Will eSIMs Drive the Internet of Things(IoT)?

The term, ‘eSIM’ stands for embedded SIM or ‘embedded subscriber identity module’. The e-SIM card is not actually a plastic card but a small non-removable chip inside your smartphone, that supports network carriers and virtually embedded by them.

The embedded SIM provides all the services like the physical SIM cards, even better. And using eSIM with its supported phones, the related services become much easier. Also you don’t need to put or swap any physical SIM card into the phone.

The humble SIM card has survived for quite a long time now, but it now finally looks like it’s on its way out. Why? Well, the eSIM, a much smarter technology, is here to save the day.

 Unlike a regular SIM card, an eSIM card is built into the device. It stores your international mobile subscriber identity (IMSI) and its associated authentication key. The big difference is its size: it’s one-hundredth of the size of a standard SIM card.

Anyone who is connected to the Internet of Things (IoT) and M2M communications industries will be aware of the levels of ambition and investment being set for the Embedded Universal Integrated Circuit Card, more widely known as eUICC, or the eSIM. eSIMs will play a major role in ensuring the connectivity of billions of connected devices around the world.

It is estimated that about 50 billion IoT devices are expected to be connected by 2020. Cellular connectivity in IoT is poised to be the next big wave in this technology revolution, as evidenced by the increasing number of devices cropping up in the market. Given the wide variety of forms and functionalities these devices represent, on demand connectivity and interoperability are going to be key factors in taking this business to the next level.

The current cellular connectivity landscape is entirely designed on each mobile device hard-linked to a network provider through a physical sim. This has created a linearly dependent system that may not benefit devices of the future or its consumers. So how does cellular connectivity in IoT take off in such a scenario? With the physical SIM being identified as one of the biggest roadblocks, the embedded SIM or eSIM technology which offers the ability to remotely change service provider has emerged as a viable solution to this challenge.

The eSIM has many names

You may hear any of the following terms to describe an eSIM: Soft SIM, Virtual SIM, Embedded SIM, Electronic SIM or Remote SIM.

A common misconception is that eSIM refers only to embedded SIM hardware - the MFF2 SIM card form factor is shown below.

eSIM refers to eUICC or embedded UICC. The embedded UICC software can be deployed on embedded SIM hardware like MFF2, or removable plastic SIM cards like 4FF. With eSIM, you can change the entire contents of a SIM over the air. Changing the contents of the SIM is similar to completely swapping the SIM card.

There are two architectures that have been approved for eSIM, one for machine to machine SIMs (e.g. a new Audi) and one for consumer (e.g. iPhone XS or Samsung Gear S2 3G smartwatch). 

The eSIM Technology

The eSIM technology is an embedded SIM that is re-programmable and can support multiple profiles. It also gives more freedom for users to change operators, something which will encourage much needed competition in the industry.

The unique characteristics of eSIM that addresses the connectivity and interoperability requirements of IoT's are the following:

• Smaller Form factor: OEM’s are on their way to develop a wide portfolio of connected devices. The shape and features of the physical SIM card is a big constraining in terms of design of the device, manufacturing and interoperability. The form agnostic eSIM eliminates this issue, thereby allowing OEMs to design cost-effective, sleeker and waterproof devices.
• Fast and Flexible connectivity: The eSIM breaks the physical SIM’s lock-in effect (a SIM tied to a single operator) in a device. The eSIM along with remote provisioning system allows consumers to download and install operator profiles “over-the -air”. This flexible model allows fast and easy switching between network operators and the ability to manage multiple profiles from different operators on the same device.

The eSIM along with remote provisioning technology has already gained adoption and is used in the car/automotive industry, for connected cars.

The automotive industry is a prime example of a sector that has been keen to drive the technology forwards. With connected cars quickly becoming mainstream, the eUICC compliant eSIM has the potential to empower manufacturers by offering new opportunities to simplify logistics and optimise costs.

With GSMA releasing a standardized approach for remote provisioning, we can see wider adoption of the eSIM within the IoT sector.

The eSIM landscape – Stakeholders, Roles and Impacts

Although GSMA has instituted the standards towards realising interoperability enabled by the eSIM, the real challenge lies in its implementation. The telecom industry while adapting to the eSIM technology will go through a series of changes that are transitional in nature. During this period, physical SIMs will not cease to exist and devices using the them will continue to need support from Mobile Network Operators.

The landscape may also see a series of new entrants who develop or support systems that enable “over the air” provisioning. For existing players like OEMs and MNOs to retain their competitive edge, considerable changes to their business models are required. OEMs and remote subscription managers are the most thrilled stakeholders in this developing ecosystem. OEMs will widely benefit from manufacturing IoT enabled devices that carry an eSIM which can be activated anywhere in the world. SIM vendors can expand their competency to support profile creation, user authentication, data encryption and security. On the other end, eSIM facilitates managing multiple subscription from a single profile and end users benefit from this without having the hassle of carrying multiple SIMs.

But industry ambition doesn’t stop there. The eSIM is being hailed as the next evolution of the SIM card, prompting vendors, operators and service providers to trial new eSIM-based edge solutions in an attempt to secure their position in the huge and growing global cellular, IoT and device connectivity markets.

Clearly, there is plenty of optimism around the eSIM, much of which is based on some key benefits being promoted by the IoT telecoms industry to customers. But, is there a gap between the perception and current reality of the eSIM?

MNOs and their changing role in SIM management

While eSIMs bring in benefits for all the players in the ecosystem, it also poses unique challenges to the MNOs. The MNOs have been enthusiastic about business opportunities within IoT. However, with eSIM coming into play, there have been questions about the role of MNOs in SIM management. MNOs fear losing, their direct access to consumers, to subscription managers. To stay ahead MNOs must revamp business models which may include adding comprehensive IoT subscriptions to their services. Vodafone as an example of an MNO is doing just that.

The shift from a physical SIM to eSIM will simplify logistics for MNOs. Re-configuring operations for provisioning eSIMs and offering complete connectivity for multiple devices, coming up with pay per schemes on devices will help MNOs retain their competitive edge in this evolving ecosystem.

Image Credit: Counterpoint

Undoubtedly the most important benefit of eSIM technology, and the one most widely referred to, relates to enhanced provisioning.

Traditionally, SIM cards have been provisioned with the profile of a single mobile network operator (MNO), which once locked in, cannot be changed. This means customers must replace their SIM card every time they want to change operators. While this is a manageable task and something we are all used to when talking about a personal mobile phone, it has massive cost implications for IoT customers managing thousands, if not millions, of remotely located edge devices, over many years and across potentially vast areas.

With new, eUICC compliant eSIMs, the plan is for MNO provisioning to be managed over-the-air, with no physical access to the device required. The cards should be able to host multiple and changeable provider 'profiles' when they are deployed. This should mean that customers can change carriers on a daily basis if they so wish, depending on business factors such as connectivity, resilience, customer service SLAs and the data rates available.

This requirement has significant implications for enterprises with large-scale IoT deployments. Embedded eSIMs remove the cost and logistics headaches that come with having to manually change a SIM card or network provider, as well, for example, as maximising device uptime by allowing a choice of the best local network operator.

There are also benefits for both manufacturers and operators to consider. As eSIM-equipped devices are ready to go straight out of the factory, IoT business managers and technologists can, in theory, streamline their logistics by removing the need for local device set up and configuration further down the supply chain, no matter where they are deployed.

With IoT customers being promised an improved cellular supplier negotiating position, increased management convenience and the removal of a considerable amount of complexity and risk of ongoing costs from operators, it’s easy to see why they are drawn to the eUICC compliant eSIM.

However, despite these benefits, the current eUICC specification doesn’t yet solve all the problems of IoT.

The eSIM card sheds all of these inconveniences. It is completely programmable and can be configured remotely using Over-the-Air Technology (OAT). It enables users to download, install, activate, deactivate and even erase operator profiles. It also allows easy switching between different operators, just like switching to a different Wi-Fi network.

The gap to eUICC delivery:  

The problem currently facing potential eSIM customers is that while industry discussions have so far focused on the potential benefits offered to businesses, there are also several commercial and technical challenges that will need to be understood and worked through.

Commercial challenges: Operators are aware of the continuing commoditization of M2M cellular data with this newly enabled, simple, least-cost transferring option. The whole point of eSIM technology is that, unlike traditional SIM cards, it provides a means of avoiding contractual lock-in. However, this is not in Telecom operators’ interests, and may not always benefit customers in the way they imagine.

IoT deployments can be complex. Organisations will increasingly rely on the reliable delivery of vast amounts of business – and possibly even life-critical – data, drawn from huge numbers of devices, across many different locations and environments. There is a cost to maintain and deliver this service, and while some companies can reduce the total cost of ownership (TCO) (an estimate of all the direct and indirect costs involved in acquiring and operating a product or system over its lifetime) of a deployment with specialist wrap-around services, dynamic multi-IMSI SIM technology and expert 24/7 IoT customer support, getting the data through will always come at a price.

In addition, although eSIMs might appear to offer an easier switching process for customers, this doesn’t necessarily mean that it is contractually any different and there will still be a procedure for customers to go through.

Technology challenges: There are also some significant technology integration issues that will need to be overcome before adoption rates can really take off, primarily concerning remote provisioning. The industry has been keen to promote the idea that eSIMs enable customers to change their supplier at will, but in practice, both suppliers must be integrated at this technology level, in a way that allows data to flow.

Essentially, both parties not only have to agree to the transfer, the relevant systems must also be bolted together to actually make it happen. The device itself also has to be able to communicate with both platforms. From years of experience in Telecom and SIM provisioning file management and IoT device optimisation, I can say this is likely to be a longer and more complicated process than people actually think.

eSIM standards are undoubtedly a move in the right direction, but there is still some way to go for eUICC to become the revolutionary innovation it is predicted to be.

To support the growing number and increasing diversity of wearables – a sector now encompassing biometric t-shirts, tennis rackets and bikes – embedded SIMs or eSIMs could be crucial. To illustrate the point, take the Samsung Gear S2 smartwatch. Thanks to a solution that was unveiled at the Mobile World Congress in March 2018, the S2 no longer needs to be linked up to a smartphone, making things much more convenient for runners. Now, they will be able to read texts, access apps and even make calls on their wrist without taking their mobile phone with them.

The question is – how exactly does it work? The solution is called On-Demand Connectivity,(ODC) – by Gemalto. It is designed to enable connectivity on any device, anytime, anyplace. Built for both the M2M and consumer electronics markets, it uses embedded SIMs to ensure users can access the Internet seamlessly throughout the entire lifecycle of a device.

Leveraging Partnerships – key to success in an evolving eSIM ecosystem

Building partnerships and developing services that support each other are going to be key in delivering secure, scalable, interoperable and functional connectivity for IoT devices of the future. The eSIM can efficiently drive the expansion of IoT in an environment where OEMs, MNOs, SIM vendors, remote subscription mangers and IoT platform developers work together. Some of the biggest players in the SIM provisioning industry such as IDEMIA, G & D GmbH and Gemalto are coming up with innovative services that MNOs can leverage to boost their position in the eSIM ecosystem. On the other hand, SIM vendors and remote subscription provisioning managers can benefit from using an operator’s expertise in infrastructure to strengthen end to end encryption and security services for customers. Building such partnerships and developing services that support each other are going to be key in delivering secure, scalable, inter-operable and functional connectivity for IoT devices of the future.

Therefore, although the eSIM initially appears to be a replacement for the cumbersome physical SIM. Recent developments in business models around the eSIM show its ability to change telecom business as we know it. The traditional roles of OEMs, MNOs are all set to be redefined in a direction that would largely benefit the end user. The eSIM technology provides a platform for OEMs and MNOs to work together, opening access to data about devices and consumer habits that was previously unavailable. These valuable insights allow them to create newer products and services, expanding each of their core business. Connectivity is key to the Internet of things(IoT), and this alone signifies the importance of the role MNOs will continue to have in this space. IoT revenues for MNOs from connectivity alone are estimated at about 25% while the remaining will be through the value-added services they offer or will offer. Being early adopters of the eSIM and establishing services that are driven by user experiences will help speed up the IoT revolution.

Today the market is not ready to completely embrace the eSIM for a number of reasons, and notably this is due to lack of MNO eSIM readiness. OEMs will need to remain mindful of this to continue supporting their respective global client base until all MNOs are ready to make the switch full time.

The future looks bright for the IoT and eSIMs

Credit: Achana, P.M.

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