Will eSIM eradicate international roaming?

First engagers will play off device evolution to create differentiation
Will the good old SIM card become obsolete?
Will the good old SIM card become obsolete?


Consumer eSIM could eradicate the need for international roaming within the next three to five years, according to the findings of a research by ROCCO and UROS.

“It was important for ROCCO to gauge the reaction of MNOs to this industry initative which has effectively been introduced by device manufacturers, this change is not to be underestimated and brings into play a new way to think about mobile devices which cross international borders” said Jason Bryan CEO of ROCCO. The results indicate that from the MNO perspective consumer eSIM could eradicate the need for international roaming within the next 3-5 years suggesting that MNOs are aware of the evolution and involved in projects to bring the eSIM to the market.

eSIM growth predicted by #ROCCO pic.twitter.com/XxqxJRhFjm

— CommsMEA (@COMMSMEA) January 21, 2018

Mika Alamartimo, eSIM programme manager at UROS added: "eSIM will provide great opportunities for MNOs to create new and innovative products and solutions for consumers. UROS is excited to be at the forefront of this ground-breaking new field, as a leading eSIM solutions provider for smartphones and IoT."

Although there is a lot of speculation on the rate of adoption of eSIM, no concensus has been reached. Analysts remain vague on figures, however a 6-8 times growth over the next five years appears to be a common estimate.

When asked about whether domestic consumer eSIM was an opportunity or a threat, 14 operators from the Middle East consider the effect to be positive while nine consider the effect would be negative. eSIM will help device manufacturers and OTT players to directly manage subscription, provisioning an access to mobile networks for their customers. This would suggest that eSIM plays into the hands of MNOs’ competitors, and that MNOs can only assume a passive role in the eSIM value chain, the report adds.

ROCCO isn't convinced however, that MNOs are destined to be just bit-pipes. MNOs also are positive that eSIM can bring with it several new opportunities that can be pursued. The launch of this technology can enable MNOs to build new interfaces with their customers and expand sales channels in ways that haven’t been possible before. With eSIM, MNOs can extend their sales of data plans to any device through unique digital marketplaces, and also collaborate with digital players to expand their channels to a broader audience. "With the introduction of eSIM, companion device bundling will become easier for consumers to adopt and modify. Shared data plans with split device and service fees can attract consumers who do not wish to commit to separate plans for each companion device," said Jason Bryan, ROCCO CEO. 

Better understanding of eSIM will also enable MNOs  to engage with all types of opportunities in IoT through Cellular IoT and LTE-M, which both require eSIM solutions.

However, the effects wouldn't be all positive for the MNOs too, the report warns. For instance, the dynamics of industry rivalry may be affected, as MVNOs will be able to enter the market with more ease. Factors supporting this include the decreased importance of physical sales channels and MVNOs’ reduced demand for physical SIM cards.

The research further revealed that large MNO Groups and MVNO Groups have a higher ratio of eSIM in regard to their overall SIM base. Europe and Asia seem to be the core markets for eSIM developments. 

When MNOs were asked if they would support eSIM within a roaming scenario, 33% consider it a threat to inbound roaming revenues while 27% see it as a threat to outbound roaming revenues. However, a majority of the MNOs support the scenario or are still considering it. In terms of the time though, many MNOs do not know when they will start to support eSIM for roaming scenarios.

So, would consumer eSIM could eradicate the need for international roaming completely? 47% of MNOs think it's very likely and 28% think it's likely. Due to the impact of eSIM, operators think not many MNOs in the Middle East would consider it. While operators had several remarks on this topic, one seems the most plausible: "There will be benefits and drawbacks, I only hope that MNOs are strategically ready."

Overall the research distributed the MNOs into two main categories based on their various responses to the question of eSIM- 20% were identified as first engagers while the rest 80% were the fast followers. First engagers will play off device evolution to create differentiation and digital interfaces, while the fast followers know eSIM devices are coming however aren't exactly ready for mass adoption of the same. 

The introduction of eSIM will not directly change the fact that MNOs will remain in control of their network as well as its users, pricing and service quality. Consumers will still be demanding a combination of quality networks and reasonable pricing, instead of always sacrificing the former to the latter. 

The detailed report can be found here

#eSIM for the #Roaming Consumer- Takeaways from UROS and ROCCO research pic.twitter.com/pLkAZqbZsD

— CommsMEA (@COMMSMEA) January 21, 2018


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