Amir Mehmood, Director of Solution Engineering, Optiva & Joy King, VP of GTM, Optiva tracks the impact of eSIM technology
There’s a quiet revolution afoot in mobile connectivity. This time, it’s not about faster speeds but rather the nature and convenience of connectivity. Embedded SIMs, or eSIMs, are here, and they promise to redefine connectivity for operators, consumers, devices and businesses across the globe.
The eSIM market is already firmly established and expected to grow by 20% over the next decade and be worth 6.29 billion by 2034, according to Fortune Business Insights. To understand eSIM technology and its potential to impact the mobile market, let’s first look at it through a consumer lens.
Customer onboarding for mobile operators has traditionally been a painstaking process. Even mobile virtual network operators (MVNOs), typically more nimble, agile and digitally adept than their “parent” network operators, still deal with friction when onboarding new subscribers. That’s because, until recently, the onus has been firmly on the customer to act. They must buy their device, insert a compatible SIM card, set up their account and manually connect to their network(s). It is a far cry from the “seamless connectivity” often advertised by the industry.
This also means that operators must work exceptionally hard on marketing and services to win customers. Consumers are unlikely to switch providers if their offering isn’t game-changing. eSIMs will render traditional SIM cards obsolete, allowing connectivity to be “baked-in” during the design and manufacture of a device so that connectivity can be activated straight out of the box. No configuration, no setup, just instant connectivity that simply “works.”
Thus begins a fundamental shift in how operators deliver their services. Airtime usage will be decoupled from traditional provisioning models, giving users greater flexibility when selecting and switching carriers and more coverage options when traveling internationally. It is a boon for users but could also be a boon for operators, allowing them to compete on a level playing field — best service wins. We’ll see a push toward hyper-personalized services and bundles as operators vie over subscribers, which, while challenging for some, will ultimately drive the industry forward.
What does this have to do with business and IoT?
As enterprises increasingly rely on connected solutions to streamline operations and enhance productivity, the traditional limitations posed by physical SIM cards appear more apparent. One of the many advantages of eSIM technology is that it offers a digital alternative to physical SIMs that can be managed remotely. Remote SIM provisioning (RSP) solution performs over-the-air switching of profiles on the SIM card, eliminating the need for physical installations.
It enables more agile connectivity management across various devices from M2M to IoT sensors to automatically connect to local networks upon arrival, simplifying regulatory compliance and addressing ‘permanent roaming’ issues. This flexibility offers better commercial terms, potentially lower tariffs, and improved negotiation power. Additionally, it enhances reliability by enabling network switching in areas with limited coverage or during network outages. The shift brings supply chain efficiencies and allows businesses to optimise their connectivity in real time.
MVNOs might understandably be apprehensive about this shift. In addition to making it easier to secure and onboard new business customers, it will also make it harder to retain them. Those that can adapt and offer more seamless, scalable and targeted solutions will find it easier to pull ahead.
For instance, the ability of eSIMs to support dynamic network switching and service customisation is particularly advantageous in scenarios where businesses deploy connected devices across multiple regions and networks. As IoT devices proliferate across industries — from healthcare to automotive to manufacturing — the role of eSIMs in ensuring uninterrupted and secure connectivity becomes increasingly critical, presenting MVNOs with significant opportunities and new challenges to navigate.
Building a case for eSIM-driven IoT
According to Counterpoint Research, projections are for IoT eSIM connections to grow 43% annually between 2023 and 2030, accounting for 2.2 billion connections by 2030. Their appeal is clear.
Firstly, devices come out of the factory with an industrial-grade SIM chip already embedded in them, which cuts down the time, labour and costs associated with installing the SIMs into devices at a later point. It accelerates the devices’ time-to-deployment (and ROI) and enables truly global streamlining with single SKUs and simplified workflows.
Remote SIM provisioning is a game-changer in IoT and other industrial contexts. It enables scalability, improves security and control, and increases efficiency. This is particularly true in scenarios where configuring and updating devices is challenging — for instance, in rugged or hard-to-reach environments.
These industrial-grade eSIMs are designed to withstand the stresses of the many different, complex IoT environments, where safety, robustness and remote configuration are priorities. Settings such as connected cars, retail, transportation, utilities and healthcare are expected to see the biggest growth in IoT eSIMs.
Tearing down the barriers
Frictionless connectivity is another way the barriers between users and their digital worlds are disappearing. For many users, eSIMs represent the perfect example of this digital simplification. Just as digitally native generations who have grown up with mobile phones struggle to grasp that people once phoned a building to connect with a particular person, eSIM technology is re-writing the connectivity rules for many familiar business scenarios.
It includes simplifying provisioning in cases where personal devices are used in a business context, cutting down on the need for multiple handsets, for instance. It also allows business users greater freedom when traveling internationally with travel eSIM plans that reduce roaming charges. eSIM technology also removes the need for backup or multiple SIMs, simplifying usage considerably. Finally, businesses can select and switch carriers with greater flexibility, enabling efficient, fast connectivity at scale for the workforce.
MVNOs: unlocking the eSIM opportunity
Unlike traditional network operators, MVNOs tend to be digital natives. While they’re often offshoots of either incumbent operators or other established businesses, they tend to behave like challenger brands. They lease connectivity from the operators but often deploy their own nimble business support systems (BSS) and digital channels to deliver modern experiences and personalised service bundles. This business agility will prove their secret weapon for the oncoming eSIM land grab. Indeed, customer network-hopping could be an opportunity for more agile, forward-thinking MVNOs – so what’s the hold up?
In short, legacy systems. A legacy BSS system might not be equipped to deliver the flexibility and data-driven personalisation that MVNOs will need to compete in a consumer market “unlocked” by eSIMs.
MVNOs should expect regulatory challenges, too, at least in certain markets. Specific requirements exist for subscriber registration and verification in territories where mobile connectivity is tightly regulated, designed originally with physical SIM cards in mind. In India, for example, regulators have highlighted the need for explicit guidelines around eSIM usage to ensure security and prevent misuse. Meanwhile, privacy laws impact eSIM adoption and implementation. For instance, the EU’s General Data Protection Regulation (GDPR) requires operators to comply with complex requirements.
Full speed ahead for the eSIM revolution
eSIM technology will introduce specific regulatory and technical challenges for MVNOs. However, it also promises significant opportunities for service differentiation, revenue generation and customer experience improvement for MVNOs willing to embrace the innovative, digital-first mindset required to anticipate and adapt to customer needs.
Author: Amir Mehmood, Director of Solution Engineering, Optiva & Joy King, VP of GTM, Optiva
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