The global Coronavirus pandemic has brought new life to the wearables market and in-turn greater adoption of eSIM technology among telecoms operators. As remote working and a focus on health drives sales of smartwatches and eHealth devices we ask whether eSIM adoption could spell disaster for the MVNO market as we know it.
MVNO’s have benefited from the physical SIM card for many years. They have tied customers into visiting stores to receive hardware, and allowed MVNO’s to hang a great deal of branding around SIM’s, using them as a way to differentiate themselves from the competition and strengthen their brand relationship with subscribers. Losing the trusty gold chip will leave a huge gap in their branding and marketing toolkit.
In contrast handset manufacturers are in line to benefit from eSIM adoption as customers not limited to physical SIM’s will be free to buy handsets directly from the manufacturers. More concerning for existing MVNO’s will be the prospect of manufacturers becoming MVNO’s themselves. Indeed, Apple considered this once before.
Further still is the potential influx of many more MVNO’s from brands traditionally unfamiliar with the telecoms space. While eSIM’s increasingly connect the Internet of Things (IoT) OEM’s will likely spy a new role in the telecoms business, with some becoming MVNO’s themselves. Of course, regulation is likely to determine the reality of this but in principle eSIM adoption potentially empowers almost anyone with a following to consider their own MVNO, from social media companies and OTT providers to churches and political parties.
MVNO’s will need to adapt quickly to mitigate against the impact of eSIM adoption. They will need to implement systems that control usage and connectivity policies for devices and automate provisioning and other back-office tools for devices with eSIM.
The move to eSIM has the potential to increase customer churn for MVNO’s as subscribers are given a much easier way to switch providers. Retaining customers will become a lot more challenging so customer experience will be paramount.
While many laud the security benefits of eSIM, there have already been cases recorded in Asia of eSIM Swap fraud, where fraudsters have duped customers in the name of eSIM activation. Posing as phone company employees, fraudsters have contacted subscribers to activate their eSIM only to take control of their phone and gain access to bank accounts.
In what will become a much more challenging and competitive market, MVNO’s will need to streamline and optimise processes where they can. A focus on simplifying and refining signalling and reducing network complexity through converged services and smart centralised core networks will help to future proof MVNO’s for 5G and next generation communications.