SPECIAL REPORT: Assessment of e-SIM revenue opportunities

MVNO Dynamics has commissioned and is near completion of our e-SIM Special report. This report has 60 pages of data and has in depth analysis of eSIM, and the application usage for MVNE/As and MVNOs in addition to standard wireless operators.

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  1. Embedded subscriber identity modules (e-SIM) are increasingly set to replace and co-exist with standard SIM cards, which has significant implications for many mobile industry participants. These implications do not just affect companies that supply SIM cards, but all market participants throughout the mobile services value chain. Market participants need to overcome many challenges to make sure that they can support e-SIMs, both in the consumer device market and the machine-to-machine (M2M)/Internet of things (IoT) market.
  2. This report uses the GSMA’s definition for e-SIM.1 A piece of hardware embedded into a device, which is soldered into a printed circuit board (PCB). The e-SIM can store multiple MNO profiles (IMSI number, network key and other settings). The e-SIM may also be updated OTA with new MNO profiles.
  3. This report also provides recommendations for mobile virtual network enablers (MVNEs), mobile virtual network aggregators (MVNAs), MNOs and mobile virtual network operators (MVNOs) to consider when developing strategies that will result from the emergence of e-SIM.
  4. At a high-level this report seeks to identify potential new revenue opportunities that the market participants mentioned above may target.
  5. This report’s conclusions and recommendations have been based on interviews with C-level stakeholders at a broad range of market participants, as well as secondary research.
  1. There are numerous use-cases for “remote provisioning” of SIMs with mobile operator “profiles”, especially where the SIM hardware is built-into devices
  2. eSIM adoption will have a slow start. 2016-17 consumer deployment will mostly be early concepts, allowing MNOs and OEMs to gain practical eSIM experience and refine implementation and processes. eSIM phones will emerge very gradually
  3. Adoption should ramp up in 2019-2021 as cost, industry value-chain and user-experience problems are progressively solved.
  4. Apple and Samsung are unlikely to use eSIM to become MVNOs / carriers. Neither will they aggressively push eSIM into their flagship products.
  5. For many M2M/IoT devices, the eSIM decision is secondary to justifying the extra cost, space and power needs of the cellular radio itself.
  6. eSIM is “necessary but not sufficient” to drive adoption of cellular M2M. It is unlikely to change the competitive dynamics vs. LPWAN technologies like SigFox or LoRa.
  7. There remain unanswered questions about regulation, customer-support and business model for eSIM. Although some projected cost-savings are attractive for operators, it is unclear that it will help OEMs generate extra revenues/loyalty.
  8. There will other approaches to remote provisioning beyond GSMA’s vision of eSIM. Some OEMs may adopt proprietary versions, while standards-body ETSI is intending to develop specifications which go beyond just mobile use of chip-cards
  9. Most eSIM-enabled smartphones will be hybrid eSIM / removable-SIM.
  10. By 2021, 630m mobile & IoT devices will ship with embedded SIMs annually, driven mostly by smartphones, although vehicles and tablets show growth earlier.
  11. By end-2021, the installed base of eSIM-enabled devices will exceed 1 billion
  12. While significant, this only represents around 10% of total cellular connections
  1. Executive summary
    1. e-SIM addresses the miniaturisation of devices, support the take-up of M2M/IoT services and the development of new business models
    2. e-SIMs support the emergence of three broad revenue opportunities, which are discussed in this report
    3. Select recommendations for MVNEs/MVNAs
    4. Select recommendations for MNOs
  2. The emergence and shift to e-SIMs
    1. e-SIMs will need to be managed when they begin to penetrate the consumer device market, which will also enable the development of new revenue opportunities
    2. MVNEs could manage e-SIMs for consumers, OEMs, MNOs and MVNOs
    3. Managing device settings and e-SIM swapping could provide an additional revenue stream for MVNEs in more detail, and MNOs/MVNOs to deliver a good QoE to users
    4. Mobile market participants should consider targeting the USD10 billion identity management revenue opportunity, which will made more accessible following the introduction of e-SIMs
  3. Revenue opportunities and case studies
    1. e-SIM opens up new opportunities in the M2M/IoT market, helping to support the deployment of billions of connections
    2. e-SIMs are most likely to be switched if they have high bandwidth requirements
    3. In order to support the M2M/IoT ‘sweet spot’, MNOs and MVNOs need a broad range of capabilities
    4. M2M/IoT use cases require M2M require a broader set of capabilities
  4. e-SIM critical success factors and calls to action
    1. Customer needs will change little following the introduction of e-SIMs, although they may demand better QoE
    2. A market in which a significant proportion of users manage e-SIMs seems unlikely, unless some form of brokerage model is standardised by the mobile industry
    3. Scenario 1: Some users may be prepared to manage e-SIM profiles, but most users are likely to want a ‘managed service’
    4. Scenario 2: Aggregators could make it easier for users to manage e-SIMs, although there are no current mechanisms or companies that this role
    5. OEMs are unlikely to take over from MNOs or MVNOS managing end user relationships
    6. Scenarios 1 and 2: OEMs are most likely to sell devices with an out-of-the-box e-SIM service, at no extra charge, or that the user can choose to / or not to use
    7. Scenarios 3 and 4: Working with an aggregator makes it easier for OEMs to add e-SIM profiles/tariffs but not in addressing users’ diverse needs
    8. Many users will not want the hassle of managing multiple e-SIM profiles and will continue to chose contracts similar to the ones they use today
    9. Scenario 1 : Operator groups can use e-SIM to offer user better roaming rates across their country footprints
    10. Scenario 2: e-SIMs provide MNOs the opportunity to become global/regional MVNOs and/or a global/regional MVNE
    11. MVNOs/MVNAs could also manage e-SIMs for users
    12. Some form of brokerage system could evolve to support e-SIM profile/tariffs
    13. Content providers may consider using e-SIMs as a means to deliver consistent access to content and QoE
    14. e-SIM devices may switch e-SIM profiles from one MNO to another; these profiles can also be updated over-the-air (OTA)
    15. Intelligence in the network is needed to present the correct CLI number
    16. e-SIMs standards are well defined for M2M/IoT devices and are in the process of being defined in consumer devices
    17. e-SIMs could ultimately become software-based (soft-SIM)
  5. Annex

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Focus Report Profile: Technologies/ eSIM
Number of pages 60

Status Current: Last updated 25 Jan 2017

Update History
Author: Gareth Williams
Analyst: Ramy Caspi

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