eSIM is here. How can service providers be successful in this emerging market?
In our previous blog posts about eSIM we’ve explored consumer needs and demands, financial benefits of eSIM and eSIM benefits for service providers. Now, it’s time to discuss how to become successful in the emerging eSIM market.
I’ll start by sharing some of my own definitions (however, I’m happy for them to be challenged!):
|eSIM definition||The automation principle||Changing our lives|
eSIM is a global standard, specified by GSMA, which enables remote provisioning of embedded (soldered) SIM in mobile devices.
eSIM allows consumers to upload multiple operator profiles on a device simultaneously and switch between them as needed, however only one profile can be used at a time.
Automation implies the secure and complete onboarding of a device, and assuring subscription profile management into a network.
From the moment a consumer buys a device until the moment it connects to a network no human is involved (except from yourself).
A fully automated process is executed in minutes.
By this I mean changing our habits. Today, we expect to be locked into a contract with one service provider. If we, for example, have bad coverage and need to improve it, or need access to gated content, we cannot quickly take advantage of offerings from other service providers.
eSIM and automation we will change the whole industry – moving us away from lock-in contracts and opening up ‘deliver every minute’ alternatives.
By simply getting rid of physical SIM cards in smartphones you only make cost efficiencies in terms of production, inventory and any other expenditures associated with distributing physical cards.
However, by having a fully automated process you can also create ‘out of the box’ experiences. What constitutes as a fully automated process in this context hasn’t yet been defined the global eSIM standard, but Ericsson’s solutions enable service providers to support the use cases outlined earlier e.g. eSIM-enabled smartwatches that operate independently from smartphones. If the service provider supports an automated eSIM activation, the consumer can activate their new smartwatch within minutes.
Together, eSIM and automation will create new user experiences across all secondary devices (smartwatches, laptops, game consoles etc.) – but will it rock the market? No, I don’t think so.
So, how do we shake up the mobile market? Change lives.
From lock-in to ‘deliver every minute’
Today, service providers sell devices, offering various subscription packages. In most cases, they have focused on business models with a contractual bounding effect (in conjunction with device subsidies). In many markets we see churn rates reducing to 1 percent per month. What does this signal? Are customers satisfied, or do they simply not care about which service provider they use? Or is it because the market is dominated by a small number of large sellers?
When the offerings available are too similar, people usually value the service less. But how can we change this? Firstly, let’s look at the financial KPIs that service providers use:
- ARPU (including voice ARPU, data ARPU, and messaging ARPU)
- Amount of postpaid subscribers
- Amount of prepaid subscribers
- Churn rate
Are these figures relevant? I would argue no – they are simply there to explain service revenue figures. This means that success is measured in terms of market share and revenue per subscriber.
However, if the offerings are all the same then the way to increase market share is to decrease the tariff. Having a high price elasticity can work, but for most mobile service providers today the predominant offering is bundles, and increasing market share by lowering tariffs reduces revenue per subscriber...
We seem to be stuck between a rock and a hard place.
Before exploring the value of eSIM for consumers and businesses, I’d like to consider whether fears over increased churn are justified. When a user has a contract with a provider then breaking it will have financial consequences, and possibly other consequences. Despite the exposed risk, the focus should shift from fear to the new, evolutionary opportunities that eSIM presents.
With the launch of eSIM this is about to change. The new way of operating will be more campaign driven, using a targeted approach. We won’t talk about subscribers anymore, we will talk about revenues from different campaigns and consumer segments. Sound strange? Below are some use cases that we’ve explored both in terms of how to realize eSIM’s potential and consumer interest (based on an Ericsson ConsumerLab survey performed in six countries).
In short, this gives today’s service provider the ability to provide targeted offerings for a particular group of consumers for a defined time period. This can be translated into a dream scenario for proactive marketing people, resulting in a campaign-driven business.
To support this vast array of opportunities, automation is key for handling device detection, user identification, service profile selection, subscription management and more. All these elements need to be managed remotely without user intervention to assure that variations of emerging eSIM use cases can be handled smoothly and cost-effectively.
Ready to rock the mobile market?
Device manufacturers love eSIM, and many of the major internet shopping giants will love it too. If service providers swim against the tide, they’ll sink. But if they proactively embrace eSIM as a new way to generate revenue, they’ll rock the mobile market.
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Want to know more, read previous blog posts on eSIM: