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eSIM – Commoditizing Data Network Globally

eSIM – Commoditizing Data Network Globally
May 16, 2018

Technology has always made the consumption of services simpler for the consumer and, at the same time, has shifted or completely disrupted the business models for enterprises. Look at Netflix, gaining 125 million subscribers worldwide with a revenue of $11 Bn + by providing video content enabled by data traffic through the infrastructure laid by the Telecom companies. It virtually changed the business models completely adapted by Telecom, Broadcasting companies as well as Studios. The next game changer can possibly be eSIM which will disrupt the fundamental structures of operator and customer relationship.

eSIM will change identification and authentication modules to the software-defined process, hence removing the complete dependency from the physical SIMs. In the current situation, your SIM card is tied to a particular operator and contains all the information about your operator, towers to connect to, and digital identity for authentication. This information can’t be updated or modified over the air, therefore, tying the subscriber to a particular network. eSIM will enable the transfer of operator profile over the air. It means that a traveler from USA taking a flight to Singapore can opt for Singtel through a simple user interface and, later, to Airtel while enjoying his holidays in Goa, India, all that without changing the SIM card to the destination country operator. This will enable the user to have a hassle-free experience without paying hundreds of dollars in roaming charges. The other bright side is the Internet of Things (IoT) where the projection is to deploy 50 billion devices by 2020. Now any enterprise building an IoT solution usually ties up to a network operator for connectivity. Once these devices are deployed, it will become a logistical nightmare to change the SIM cards in these devices. Think of barometers deployed in oceans waters. Even if a low-cost or a more reliable data network is available, the enterprise is still tied to the agreed upon the operator. But eSIM can enable change of network operator profile depending on network analytics like cost, reliability, user preference, and host country or rather micro-location.

eSIM will change identification and authentication modules to the software-defined process, hence removing the complete dependency from the physical SIMs

This technology will allow any enterprise to launch Network as a Service (NaaS) globally or build an ecosystem to provide network analytics for their customers directly. Take, for example, an automobile company which is currently dependent solely on a telecom company till the product’s end of life to provide network, but now they can just negotiate contracts with network providers and push the preferred profile to their telematics device on the go. This can completely shift the dynamics in the favor of OEMs/brands.

While eSIM seems to be a threat for the MNOs’ traditional business model, they can utilize this opportunity to set themselves as a global connectivity partner and acquire new customers through price differentiation, value-add services, and reliable network analytics through a set of trusted partners globally. The key challenges for MNOs would include:

  1. Connectivity procurement: Partnerships between MNOs domestically and globally exist largely for roaming. In order to provide local profiles in-country, the MNO must negotiate wholesale connectivity with other MNOs and gain access to the MNOs eSIM profile to offer to its own customer.
  2. Service enablement: Most MNOs will face the challenge of utilizing their current CMP (connectivity management platform) to enable them to provide connectivity via eSIM both domestically and internationally. This results in the procurement of a new CMP or providing customers with multiple systems to manage their connectivity.

To enable this strategic move, HCL has built solutions accelerators and niche partnerships. The ecosystem provides a new CMP which will support both IP and non-IP networks, including 2G, 3G, 4G, 5G, LTE, LTE CAT-M, NBIoT, LoRa, Sigfox, and satellite. The api-driven architecture will lead to seamless integration with third-party systems like billing, CRM, or support systems. Right investments from MNOs or OEMs will enable monetization across multiple technologies, multiple devices, or customers across multiple geographies.