eSIM: how embedded SIMs are changing connectivity

First came the SIM card, then the mini-SIM, followed by the micro-SIM, and finally the nano-SIM in 2012. Can it get any smaller than that?

An eSIM is a virtual SIM card built into your mobile phone, letting you switch between networks easily by downloading a new SIM profile to your device, rather than needing a new physical SIM card.

The eSIM was first outlined by the GSMA in 2016 and it took just a year for the first eSIM-enabled device, the Google Pixel 2, to make it to market. Now, dozens of eSIM-ready devices, and even some eSIM-only devices, such as the iPhone 14, are driving sales to an anticipated $16.3 billion by 2027.

What is eSIM?

First, let's quickly recap what a SIM card is.

A SIM (Subscriber Identity Module) card stores the information that identifies the user to their mobile network. It contains unique data such as the user's phone number, network authentication details, and other carrier-specific information.

Once the size of a credit card, physical SIMs have shrunk significantly since their creation in 1991 as devices got smaller. Though devices started getting bigger again in the 2010s, SIMs kept shrinking; the nano-SIM, introduced in 2012, is the smallest possible size while retaining the universal contact - that's the golden chip on the outside of the card. The data on a SIM card is stored in its internal memory, which is located under the gold chip.

Instead, eSIM uses an MFF2 card (Machine-to-Machine Form Factor 2), which is soldered directly onto the device's circuit board during manufacturing - the "e" stands for "embedded."
Vodafone believes that the switch to eSIM could save as much as 320 tonnes of plastic per year.

What's driving the growth of eSIM?

Without the need for a physical SIM card, users can remotely provision their profile or switch their provider by app or QR code, without the need to physically change the SIM card within. Some phones can even have both a physical and eSIM simultaneously.

This makes it easy to switch in and out of plans when needed, whether you're permanently moving to a new provider or switching temporarily while abroad. The return of roaming fees for UK citizens means that travellers in particular can benefit from eSIMs; rather than purchasing a local SIM card, they can instead swap digitally onto a local plan, saving time and reducing the hassle of multiple physical SIMs. For example, Wizz Air has seized the opportunity by partnering with eSIM Go to launch a data bundle for passengers travelling to destinations across the globe.

Another firm targeting roamers is FinTech company Revolut, that launched an eSIM for UK customers when abroad, allowing them to use the Revolut app to top up their payment card without using their data allowance.

However, eSIM isn't limited to mobile phones; devices such as wearables, tablets and laptops also support eSIM, making it easier than ever to manage connectivity on a single data plan shared across these devices.

In the industrial sector, eSIM-enabled IoT devices can integrate with sensors and infrastructure to collect and analyse vast amounts of data. Remote provisioning and management using eSIMs mean that a high volume of devices with their own profiles can be independently supported in a geographically large area, or in a small setting with minimal interference.

The challenges facing eSIM adoption

eSIM technology has not been adopted equally by all manufacturers and service providers, potentially limiting users in certain regions, or those using eSIM-only devices. Smaller MNOs and MVNOs are likely to be slower to adopt due to the time and financial investment required.

Is this reinforcing, or being reinforced by, the lack of consumer awareness?

New, powerful handsets are exciting, but which SIM cards they support has rarely been a selling point for customers. If the last five SIM iterations have proved anything, it's that shrinking the size has not been met with much fanfare.

While recognition is growing, adoption still remains low, with under 30% of consumers aware of eSIM.

Many older devices do not support eSIMs, requiring users to upgrade their phone to take advantage of the technology, although some physical SIMs can be remotely provisioned "over the air."

Furthermore, prepaid eSIM options are currently much less common, providing limited appeal to budget-conscious users and holding back a very significant market segment from adopting.

The onus is on telcos to manage expectations of eSIM and preach what benefits they could bring to customers to increase adoption. As smartphone sales begin to rebound from a sluggish couple of years, the number of customers with newer, eSIM-enabled devices is likely to accelerate.

The future of eSIM

As eSIM technology matures, we can expect to see improved interoperability between different operators and devices, enhanced security features, and innovative applications across various sectors, including healthcare, smart city management and industrial IoT.

If the next iPhone in the UK and Europe is eSIM-only, as some are predicting, this could prove a bellwether for the state of SIM cards for the future, potentially heralding the phasing out of physical SIMs altogether.

While eSIM technology offers numerous advantages in terms of connectivity, convenience and environmental impact, its widespread adoption will depend on overcoming these current challenges. We expect eSIMs to become the de facto standard, provided that operators can offer consumers more flexible and competitive plans, including packages for business and leisure travellers, and integrated device management for industry.

To reach its full potential, mobile network operators must also invest in upgrading their BSS/OSS platforms to fully support eSIM capabilities and streamline the activation and switching process. Additionally, device manufacturers need to expand compatibility across products.

With these developments, eSIM can usher in a new era of connectivity, enabling users to effortlessly manage multiple profiles and connect to networks with ease.

Cerillion's CRM Plusprovides a fully integrated suite of functions to manage eSIMs. Contact us now to find out more.

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