eSIM technology is bound to bring market damage but operators can benefit from it

On December 16th (Ace) Ovum Europe senior analyst Paul Lambert said that eSIM technology is entering consumer devices, which triggered a common problem facing emerging technologies: When? What kind of way? What impact does it have? On the one hand, consumer-oriented eSIM technology can be seen as a Trojan horse that network operators are further losing control of their customers. However, eSIM will also reduce the cost of operators and enhance the user experience. After entering the eSIM technology world, it will be much easier for users to change service providers than they do now.

Standardized eSIM technology has arrived, but most operators will not rush to adopt in the consumer field

The Samsung Gear 2 is the first consumer device to be launched by major vendors using standardized eSIM technology. This equipment has been introduced by several operators in Europe, including Vodafone, Swisscom and Telefonica. It is reported that the sales volume of each operator is about tens of thousands. However, equipment sales are not the most important consideration for these operators at the current stage; instead, they use the early eSIM consumer equipment to promote their billing and IT system development, thus coping with the inevitable entry of eSIM equipment into the mass market. the trend of.

The major upgrades to billing and IT systems required for eSIM technology are difficult for many operators because of the limited range of equipment available. As a result, they are unable to enjoy the key benefits of eSIM technology over physical SIM card technology: low cost, faster configuration, the ability to manage multiple devices with a single subscription, and potential new revenue from new connected devices. In the IoT space, eSIM technology opens up many opportunities, such as global distribution at a lower cost than current physical SIM card technology.

Apple's adoption of non-standard eSIM technology in its iPad-enabled iPad has raised concerns in the industry that eSIM technology will make it easier for consumers to change service providers, leading to an increase in smartphone user churn. Obviously, this is not what operators expect to see.

Operators must now begin preparing for eSIM technology

The transition to eSIM technology is a major project that requires upgrades to core back-end capabilities, including BSS, OTA platforms, CEM platforms, core network PCC domains, and IT systems. Also, eSIM requires real-time BSS, so operators must be able to provide continuous services, allowing users to start accessing new services and new price plans. Considering that consumers have no demand for eSIM technology, and there is no real mass market eSIM device available, operators can easily say that they are not eager to switch to eSIM.

But if a popular eSIM device enters the market (such as the new Apple Watch in 2017), if operators can't provide the device, it will naturally lose some advantages compared to the operators that can provide the device. At the recent eSIM Connect conference in London, a spokesperson predicted that the first smartphones that only support eSIM (eSIM-only) will be available in 2018-2020, but later release times may be more in line with industry expectations. .

The second phase of the GSMA eSIM standard will allow devices to connect to cellular networks without the aid of a smartphone, a standard that will be released soon. This is an important milestone for eSIM technology. It will make it easier for operators to connect to new types of devices on the network, either as part of an existing contract or as a new contract. This will generate new revenue through new connections and traffic, and will make it more difficult for consumers who are connected to a large number of devices to pay for a carrier to change carriers.

Operators should not be afraid of eSIM, but they must be alert to threats from non-telecom operators

Non-telecom operators, including manufacturers and OTT companies, want eSIM to help them directly manage more and more end-user subscriptions and network access. This poses a threat to operators because it weakens their direct billing relationship with device owners and will further drive the growth of OTT phone users. However, operators still have the right to control who connects their networks and their payments, just as they do in the MVNO space. Operators with the best data networks will maintain their same market position today with dealers, including those that focus on low prices.

Operators will need to provide an online or APP-based contract management experience for all their eSIM connected devices. Providing an attractive UI (which is not defined in the second phase of the GSMA specification) and digital customer experience are often the shortcomings of operators, and this is where OTT players excel. The threat from OTT players is real, but as long as operators can provide first-class contract management and other value-added services, they will have a lot of opportunities. This will help them retain the most valuable users. And if network operators can't do this, then large Internet players will replace them.

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