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Benefits of eSIM for service providers: 6 use cases

During the fall of 2019 two major smartphone manufacturers announced that several of their models are now equipped with eSIM functionality. During 2020 many more will follow suit. By 2025 GSMA estimates that more than 2 billion eSIM devices will be shipped. So clearly, there is an incentive from the device industry to go for eSIM.

eSIM benefits
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Service Providers’ top line has for several years been flattish, so the question I ask in this blog post is; How can Service Providers make use of eSIM not just for cutting cost but also in order to increase top line? The future demands new ideas to increase revenue streams in an evolutionary way.

It is well known by part of the industry that the introduction of wearables like smartwatches enabled by eSIM capability generates additional monthly subscription fees.

So, how about primary eSIM devices? Can Service Providers get more money from those devices?

When working with this during the fall of 2019, we identified 6 different use cases relevant for primary eSIM devices that I will describe in this blog post. We also made a ConsumerLab survey on Smartphone consumers in 5 countries, representing some 200 million users relating to the 6 different use cases. The result of that study will be discussed in the next blog post in this eSIM series of 4 blog posts.

Firstly, let’s have a look on eSIM benefits, the use cases:

eSIM benefits

Let’s start with the green ones, these could be an extension of Service Providers’ current available offerings.

 

Travel Specials

Travel Specials target travelers that would like to make use of mobile connectivity abroad. Having the internet in the pocket has changed our lives dramatically, being always on. But, when travelling the habit nowadays is to either use hot spots (hotel, café, shopping mall, business premises etc.) or buy a pocket router and use a prepaid local SIM. Question is, are there any winners in this game?

Juniper research estimates that the silent roamers (i.e. roamers that do not use mobile data when roaming, only hot spots) was 51% of the total amount of roamers in 2018. That is a lot of revenue that is up for grabs.

The “travel specials” target especially this segment, offering a local+ tariff (since billing is still handed by the home Service Provider a service charge e.g. per day could be added).  So, when visiting a country, you just download an additional eSIM and you are on your way to a connected vacation!

Another business model here might be airlines/travel agencies offering complementary mobile data when booking your vacation trip with them. Peace of mind for parents that otherwise needs to lock in smartphones and tablets in order not to get ruined!

Outcome:

  • The airline/travel agency gets a new benefit to give to their customers that make vacation hassle free
  • The visited and home Service Provider gets additional revenue (increased market with some 50%) and less annoyed customers
  • The consumer can continue being always connected

 

Connected Consumer Devices

Connected Consumer Devices is all about secondary devices (smartwatches, tablets, laptops etc.). When we started working on these use cases both I and my colleagues thought that the key here was of course the smartwatch. We all have seen the success of the eSIM enabled smartwatch, but when the result from our ConsumerLab survey came out…smartwatch was not in the top. As a matter of fact, it was not even in the top 3.

Number 1, that is the most wanted, was the laptop. Today, most of us connect the laptop via tethering or public hot spots when out and about. Tethering works fine but drains your battery and when you are out and about you do not want to drain the battery of your lifeline, the Smartphone.

WiFi hotspots are also becoming a concern for many business users because of the security aspects, here a cellular connection is preferred.

So, an add-on subscription of say 2 Euro per month for a laptop, 2 Euro per month for the tablet. Things start to add up.

 

Excel in Connectivity

Now when looking on this at first, one sees a scenario where apps in your device change between different Service Providers constantly based on best coverage. Sounds like a nightmare? Well, the good news is that this is not what consumers are looking for.

What consumers are looking for is some kind of service insurance when having a critical situation.  That is at times you need to get in contact with someone and you have no coverage. Situations like your car break down in the middle of nowhere, you lost your key, you need to get hold of your child, you need to… Here, people are prepared to pay like an insurance fee, say 1-2 Euro per month to be able to activate another eSIM. When making the call, extra charges for the actual call (normal tariff) will also take place. So, how many services have you launched lately that gives an ARPU of like 2 Euro to a minimal cost? And if adding the laptop and or tablet, you are getting up to some 4-5 Euro extra per month. But wait…there is more.

Outcome:

  • Increased top line for Service Providers from selling the insurance service
  • Increased satisfaction and peace of mind from consumers

 

Try and Buy

Going beyond the “all you can eat” offerings, what can you sell? How can you communicate the value to the consumer?

Try and Buy is something that has been used for a long time in Marketing. When it comes to content and apps it is also used extensively and now, we can see the same thing also in Mobile Communication. Example of type of service offerings that could benefit from Try & Buy:

  • Premium speed
  • Special content/event offers
  • New devices/services/business models (Glasses, Smart calling, Child locator etc.)

 

Again, a simple way forward. In this scenario, consumers download an additional temporary eSIM subscription, valid for say 3 days, and during these 3 days one can try out the new offerings e g for free (your present bundle, you still pay for). If the consumer like the service, a simple click will turn the temporary subscription into permanent.

Now, would you need eSIM to do this? Not really, you could send an SMS or RCS with clickable links to targeted subscribers but, with eSIM you can also reach consumers that today are not your subscribers. Here is where we will see true benefits for proactive service providers.

Outcome:

  • Increased top line for Service Providers
  • Consumers will benefit from more innovative packages provided

 

Marketing Campaigns

So, how can we take the next step in mobile marketing? What would be the natural evolution? If we look back, this is what the evolution has looked like:

  • Telemarketing; if you have a reach rate of 20%, a qualification rate of 40% and a conversion rate of 60% that leads to a 5% conversion rate in total.
  • Application-2-person SMS: 95% of all texts are read within 3 minutes (Source: Forbes)
  • Application-2-person RCS: Looks very promising, can provide interaction but, so far, not supported by Apple

For Consumer goods companies the questions are; how to increase interaction, how to better target individuals and ultimately how to increase conversion rate. Is there a role for eSIM here? There is no magic here, to excel in conversion rate you need to have a:

  • Targeted proposition
  • Interactivity

So, how to achieve just that? Let me take one example here.

Imagine you are a major company in the apparel industry. Winter is coming and you want to launch your new winter collection. On banners, ads etc. offer to your customer “become a VIP, try out our new collection before available in the stores, scan this bar code to become a VIP and get 3 days exclusivity”. The Consumer goods company may use a different Service Provider than what the consumer is using. With a temporary eSIM this can be solved. Scanning the barcode result in that an additional temporary eSIM is downloaded. This eSIM gives the consumer access to a VPN and AR (augmented reality) client. The subscription related to this new temporary eSIM is handled (read paid) by the apparel company.

Now, for e.g. 3 days the consumer can try on (with the AR client) the new collection on their smartphone, tablet or laptop. Send video clips to their friends or post on social media to get comments on how the new collection fit them. Apart from getting more consumers trying out more and by moving the dressing room to the Smartphone the apparel company will get a lot of information about their customers, their behaviors, their values etc. This will be worth gold in order to tailor targeted offerings.

Outcome:

  • the consumer gets a great customer experience
  • the apparel company gets a new sales channel and customer information
  • the Service Provider gets double income during the Marketing Campaign

 

Events

With events I am referring to Sports, concerts, trade shows and the like. Again, like in Marketing Campaigns we are talking about a short period (e.g. a week). The offer here will be targeted to the consumers that have this interest (and by doing just that, you as a Service Provider get additional insights in different consumers values and behavior).

Example is a concert with a major band.

All fans of that band will be searching for tickets well before the event, the record company (or arena owner) will give on their home page a QR code to get VIP treatment.

By clicking on the QR Code you become like a subscriber to the band for a short period of time (e.g. 3 weeks). During that period, you will get access to book premium tickets, get short clips of new songs streamed to your smartphone every now and then. Lottery for backstage passes and after the event video clips from the show.

Outcome:

  • the consumer gets a great customer experience
  • the event provider gets a new sales channel for add-on sales and customer information
  • the Service Provider gets double income during the Marketing Campaign

 

eSIM benefits, Summary

These use cases are some of the starting points for Service Providers, enterprises and consumers enabled by eSIM. More use cases are still to be explored. With all these cases  it is important that we secure that all involved parties benefit from each use case.

In the next coming blog posts, we will highlight the result from our consumer study performed in 5 countries (blog post 2 and 3) as well as provide tools for you to calculate financial benefits (blog post 4) from these use cases.

Take a closer look at 2 of the use cases!

Download

Look out for our coming blog posts on eSIM, where we will discuss the findings from a consumer survey on eSIM that we performed recently! 

 

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