How the eSIM era is changing the telecom landscape

The launch of the iPhone 14 this fall will change the eSIM landscape. Bob O'Donnell of TECHnalysis Research discusses the importance of eSIMs for telcos around the world and what they should do to be ready.

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Bob O’Donnell, President

TECHnalysis Research

07 Dec 2022

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How the eSIM era is changing the telecom landscape

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The world of device authentication on cellular networks has been evolving for many years, but with the launch of the iPhone 14 this fall and its requirement for eSIMs the trajectory of these changes has shot upward.

While most people don’t even think about them much, it turns out SIM (Subscriber Identity Module) cards are incredibly important. They are, after all, the mechanism by which people (and devices) can connect to cellular networks. They provide the authentication method that verifies that your smartphone or other device has an account on a given network and has the appropriate permissions to send and receive data or make voice calls on that network.

After decades of existence in physical form, however, we’re on the cusp of major changes to SIMs and how they get deployed. In short, they’re going from physical to digital. And just as the evolution of CDs, DVDs and other physical media into digital format led to dramatically different types of possibilities, such as streaming services, so too does the dawn of the eSIM era portend some intriguing new possibilities for the telecom industry.

In truth, eSIMs aren’t really new. Some of the first iterations of the technology appeared about 6 years ago. With the launch of Apple’s latest iPhone 14, however—which only works with eSIMs in the US—the momentum towards eSIMs has taken on new urgency and importance. As a result, many telecom carriers around the world are now working to enable the technology on their networks. 

Part of the reason for the delay is that telcos were initially reticent to adopt the technology because, in theory, eSIMs made it significantly easier for customers to switch between carriers. Companies were concerned that people would keep switching to whatever the lowest cost option would be, thereby driving a race to the bottom and hurting profitability. Plus, physical SIMs were a known, established technology that both customers and carriers were comfortable with.

In reality, the concerns about rapid switching have proven to be unfounded, as the inevitable issues associated with changing carriers aren’t something most consumers or businesses are willing to go through on a more than an occasional basis. In fact, carriers have warmed to the many new opportunities that eSIMs enable. The degree of control and precision that carriers can apply to different rate plans offers significantly more flexibility than they’ve ever had. For example, if a carrier wants to offer a special plan for students on specific devices, they can make sure the eSIM profiles needed for those plans are locked to specific devices. This avoids the possibility of removing a physical SIM card from one device and then using it another.

Carriers and business customers also have a whole range of possibilities when it comes to private cellular networks. According to a recently published study by TECHnalysis Research of US-based companies interested in private 5G networks, roughly 85% of organizations want the ability to use devices on their private networks as well as the existing public networks from the major carriers. The only way to do that is to have multiple SIM profiles—one for each network type. In the era of physical SIMs, that often meant having to have two physical SIM slots, which many devices don’t support. eSIMs, on the other hand, offer support for up to 8 unique profiles that can be switched between, making the process significantly easier.

Also, for consumers who travel internationally and have become accustomed to purchasing or renting a new SIM from a local carrier to avoid roaming charges, eSIMs offer a significantly easier and more flexible option.

For device makers, eSIMs are also a great choice. Whether it’s for a connected car, connected exercise machine or anything in between, many companies have had to deal with the extra costs and hassles of inserting the right physical SIM for different countries or regions. With eSIMs, the device can be provisioned once the customer turns it on in the location in which they intend to use it. In the process, they can save time, money and potential frustrations.

As great as all the capabilities of eSIMs are, however, they do require extra effort on the part of carriers. Software tools are necessary to make sure not only that the eSIM in a smartphone or other device is easily enabled but can be moved to another device if necessary. In some cases, device and OS makers are providing the front-end interactions to the consumer, but carriers need back-end tools that can, for example, tie a given eSIM to a customer’s account. 

In fact, this connection between eSIMs and billing systems is one of the reasons why Amdocs—a company with a long history of supplying OSS/BSS (Operations Support System/Business Support System) software to carriers around the world got into the business of supporting eSIMs. They saw an opportunity to make the process of supporting eSIMs easier—especially for telcos that don’t have a great deal of experience with the technology—as well as making the overall integration of eSIMs into existing operations much smoother.

Some carriers started down the path of building their own software tools to support eSIMs on their networks. Many soon realized, however, that to fully support all the potential scenarios that eSIMs demand—as well as the opportunities they enable—was more extensive than they first thought. The digital version of the SIM is much more complex to implement, since unlike the plastic SIM- it is dependent on the customer type, the device, the operating system and the touchpoint the end customer is using. As a result, many of them have begun to deploy or look more seriously at the mature tools Amdocs has created.

As with other physical-to-digital transitions, the move to eSIMs isn’t something that will happen overnight. In addition, there are inevitable hiccups that both customers and carriers are facing along the way. However, there is no question that the future of connected device authentication is eSIMs and the sooner that carriers enable the capabilities they offer, the quicker they will be able to use them to their advantage. 

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC, a market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.


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