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Could the eSIM change the telco as we know it?

By December 12, 2018 No Comments

The eSIM has been a much hyped technology in the industry over the last number of years. But this all changed recently when apple launched eSIM. The functionality is currently only available on the iPhone XS and XS Max. Now, that Apple announced this update, you could quickly see its competitors following suit over the coming months/year. I would imagine that adoption of this will be quite slow initially, but you could easily see this innovation become the norm over the coming years and thus, the end of the SIM card.  

So how will this impact on service providers? When you think about it, the SIM card is the last piece of kit that the service provider has that links them to their customer. If you don’t need to get a new SIM off your service provider, do you need to go into one of their stores? Could this be the end of the phone shop on the high street? Probably not, for now! At the same time, there is a push towards SIM only contracts. This could mean that you no longer need to go into a store or wait for a SIM card to be posted to you. Also, phone manufacturers like OnePlus are developing high end but lower cost handsets, meaning people don’t need to opt for 24 month contracts. This could mean no longer needing to go near the high street and the sales person on commission. If these retail stores start to close, the savings could then be passed on to the consumer.

As service providers are all on different digital journeys, they are all very much aware of how successful the likes of Netflix and Spotify are at providing a digital experience. With the emergence of the eSIM, could this mean that some service providers will become fully digital companies? Where you sign up online, chose your product and are up in running with your chosen service in minutes? This all sounds great and a low-cost way of doing business for service providers. However, this also opens up the door for potential churn. If it’s that easy to sign up, it could be as easy to switch to a competitor without you having the opportunity to try and save them. Then, only community and loyalty programs will need to be extra special in order for your customer to want to hang around.

Could the eSIM bring us a global service provider? Again, probably unlikely, but when you have companies like Netflix who are operating in around 190 countries offering a digital product, this is what customers are getting used to. As the digital/cloud telco is starting to become a thing, there doesn’t seem to be any reason why a large telco couldn’t start operating in a global footprint. One brand, one head office and one product catalogue that works across many countries. This might be a long shot but could be one to watch over the next few years. This might be adopted initially by more digital savvy consumers, who might not have loyalty to their local operator but see this just as another digital payment like Netflix or Spotify.

The eSIM really is going to make the change but this all depends on how the phone manufacturers react and roll out this on their latest devices. It will be a slow burner, as the number of phones around the world that will be reliant on the actual SIM are still significant, but won’t last so long as your phone doesn’t seem to last more than two years.