In an age where partnerships and innovations in telecom are being celebrated, the rise of eSIMs stands as a testament to remarkable change in the telecom industry. Until a few years ago, eSIMs were only available to those using a limited number of eSIM supporting devices. Today, the technology has seamlessly woven itself into mainstream consumption to become a $4.7bn market at a 250% projected growth rate, reflecting a fundamental shift in user behavior within the telecom sector.
Globally, eSIM adoption is entering a high growth phase, primarily due to its application extending to the multi-billion dollar market of mid-to-low priced smartphones. In 2022, eSIM-capable device shipments grew 11% to reach 424 million units, and by 2030, an estimated 80% of smartphones will function with eSims. Apple’s move to make eSIMs mandatory on all new US iPhones, with wider rollouts, is bound to push other manufacturers to follow suit.
With eSIM technology spreading, the traditional landscape of telecommunication service is changing. Previously, a physical SIM-card was the only option to have your smartphone working. This limitation served as an in-built loyalty mechanism. The hassle of going to a brick-and-mortar shop or having a SIM-card physically delivered made users stay with the same service providers for years. Another limitation associated with a physical SIM card is its nature of nation-based distribution wherein you need to be physically present in a country to buy an active SIM card. All these limitations have found a solution in eSIM technology.
This tectonic shift pushes the telecommunication market towards being a user-determined market, away from the market model which was fully controlled and defined by service providers. Now, companies owning any sort of mobile infrastructure (nation-wide traditional MNOs, small regional MNOs, various MVNOs, satellite providers, decentralized blockchain-based networks) will be competing for the user on par. Global eSIM players will help bridge these various networks to users from around the globe at the very moment that a user is within the coverage area of each specific service provider. Thus, global eSIM players will open up unprecedented potential for smaller players, bringing them to the same level of market access which telecommunication giants are enjoying now.
Role of AI, Blockchain and Web3 in making global mobile connectivity a reality
Decentralized telecom holds potential to upend the current practice of wholesale connectivity from traditional MNOs. More and more users are ready to invest in their personal hotspot equipment to eventually build decentralized LoRaWan networks. Same is true about satellite receivers: users are increasingly acquiring such devices around the globe, already de facto building another network of user-owned devices. In addition to this, Starlink has started its cooperation with a number of traditional MNOs to insert their satellite devices into centralized MNOs networks.
While decentralized networks promise the future of connectivity, their complexity presents immediate challenges. Building them is no sprint, and questions will be asked of data handling, KYC, billing & reconciliation, operator switching, and trust. Blockchain solutions though, if implemented across the ecosystem and not in patches, can help manage complex trust-led processes. For example, this could help connect scattered MNOs and bring them onto a common platform for the benefit of end users. Enterprises will benefit as well, with eSIM technology enabling seamless switching between multiple networks, allowing them to always choose the best coverage at any given time. Another possible outcome is of digital-native virtual operators being at the forefront of selling and reselling connectivity to new users, as suggested in this PwC report.
Potential impact on emerging economies
One of the best things to emerge from the telecom revolution of the last two decades is how access to basic internet services has been shown to improve access to finance. In this regard, eSIMs represent a significant leap forward, enabling an easier medium to connect to the internet to make financial transactions. It helps that telecom companies are already a repository of alternative credit data, a valuable asset for financial inclusion among the underserved. KYC, though, will remain a point of contention and this is where partnerships between eSim service providers, local network providers and technology enablers can address the trust gap.
Offering flexibility in payments is key too. Introducing diverse bill payment options like cryptocurrencies will help service providers acquire a large chunk of globetrotting crypto users. In fact, crypto users are part of a larger tribe of global travelers looking for simplified telecom access and are fueling the adoption of eSims in the Americas, Europe and Asia Pacific region.
eSIMs beyond smartphones
Beyond smartphones, eSIMs are expected to be the go-to communication software in an increasing number of smart IoT-enabled devices, such as drones, automobiles, wearables, and AR/VR gear. However, mass adoption will require building a bridge between the present ecosystem and this data-driven future in a way that innovation doesn't outstrip the demand or the familiarity and trust of existing technologies.
Far from making traditional operators seem redundant, eSIMs have a significant role to play in democratizing the telecom industry. The ongoing spurts of innovation will give consumers greater choices, lead to fruitful competition, and give service providers a much larger role to play in connecting the world.
Which is, after all, the very essence of the telecom industry.
