• April 30, 2017
    Last updated 3 minutes ago

technology

Consumers will have more control with eSIM

They will be able to connect to operators’ networks in the same way they now choose WiFi networks

By Naushad K. CherrayilStaff Reporter
14:04 April 20, 2017
eSIM

Dubai: The telecom sector is expected to soon experience another disruption, one that will reach the Middle East in coming years.

After mobiles and the internet, the next change will be the demise of the physical SIM card, the chip that sits inside mobile phones and connects consumers to telecom operators.

Jad Hajj, partner with Strategy&, part of the PwC network, said that the demise of the SIM card will mean that telecom companies will lose control of connectivity, with important implications for consumers, device manufacturers, mobile network operators, and mobile virtual network operators (MVNOs), which buy network capacity from telecom operators and then sell it to consumers.

At the same time, he said the market for connectivity is growing quickly because there are more and more smart devices that need connectivity — such as connected cars, connected fridges, or home security systems.

The SIM card allows a mobile operator to identify and authenticate a consumer, which in turn gives the consumer access to the mobile network to for calls and data. In the past, this meant that mobile operators could control connectivity. In the future, devices, such as smartphones or tablets, will not need a physical SIM. Instead, these devices will use an eSIM.

The advantage is that users with eSIM, smartphones won’t need to change the SIM cards when travelling to another country. Instead, the eSIM will be able to interact with the foreign networks just as if they were “local”.

The telecom operators in the UAE — etisalat and du — showed eSIM capabilities in October while Saudi Telecom Company has recently announced that it will introduce the eSIM in collaboration with Oberthur Technologies’ subscription platform for the Huawei smartwatch.

“As things stand now, the GSMA standards are still evolving as far as eSIM is concerned. We are in advanced stages of conducting RFI (Request for Information) with leading global players in this space and further breakthroughs will be announced as and when they take place,” Saleem Al Blooshi, EVP — Infrastructure and Technology, du, said.

“Our vision is to integrate the consumer and enterprise architectures for this technology and as an active member in the eSIM GSMA standardisation framework we are in talks with all the key stakeholders,” he said.

Etisalat said in October that they will launch this facility in six months. “We are focusing on launching smart digital solutions that are aligned with the most innovative technologies and standards such as eSIM, a technology that is enabling us to launch new use cases for wearables, connected cars and many other services in the near future,” said Francisco Salcedo, Senior Vice President, Etisalat Digital.

Connectivity

Hajj said that the main beneficiaries will be consumers because they will have more control over connectivity. They will be able to connect to operators’ networks in the same way they now choose Wi-Fi networks.

“Consumers will decide which plan they want when they buy their device or turn it on for the first time — the plan could come from a telecom company or from the device manufacturer,” he said.

The device manufacturers could also gain because they can sell directly to consumers more often, disintermediating telecom operators. In the past device manufacturers had bulk agreements with telecom operators.

In the future, he said that device manufacturers will also be connectivity providers. Many devices such as cars, tablets, home security systems or even fridges are connected to the internet through mobile networks. These eSIM-enabled devices can offer connectivity, giving consumers more choices.

“The eSIM could be an opportunity for telecom companies, whether they are mobile network operators (MNOs) or MVNOs. If the eSIM is introduced gradually, then MNOs would manage connectivity for consumers’ multiple devices, remain the main sellers of these devices, and would offer new additional services,” Hajj said.

MNOs have until now retained their customers by having them sign long-term contracts and by subsidising the cost of devices, whether handsets or smartphones. “They can respond to the eSIM by providing bundled contracts for multiple connected devices (e.g. cars, domestic appliances, wearables, tablets), which would create a closer connection to consumers than at present,” he added. To do so, he said that operators will require embracing the new technology. They will have to revise contract structures and change how they subsidise devices.

In terms of the corporate market, in which companies need large numbers of lines and connectivity, he said that MNOs can offer better provision of devices and more self-service to keep costs down. Far from losing consumers, MNOs could increase their retention rates.

The eSIM means consumer choice, he said, and added that there are certainly opportunities for device manufacturers, but the consumer relationship with telecom operators is far from over. “If MNOs and MVNOs respond wisely by building on their core capabilities, they can establish a new connection with their customers that will be more enduring than the SIM card,” he said.