January 28, 2020

eSIM Adoption is now at a Tipping Point

Customer management and identity becomes a greater priority as the technology creates easier market fluidity and customer movements

In the consumer telecommunications markets, all of the major smartphone manufacturers announced the adoption of eSIM technology in 2019. Apple, Samsung, Google and Motorola represent the vast majority of mobile devices in use in the world today, and, as they made the leap to eSIM, this was a stamp of approval for device manufacturers everywhere. As such, 2020 will see eSIM adoption increase at a faster rate than ever before.

The concept of eSIM was developed in tandem with the concept of digital operations: taking physical specialist items and replacing them with a software version. eSIM fits well with the expected increase in connected devices due to M2M communication under IoT adoption in one form or another. With more than 25 billion connected devices worldwide expected by 2025, the idea of manufacturing 25 billion SIM cards to go with them seems like a very arduous and costly endeavor. From this standpoint, it makes perfect logical sense to use eSIM, however, this is a highly disruptive technology for the simple reason that it not only makes it easier to provide connectivity to billions of devices, it also makes it easier for consumers and enterprises to swap between connectivity providers. So the ‘stickiness’ that CSPs have spent so long building up in their tariffs is under threat.

Handling eSIM Disruption

With eSIMs, consumers will be able to more easily leave their existing service provider and switch to another based on tariff bundle differences. In the past to something like this, CSPs’ initial reaction has been to resist by making this move more difficult. One way of doing this that has already emerged is by offering locked eSIMs to bind the consumer’s mobile device to that CSP. However, regulatory changes to encourage competition will limit how binding this can be. In the long term, it is shrewder for CSPs to invest time in trying to attract more subscribers from their competition than they are losing through various value added services.

Managing and Tracking a More Fluid Customer Base

As subscribers are more likely to switch CSPs more often in the eSIM age–not only for their smartphone subscriptions, but also for IoT services–it is likely that the customer data management of BSS will come under some scrutiny. In the case of IoT, it may mean that one day several million devices will need to be deactivated from one MNOs network and then onboarded and activated on another, which, of course, requires full automation in the service fulfilment process and all associated OSS/BSS workflows. So, if a CSP has the right software solutions in place, they can benefit from the disruption to the market caused by eSIM.

Digital Identity and Blockchain

The concept of ‘digital identity’ is becoming more widely accepted in telecoms, and eSIMs will no doubt further stimulate interest in its benefits as CSPs will be able to store a single view of all customer and partner information online, including historical and present-date accounts, behavior and buying and spending details. This can be combined with loyalty management data like Rakuten’s model to incentivize their customer base to use certain partner offers and programs. It can also be combined with contract and SLA-level data which can be stored indefinitely, even if a customer leaves. A long-standing school of thought within CSPs has been that if a customer leaves, then their digital identity data could be sold to their new CSP (should data sharing regulations allow). Blockchain security technology can be used to ensure that digital identity is not at risk of being hacked by external sources.

Deploying a telecom software solution set that can achieve all of these things–even in the recent past–was aspirational to say the least. However, in 2020 this is possible and in all likelihood essential if CSPs hope to be the proactive profiteers in the eSIM story, rather than the victims of a sudden change in the status quo.


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