For the past decade or so, speed was the primary focus for operators. More bandwidth meant happier customers, paving the way for more data-intensive use cases like high-resolution video streaming and AR/VR services. That’s all well and good, but what use are lightning-fast speeds if users have to jump through countless hoops to get on the network?
The saying “convenience is king” is almost as old as the internet itself, and every innovation in telecom has had this simple mantra at its core. The reason is simple: the fewer barriers to getting and staying connected, the easier it is to gain and retain subscribers and monetize services.
There’s no two ways about it — customer onboarding is a painful experience for network operators and their customers. Even mobile virtual network operators (MVNOs), who typically have greater agility and more targeted digital service bundles, still ask a lot from prospective customers. In other words, customers have to do all the legwork.
Before customers can enjoy their service, they need to buy the device, insert their compatible SIM card, set up their account, and connect to the network. This is hardly what one might call “seamless connectivity.” Further, it means that operators have to market themselves exceptionally well to get noticed, attract customers and engage them. That’s why simplified connectivity, not bandwidth, is the holy grail for operators.
In the quest for this holy grail, a quiet revolution is now underway in the form of eSIM technology. Using eSIMs, or “embedded” SIMs, will ultimately render physical SIM cards obsolete. It allows connectivity to be baked in during the design and manufacture of a device, offering out-of-the-box connectivity that users never even have to think about. Some refer to this as “The Invisible Network” — making connectivity as ubiquitous and accessible as the air we breathe. The truth is that customers don’t want to have to deal with connectivity — they just want it to work.
How eSIM technology has evolved
The journey from physical SIM cards to eSIM technology mirrors society’s push toward digital simplification. The barriers between users and the digital worlds they inhabit are dissolving, and frictionless connectivity is a crucial gateway that needs to be automated and streamlined if those barriers are to be removed entirely. The shift has begun.
According to the GSMA in a presentation delivered during the annual Mobile World Congress, there will be 850 million eSIM smartphone connections globally by 2025 and more than four billion eSIM-connected devices, including IoT and other business-based use cases. The latest iPhone (iPhone 15) does not support physical SIM at all and is shipping with eSIM only technology. Users are paying attention. More data from the GSMA suggests that more than a third (36%) of consumers across major markets are now aware of eSIM technology, and 88% of surveyed operators plan to offer eSIM services by 2025.
It starts a fundamental shift in how services are delivered — decoupling airtime usage from traditional provisioning models. As a result, users have greater flexibility when selecting and switching carriers and increased connectivity freedom when traveling globally. Travel eSIM plans have become very popular as they reduce roaming costs, offer flexibility, and simplify the process of accessing local networks abroad. They introduce competition, potentially leading to better roaming services. As eSIM adoption grows, traditional roaming may need to adapt to remain competitive.
eSIM technology: A boon for MVNOs?
eSIM technology has emerged at pace. In the past decade, it’s gone from a nascent technology to firmly planting its teeth in the consumer sector, from automotive and smart-home devices to tablets, phones and wearables. While the benefits of eSIM technology are often talked about from a consumer perspective (“convenience is king”), it’s also changing the game for MVNOs — in a good way.
Unlike traditional network operators, MVNOs tend to be digital natives, which means they can deploy services at their own pace and personalize them to capture and retain their customer targets. It’s not uncommon for an MVNO to emerge, either as a sub-company of an MNO or as another brand or retailer making their first foray into telecoms, to target a relatively narrow market segment. These brands “rent” connectivity from big operators, often deploying their own business support systems (BSS) and digital channels to deliver more modern experiences and personalized service bundles. This agility means that MVNOs are perfectly poised to capitalize on the eSIM gold rush.
eSIMs enable MVNOs to offer a more dynamic and tailored service portfolio by facilitating on-the-fly carrier switching and simplifying the customer onboarding process. This adaptability enhances the customer experience and opens new avenues for MVNOs to differentiate themselves in a competitive market, potentially improving customer loyalty and retention. If MVNOs can effectively “bundle” their connectivity at the device manufacture stage, every purchase of that device would effectively equate to a new subscriber.
It would also be easier for subscribers to “network hop,” allowing them to switch between providers to get the best data/call plans without ordering new SIM cards. There’s also a logistical upside for operators — eliminating the need for physical SIM card distribution and inventory management may seem trivial. En masse, it translates into significant cost savings and operational efficiencies.
However, there are challenges to adoption
While the benefits of eSIM technology are plain to see, there are some challenges that MVNOs will need to be aware of. For one, navigating an already competitive landscape will become even more complex as traditional boundaries between service providers blur, creating a need for greater differentiation strategies beyond just price. MVNOs must go beyond the legacy BSS systems they perhaps inherited from their “parent” operator. Instead, they must leverage systems that allow for hyper-personalization, targeted service bundles, scalable pricing and the ability to anticipate and deliver on individual customer needs.
For instance, a legacy BSS system might not be equipped to leverage individual customer data and behavioral analytics to determine when customers need to upgrade or downgrade their. While eSIM technology might allow users to switch providers more seamlessly, it also means that MVNOs will have to work harder to retain their customers and anticipate their needs. Gaining this functionality will require some level of innovation — and investment — on the part of the MVNO.
Regulatory hurdles, too, may pose a challenge. For instance, in some countries, the regulatory framework around mobile connectivity is tightly controlled, with specific requirements for subscriber registration and verification originally designed with physical SIM cards in mind. Adapting these regulations to accommodate eSIMs, which enable remote provisioning and management of mobile services, will need to be considered.
In the EU, the General Data Protection Regulation (GDPR) imposes layers of complexity regarding data privacy and security for eSIM technology, requiring operators to navigate a maze of compliance requirements. Meanwhile, in markets like India, regulatory bodies have only recently started to warm up to eSIM technology, highlighting a need for explicit eSIM provisioning and management guidelines to ensure security and prevent misuse.
Despite these challenges, the potential for eSIM technology to quietly revolutionize the market for MVNOs is undeniable. New pathways for monetization, innovation and differentiation will open like never before, but navigating those pathways will require a digital-first mindset that puts customers first.
