How Mobile Network Operators (MNOs) Can Win with eSIM

In the early years (before eSIM was a reality) much focus from telcos was around their concerns of cannibalisation and opening up the market to new competition. A lot of debate was given to how MNOs might open up the IoT with more flexible eSIM services without risking existing (smartphone) revenue streams. However, once the technology has been developed it is very difficult to keep a cap on it. This led to two specifications being developed within the GSMA, one for M2M/IoT and one for consumers. Early implementations were focused on connected devices, such as cars, and now we have seen Apple push ahead with the introduction of eSIM in the iPhone XS I expect other OEMs to follow suit. 

eSIM creates new opportunities for MNOs to put the customer at the centre of this, with flexible and convenient business plans. However, I have concerns on the approach of some service providers. They are not starting with a blank sheet on how they can transform their business models with eSIM, instead they are trying to fit eSIM into their current service models. 

 

A clear example of this is that eSIM is a digital technology, which no longer necessitates a subscriber to order a physical SIM which has to be collected or delivered. The eSIM is, after all, already in the device. All that is required is the correct profiles to be installed for the preferred network, which can be done remotely over the air. 

Initial retail processes designed simply replicated the existing process, replacing the physical SIM card with a QR Code that could be ordered online or in a retail store. Whilst that may be okay as a temporary solution it does not improve the process or take advantage of what eSIM offers. Alternatives have been looked at, some of which show promise although I believe that this can be improved. 

 

During discussions with some companies on the lack of transformation, I asked myself over a year ago, “what would Amazon do?” If looking at how industries have been transformed then looking at how Amazon has affected the retail and media sectors is as good a place to start as any. Would Amazon continue with a slightly clunky process that requires someone to provide proof of identity or a physical inspection of it in person? Would it continue to require people to wait before they can start using a new digital service? Would it put barriers in place by bundling hardware and service together? 

 

My questions here are not to denigrate companies’ strategies but to highlight that there are alternatives that should be considered. My reasoning is that by offering more choice and flexibility, customers will be enabled to pick the optimal service mix to suit their requirements. And if this happens, then they will naturally be more inclined to increase their level of spend. There is a reason that by offering the best business model and service to consumers that a company like Amazon has become so entrenched in their customers’ mindset that many return to use them without even looking at alternatives. 

Another positive example is my Microsoft account. I am able to add various devices through my online account. I am able to create profiles and add devices for family members. I have control over what level of usage is allowed, when and for how long. Imagine if you could do this for your mobile and other devices. Think of the greater incremental spend you would be happy to make if you had control in this way. 

 

This can be replicated with eSIM for mobile and IoT. Looking at the above questions, I can sign up to new services in the financial and transportation sectors online or via an app, including submitting my proof of identity and verifying it in a quick and easy on-boarding process. I am also able to sign up for and activate new accounts and use digital services immediately without any delays or issues with account migration/transfer or delayed billing. I can also pick and choose which devices I wish to use receive new multimedia services, regardless of how it is connected, delivered or where it is, adding and removing new devices or services as and when I choose and for as long as I want. 

Of course, this is all reflected in the length of service contract and how much I am charged but as a paying customer I am in control and am able to make informed decisions. These services put me first and allow me to make my preferred choices rather than trying to have me conform to what they want to offer. 

 

I will reflect on a workshop that I was involved with recently to illustrate this point. When I suggested that a possible approach would be for service providers to consider the smartphone or other device as a separate revenue stream to the data/airtime I was told that the market has moved on from this. Given the growing popularity of SIM-only contracts and open channels for standalone device sales I would suggest that there is evidence to the contrary but many in the industry are fixed on post-paid subscriptions bundling devices with data tariffs because this suits them, not their customers. 

 

Part of the challenge for service providers is to convince subscribers that eSIM is of benefit to them and offers them more choice and flexibility. This is a key part of the messaging and will affect how the market develops and ultimately who wins. It cannot just be seen as a way of reducing their own costs and/or charging more. It cannot be seen as being restrictive in any way by not offering choice and meeting customer requirements or (unfairly) tying customers in. MNOs need to look at what customers’ preferences and requirements are and implement a strategy to make these their business objectives. 

 

As a customer, I will go to the provider that allows me to do this and I will be happy to pay for this level of service. If I can do it all in once place, via a single app or portal, then one company could make quite a lot of money out of me and other customers like me. 

 

John Devlin, Principal Analyst & Founder at P.A.ID Strategies, will be co-chairing the World eSIM Summit in Brussels on the 7th and 8th February 2018. Please contact info@paidstrategies.com if you have any questions or requirements around eSIM models, strategies or related applications. 

 

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