Preparing for an eSIM Revolution in Telecommunication Ecosystem

Telefonica Group, the Spain-based telecommunications company, has partnered with digital security company Gemalto to launch On-Demand Connectivity cloud service. The service enables remote subscription management of all consumer products, such as PCs, tablets and wearables, as long as the devices are with an embedded SIM(eSIM). End users will be able to directly purchase, modify or update their existing subscription plan, without the need to fit or change a SIM.

The service is available to all Telefonica operations across 17 different countries. eSIM with remote provisioning services allows operators to maintain flexibility without the need to plan unique subscription at production level, avoiding device variance while streamlining manufacturing, and logistics with high level of security. Seamless eSIM connectivity helps boost the adoption of consumer products and enhance user experience, opening new markets for mobile operators, as well as opportunities for innovations, differentiation, and new consumer services for OEMs. 

Instead of using a removable SIM card, eSIM presupposes no external chip but in the form of reprogrammable SIMs embedded in the devices. All subscriber data are stored on the device itself, which could be initially downloaded remotely.

Developed originally for the automotive and Industrial Internet of Things (IoT), eSIM has been applied for machine-to-machine (M2M) connection for several years with great success as it enables devices to be integrated more seamlessly into the cellular ecosystem. Now, the eSIM technology is making its way into consumer devices, allowing device owners to compare networks and select service at will, and transfer seamlessly between networks.

In order to introduce eSIM technology, GSMA is aligning all ecosystem participants on a standardized reference architecture and working with global network operators to develop the standardization for the implementation of eSIM technology. Consumer devices requires a more dynamic pull mode to request electronic profiles than the passive push mode of M2M technology.  Major device players like Apple and Samsung have installed eSIM in some of their mobile devices, including iPad Air/Mini and Samsung smartwatch Gears. This lays the path for consumer wearables to implement built-in, stand-along cellular connectivity, which could save more space for longer battery life.   

eSIM technology is on its way to revolutionize the telecommunications ecosystem and value chain. For a start, enabling over-the-air provisioning of operator profiles requires a standardized architecture with agreed-upon interfaces and protocols across all ecosystem participants.

For mobile operators, the existing SIM card slot provides more stickiness to consumers, and eSIM allows customers to switch operators more easily, especially in markets dominated by prepaid users. Even so, adopting eSIM technology will enable mobile operators to take a leading role in the consumer IoT, which could be integrated more seamlessly into the cellular system.

eSIM will be favored among the device manufactures (such as Samsung) and OTT platform players (Google), since it shifts customer ownership from traditional service providers (mobile operators). What’s more, eSIM adoption will be easier to create dustproof and waterproof design, and a sleeker handset design as well. To higher extent, the use of eSIM allows IoT-enabled product vendors (wearable or connected-automobile vendors) to design devices without SIM slots, making it easy for device connectivity and offering products in new market segments.  

With eSIM, Consumers can change mobile network operator (MNO) at ease with few clicks on the device in real time thereby not carrying multiple SIMs, having full tariff transparency, and preventing users to incur international roaming charges.  

This migration, with all due respect to eSIM’s benefits, won’t happen overnight. It is expected that there will be a relatively long phase of parallelism between existing physical SIM and the new eSIM technology. A great number of existing devices will continuously be serviced to the market, particularly in developing markets, traditional SIM phones and devices still have great market demand. SIM vendors should improve their competency in security and profile creation in the new ecosystem, so that they do not lose in the eSIM market.