be benefits from a tracking perspective.

eSIM’s potential impact on channels and operating models

Most network operators have already started initiatives to explore not only the impact of the architectural requirements on the organisation including changes to existing IT systems and processes but also the potential effect on channels, marketing, and proposition building.

Marketing and sales. Targeting new clients through promotional activities may be as easy as having them sign up by scanning the bar code of a print advertisement and activating the service immediately—without ever meeting a shop assistant or getting a new eSIM allocation. By conveniently adding secondary devices such as eSIM-enabled wearables and other IoT gadgets to a consumer’s main data plan, operators might improve take-up rates for those services. On the other hand, the ease of use and ease of operator switching has the potential to weaken the network operator’s position in the mobile value chain, as customers may demand more freedom from contractual lock-ins, as well as more dynamic contractual propositions.

Customer touch points. The entire customer journey and in-store experience may also be affected. For example, eSIM eliminates the need for customers to go to a store and acquire a SIM card when signing up for service. Since face-to-face, in-store interactions are opportunities to influence customer decisions, operators will need to assess the potential impact of losing this customer touchpoint and consider new ways to attract customers to their sales outlets.

Logistics. Many services will need to be redesigned, and customer-service and logistics processes will be widely affected. For example, secure communication channels and processes for profile-PIN delivery will be required.

Churn and loyalty. The customer may be able to switch operators and offers (the prepaid client base, at least) more easily, and short-term promotions may trigger network switching. This means that churn between operators in a strong prepaid ecosystem will likely increase. But this does not necessarily mean that a customer who isn’t locked into a contract will churn networks more often or spend less. Consumers may still prioritise a deal that offers a superior user experience and acceptable call quality. Satisfied happy customers will likely stay with their operator as long as locked-in customers do.

Prepaid versus Contract markets. The eSIM’s impact may be greater in markets with more prepaid customers than in markets with a high share of subsidized devices. While device-subsidy levels will remain an important driver of customer loyalty in developed markets, investment in device subsidization is expected to fall dramatically over the next couple of years from approximately 20 percent of all devices sold to less than 8 percent in 2020.

Stakeholder advantages in an eSIM environment

Adoption of eSIM as the standard across consumer devices brings several advantages for most stakeholders in the industry; IoT-enabled product manufacturers (for example, connected-car or wearables manufacturers) would have the ability to build devices with “blank” SIMs that could be activated in the destination country. This functionality would make for easy equipment connectivity and allow manufacturers to offer new products in new market segments.

By adopting eSIM technology sooner rather than later, mobile network operators can benefit from the opportunity to take a leading role in the IoT market.

They would also have the ability to provide convergent offers with multiple devices (for instance, the smart car and smart watch) under a single contract with the consumer more conveniently than they would using physical SIM cards.

Consumers benefit from the network-selection option that embedded connectivity technology provides. The ability to change providers easily means that eSIM customers don’t have to carry multiple SIMs, have full tariff transparency, and can more easily avoid roaming charges. This is attractive for prospects and new customers onboard.

Mobile-device manufacturers may be able to take control of the relationship with the customer because eSIM, at least technically, allows for disintermediation of network operators from the end-to-end relationship. eSIM also frees up valuable space in the device “real estate,” which gives manufacturers an opportunity to develop even more features using the space once occupied by traditional SIM cards.

SIM vendors don’t lose in the e-SIM business scenario either.

Their competency in security and profile creation positions them to be valuable players in the new eSIM ecosystem. Key architecture activities, such as managing the eSIM-generation service, are among the roles that SIM vendors are uniquely qualified to take on. More opportunities can be taken up and or created.

Disruptive business models that have been enabled by eSIM

A number of new business models have developed around eSIMs. Specifically, dynamic brokerage and potential spot-price platform markets are piquing the interest of the mobile community.

Wholesale service provision: Wholesalers contracting with several network operators in a market could offer a tariff selection without disclosing which network is providing the connectivity. The customer could then be “auctioned” dynamically among network operators for a period of time. Electronic profiles could even be switched among operators seamlessly for the customer. This could could work well with contract customers.

Social-media and Internet-content service providers: The voice services that social-media platforms offer rely on available Wi-Fi connectivity to provide voice services either entirely via a data connection or by using a temporary connection to a cellular network. Call quality depends in part on the seamless switching between those connectivity avenues, and eSIMs would facilitate smoother “handovers” with dynamic (and automatic) operator selection.

One of the potentially highest-impact and most disruptive new ventures of this type is Google’s Project Fi, an MVNO offer, recently launched in the United States, that strives to provide the best available data-network performance on mobile devices by combining mobile data and Wi-Fi connectivity. The decision regarding which network to connect to will be based on the fastest available speed and bandwidth. Additionally, social-media voice services mean that mobile-phone numbers are no longer the only unique client identifiers. A user’s online communication account (for example, Hangouts) is enough to set up a phone call.

New pricing schemes: While most operators already provide mobile Internet telephony services, technically referred to as voice over IP (VoIP) or voice over LTE (VoLTE), many operator tariff schemes still have potential for disruption on the commercial side. In addition to offering competitive rates, new players may further increase margin pressure by including refunds of unused, prepaid minutes in their pricing models. For advertising-centric players or social-media companies entering the MVNO market, the advertising value or additional call-behaviour data may even lead to cross-subsidising offerings in the short term.

Global roaming services: Lastly, other players are primarily targeting the still-expensive global data-roaming market for end users. Strong global brand power paired with the technology of reprogrammable eSIMs supporting over-the-air provisioning of multiple electronic user profiles of global operators, can be turned into easy-to-use offers for global travellers. These transparently priced global roaming services will allow users to choose a local network with a few clicks on their devices. Current global roaming offers based on reprogrammable SIMs are priced near the upper end of the market, but providers in emerging markets may soon offer similar services and more competitive global tariff schemes.

The GSMA is working with global network operators to develop a standardised reference architecture for the implementation of eSIM technology. The process under way may lead to widespread industry adoption of eSIMs in the very near future.

eSIM Opens New Doors but this time Not Exclusively For Mobile Network Operators(MNOs):

The beauty of eSIM is that it can serve customers on both sides of the Original Equipment Manufacturer-Mobile Network operator (OEM-MNO) divide and it allows the SIM card vendors and their partners to add new services and lines of business to this very big, yet highly commoditised business. To date, most MNOs eSIM discussions and focus has been on M2M and IoT – most certainly not on the sacred cow of smartphones (incorrectly in our opinion at (Payments, Authentication, Identity) P.A.ID Strategies). eSIM is seen as a way to enter and grow new areas of business and revenue streams, offering much more flexibility than traditional, removable SIM cards; appealing to (non-mobile) OEMs, such as automotive manufacturers, because eSIMs are not tied to a single MNO and their cars can be updated and moved to an alternate network without being recalled to have the SIM card exchanged. It is for this same reason that some MNOs are not willing to entertain the benefits that eSIM can offer to them and their smartphone customers. They are worried about it loosening their grip on their core customers; but this ignores the benefits it can offer them and the way they can put their customers first in a modern era of multi-device ownership connecting across multiple channels. eSIM opens up a new role for MNOs to play in the modern connected world, offering a new level of service to their business and consumer customers.

The eSIM/eUICC Opportunity - An Emerging Market in IoT Connectivity

New entrants and new sales and service models will drive eSIM’s impact on the mobile-telecommunications market in the next two to five years. Revenue is at stake, and operators’ approaches to new propositions, shared data-tariff portfolios, potential new revenue streams, and handset-subsidy strategies across multiple markets will play a big role in how they fare in the new eSIM ecosystem. Whether an operator decides to take a role as a smart follower or an early mover, an overall strategy and associated initiatives need to be shaped thoughtfully now.

Three strategic areas of consideration for operators:

To summarise this, in the near future being a successful reseller or MVNO will be all about providing high standards of service while retaining value for money, and keeping an eye on value added solutions and services. Some services available now, such as the option for private APN’s or bespoke IP addressing, will help retain the customer and create new forms of customer retention. The future is the eSIM standard; eSIM is a virtual SIM card which does not need a ‘dummy’ and its profile is downloaded directly into the phone’s memory. I believe that the virtual SIM will be a great thing for the overall security of mobile devices since it will be even harder to take advantage of lost or stolen devices. Future smartphones will come with a virtual SIM, meaning without a physical SIM card.

Telecom Operators can take advantage of the introduction of eSIMs on consumer devices (including smartphones) if they adapt their device bundles, channel emphasis and wholesale approach.

The evolution of eSIMs, supporting remote provisioning of mobile operators’ profiles, could allow new IoT devices and business-models to thrive. Users could easily switch tariffs or providers if they went on holiday, as to not incur high roaming charges. Or they could have multiple pay-as-you-go accounts on one phone, allowing them to switch if a better offer came up with a different provider.

However, the promise is countered by fears that eSIM could enable internet companies and device manufacturers to become connectivity gatekeepers. 

Mobile device manufacturers are the biggest winners here. With embedded SIMs they get a new business, more control over the device and more flexibility to use the space inside the device as they please. 

The consumer relationship with telecom operators is far from over. There will be a couple of years of co-existence between removable SIMs and embedded SIMs because all the phones that currently use removable SIMs won’t be replaced overnight. If MNOs and MVNOs respond wisely by building on their core capabilities, they can establish a new connection with their customers that will be more enduring than the SIM card.

The arrival of embedded SIMs or eSIMs, which can operate globally, support multiple subscriptions, and can be remotely programmed for new subscriptions, takes SIM ownership from the MNO/MVNO and gives it to the device user(s).

Prepare for an eSIM enabled customer revolution.

Are you ready for the future?