Welcome to The Mobilise Podcast, your go-to source for all things telecom. We’re here to provide insightful analysis of emerging trends, innovations, and industry insights to help you easily navigate the digital era.
In our first episode, we’ll explore the top 5 use cases of eSIMs across various sectors. From healthcare to transportation, eSIM technology has far-reaching implications shaping the future of connectivity.
The world of telecoms is constantly evolving, and the introduction of eSIM has significantly shifted how we connect and communicate. As businesses worldwide embrace digital transformation initiatives, the role of eSIMs in facilitating seamless connectivity has become increasingly important.
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Transcript
Hamish White: Hi everyone, this is Mobilise’s first podcast. 5 top consumer eSIM use cases. With me today I have Per Kristofferson, who is Mobilise’s CCO and somewhat of an industry veteran in the telecom space and eSIM space. And I’m Hamish White, founder and CEO of Mobilise.
So if anyone who doesn’t know Mobilise, I’ll give a little quick intro. So, we are a digital BSS provider based in London. We provide software and solutions for telcos who are looking to digitalise their offerings and we have a big focus on eSIM, which is obviously a big trend in the telecoms industry today.
Uh, so today we’ll talk about 5 top consumer eSIM use cases. But before we dive into the topic, Per, would you like to explain a little bit what consumer eSIM is and what the advantages of consumer eSIM is over physical SIM cards?
Per Kristoffersen: Yeah, sure, you actually already said it yourself. The word keyword here is digital. The eSIM is the digital extension of the physical SIM. The physical SIM we’ve known for, I don’t know, 30-40 years, originating with the smart card. The smart card as a secure token to keep your secrets safe. And it can be your PIN code for your credit card or it can be your network code to access a mobile network. So, it’s your authentication.
And with the eSIM technology, we now have the capability to keep your secrets safe in a software format. So combined with secure elements in the devices, we can now download an eSIM and have it digital. So, moving the previously physical SIM card into the digital world.
HW: Amazing. And yeah, obviously that unlocks a lot of additional opportunities in the telecom space as well. I think when you move from having that coupling of a physical element within a mobile subscription to effectively making everything fully digital, it opens up other opportunities like for example in the travel industry or in the airline industry, let’s say.
Where now those brands, because of the fully digital journey and those lowering of those barriers to entry for service providers are able to offer or add on a mobile service to their existing core product set.
eSIM Use Case #1: Smartphones
Interesting. So, within smartphones, one of the most prominent use cases for consumer eSIM is particularly useful with in-app eSIM provisioning.
So, for example, this is where a consumer, as Per rightly mentioned, is able to provision their subscription directly via mobile application as opposed to having to go to a store or pick up a physical SIM card or have a physical SIM card delivered in the post taking two or three days for it to arrive. So, it really changes the consumer, the convenience element for consumers, the eSIM technology. Would you, would you agree with that?
PK: Yeah. So remember that way back in the early days of mobile telephony, what we had was the SIM card being the starting point for the whole journey. And you also have that in the backend system of the telco operators. You have the SIM card as a core element, the starting point of the whole journey to provisioning, invoicing, billing, and network capabilities and so forth. So, we’re dealing with really the starting point of mobile journey here and we now have the options to go fully digital and it’s going to make a big change. It has already made a big change.
But I think as the years progress and as time progresses, we will see that the creativity and the new use cases around this for consumers will take off beyond what you and I even know now, because we’re only at the beginning of this journey. But just making it easily accessible, making something digital downloadable instead of it being in the distribution, having supply chain logistics and so forth makes the user experience so much faster.
And what we’ve done in Mobilise is of course to make this easy with the usability of our apps, with the customer journey and the onboarding. We have developed a way to really onboard subscribers fully digital and smooth. Considering that for many of these MNOs, the various system you’re touching here are old school systems, we have a lot of heavy IT systems in the back that we go in, and we sort of make them a little bit invisible and make the whole journey very smooth. Both for the consumer but also for the MNOs who may not want to change the whole backend for this.
HW: Yeah, that’s a really interesting point and very quick statistic that one of the guys has prepared for us here. So, eSIM adoption is expected to reach 2.4 billion users worldwide by 2025, and GSMA found that eSIM adoption among travellers is increasing, with 94% of respondents expressing interest in using eSIM for international roaming services.
So, I think one of the things that’s been interesting for us at Mobilise is we started the journey of eSIM probably 3 years ago. I want to say 3 and a half years ago from when the R&D first started and even though the consumer eSIM GSMA specification, I think was released first in 2016, so a long time ago, we’re coming up on 10 years or eight years or so. The adoption of eSIM has been somewhat slow and particularly the awareness of eSIM as a technology amongst consumers has been somewhat slow to gain traction and to increase.
But I think we’re definitely seeing over the course of the last 12 months or so, maybe a little bit more than that. That awareness and adoption of eSIM is really starting to, I don’t know if I’d use the word explode, but it’s definitely increasing at a rapid rate. Maybe you might be able to just help us understand a little bit more maybe what might be driving some of those increases in awareness and adoption of eSIM technology.
PK: Yeah, my thoughts on it is like, I was in the, I was heavily involved in the SIM card industry back when Apple decided not to go with the standard 2FF form factor but to reduce the size because it made good sense when you’re developing a piece of hardware you want to utilise the space you have on your PCP so it’s good practise. But the world outside of Apple was more stagnant than was fine and hadn’t come to the realisation that the SIM card format should be changed. But Apple pushed this very quickly and in the space of a few months every single SIM card manufacturer in the world had to be able to and to to supply different form factors for Apple, and it was a big change in the industry. But Apple pushed the industry to the dismay of many SIM card manufacturers. It’s not. We had a good setup, and we didn’t really want to change it. And Apple is somehow doing it again.
With the attention that Apple has in the market, at least in our part of the world, they can almost do as they please with things like this. And I think they’ve done that a bit again here saying no, we’ll only be eSIM and then the telco operators of course have to cater for that need and have to supply that. So that’s a big part of the reason.
Another part of the reason is of course that the ramp-up to eSIM has proven to the service providers, the telcos, that this is a good tool to provide service. They can reduce the cost of onboarding a new customer. They can make better journeys and they can be more flexible in the sales and in the customer elements. So, I think it’s a good trend, but I also have to applaud Apple for making this step. It’s a big push.
HW: I think the big 80LB Gorilla, 800LB Gorilla in the room, aren’t they Apple with all their marketing spend and all of the relationships that they have with their consumers as well obviously and it’s something interesting, slightly anecdotal, but when I’ve when Apple released the iPhone 14, I think it was in the US as eSIM-only, couple of months after that I remember searching on Google Trends where you can search the trends of keywords, and leading up to that point the keyword eSIM was on a growth trajectory in terms of the trend of people searching for that keyword. But within days of that Apple announcement, that they were launching that as eSIM-only, and all the kind of awareness that they put out into the marketplace.
You know, I remember the big keynote that they had, they had a specific section about, you know, how eSIM was, but you know, beneficial for consumers. And they had an educational process around it as well to inform users about how to use it. But the spike in eSIM as a trending keyword just went through the roof. And for me, that was really insightful because, you know, for so many years, so many players and stakeholders in the industry trying to push eSIM.
And then you’ve got this big gorilla kind of talking about it and you know the awareness of it goes through the roof. So, it’s interesting and that’s I think what the, you know, to touch on, you know a little bit more on the things that you mentioned there as well.
I think a lot of dynamics came together at the same time I think within the last 12 months to kind of give eSIM that extra push and obviously the Apple announcement around the iPhone 14. But then I think also the market reached somewhat of a critical mass of eSIM-capable devices as well.
So, couple of, you know, what is it? Well, iPhone itself has been maybe four or five years or the last four or five iOS releases have been eSIM capable. Most of the other flagship, other brands have had flagship devices that have been eSIM-capable. So, it’s all these elements that have kind of come together at the right time for the traction to be there, which is good you know? And I’d say maybe some of the, let’s say, naysayers in the eSIM industry not naming names too much, but maybe some of the service providers, the MNOs, who have been a little bit concerned about the risk of churn as it relates to eSIM making it a lot easier for consumers to be able to switch between service providers. I feel like we’ve reached that critical mass now where really it’s about getting on board with eSIM as opposed to possibly trying to resist it, you know? Yeah. And.
PK: And it is a threat when you work in an MNO and you see all these new things. And getting back to what I said before, the SIM is really the core of these operations. It is mission critical to be able to issue SIM cards and to have consumers having the SIM cards.
So, I understand why they have a defensive approach to this. Every time something like this has happened, it has turned out to the benefit of the MNO. So, there’s been many threats, the threats of Google and Apple and the OTT players and the discussion about being a bit pipe. And every single time they come out on top anyway. And this time they’re gonna come out on top as well.
Because what we see is we don’t see a decrease in subscribers. We don’t see churn being much higher. We just see more usability and we see more use cases for the eSIM. So, the eSIM is an enabler for the MNO to do more business quite simply.
So, what we’ll see is that as the number of eSIMs go up, the physical Sims will go down, but the total will not be decreasing. The total will be growing. And that’s just consumer. If you look at IoT, what eSIM can do there, the numbers will explode of course.
HW: Really interesting, I agree. I think and from a revenue perspective as well, one side of it is the number of eSIMs versus Sims that we might have out in the marketplace. But all for, also from a revenue perspective, I think eSIM grows the revenue pie for operators. You know there’s other use cases that are coming up now which weren’t as readily accessible for operators in the past and particularly the travel and wholesale roaming use case as well. I think that’s a big part of the revenue growth that we’ll see as a result of eSIM.
PK: But the cost savings are huge as well. Yeah. I mean, not being, not having to go to a store to pick up a physical SIM card and not to have to pay the store commission for signing up a new subscriber for you. I mean, there are lots of benefits for the MNOs and this.
HW: Well, this is the big one, isn’t it? I mean, I think subscriber acquisition cost is one of, if not the biggest cost that an MMO has to acquire a subscriber. Anecdotally, in the UK, based on some data that we’ve seen somewhere between 2 and a half, or above times, monthly output can be a subscriber acquisition cost. And that goes to distribution, goes to production of SIMs, goes to logistics, goes to commissions in store, retail footprint, all those types of things. So, there’s a huge opportunity to save costs for operators, isn’t there? Absolutely.
eSIM Use Case #2: Laptops & Tablets
Very good. Maybe we could just talk a little bit about some of the other kind of, I guess more fringe use cases maybe from what we’re seeing around eSIM and laptops and tablets, maybe starting with laptops. Do you see opportunity for consumer eSIM within kind of laptop OEM side of laptop manufacturing?
PK: Yeah, so being able to. So it’s more of an IoT use case of course, even though the laptop is of course a consumer device, but it sort of goes IoT here. But being able to in a laptop to offer the opportunity to connect it at a late stage is super valuable because what the laptop manufacturers will be doing is enhancing their product offering very low cost. It doesn’t cost much to include a secure element or even just an iSIM where it’s not even a secure element, but it’s in another module.
So, it’s an excellent opportunity to provide a better user experience and for somebody to upsell connectivity. Having worked in a company where the 5G connectivity was built into your laptop when travelling, doing meetings, it’s such a joy just to open up your laptop and it’s connected and you forget very quickly that you’re just connected wherever you go, you don’t have to ask for the Wi-Fi password, guest network and so forth. So, you very quickly get used to this.
So, I think it’s a really good use case. I don’t know how big it’ll be, it’s to be proven. We have a few projects ongoing and I’m hoping that the ability to install an eSIM will be in all laptops. So, you just do it, and you have an extra SIM card there. And getting back to what I said before, the pie will be bigger for the MNOs in the end, we’ll just have more connectivity with this.
HW: And I think that’s one of the things that I find really interesting about eSIM is that it does lower those barriers to entry for service providers. And we’re seeing so many examples now. I mean, for us. As you mentioned, we’ve got quite a few projects going on and in particular in the laptop space as well. But what’s interesting for me is that the opportunity that eSIM opens up for any brand to add incremental revenue, or ancillary revenue, or value-added services revenue, whatever you want to describe it.
And to maybe use some examples of what we’ve seen recently is the Revolut launch which I think was maybe 3 to 4 months ago. Super interesting use case from my perspective. And very quickly to summarise, Revolut are offering global eSIM connectivity and plans through their mobile application, one-click activation as well. So, customer can select their plan and then install an eSIM effectively with one click, obviously then going through the operating system steps to provision the eSIM itself on the device.
But what’s interesting for me is one, that gives Revolut the opportunity to monetise their existing customer base. Massive customer base and publicly available numbers are north of 30, 35 million. In the operator world, that’s a big customer base, right, like it’s a decent size. Most European MNOs would love to have that number of customers on their base.
But what the other thing that’s really interesting that you know you can purchase an eSIM and a plan just directly. But what’s really interesting for me is the loyalty play that Revolut have tied into that offering. In that if you are a part of some of the higher premium subscription plans. So, they’ve got like myself I’m on an Ultra plan. That’s because I’ve spent quite a bit of time in airports and I like to have the lounge access. But if you’re in those in the in the Ultra plan, you get 3GB free data per month globally, which I don’t pay for. It’s all part of the subscription.
But I think that’s really cool because basically what Revolut’s doing is through that loyalty plays, they’re driving their customers up the value chain. You know, like if you take and pay us an extra amount on a monthly basis, then you get this added perk. And I think that’s the kind of thing that a purely digital proposition which eSIM enables you wouldn’t, you wouldn’t be able to do that. Revolut wouldn’t be able to do that if they had to pay for logistics for distribution or commissions or all that kind of stuff. So, it opens up those types of use cases in from a loyalty perspective, which I find is really interesting.
PK: Yeah. But what Revolut has done is also amazing in the sense that what they’re doing with the loyalty is they’re moving your loyalty from your airline to your bank. Because now what you want with the loyalty programme, when you’re with an airline is you want lounge access so you can chill out and have the breakfast there instead of having the breakfast at home and so forth. But now you don’t need to be loyal to your airline anymore.
Now you can take whatever flight you want and because you have your bank, you have access to the lounge. Meaning you like it because sometimes the airlines that do offer lounge access are three, four times the airfare of a low-cost provider, but you now get the same service and the low-cost flight.
So, I enjoyed the fact that Revolut has managed to create this loyalty programme where they offer data, offer lounge access, and you’re now loyal to them. Something that I could never imagine. I could never imagine being this loyal to my normal Danish bank. But because of Revolut, I’m fine about it. Absolutely. So that’s an amazing thing they’ve created there. And adding eSIM, adding data makes perfect sense in this case.
HW: Absolutely. And ultimately for Revolut, you’re extending the lifetime value of your customers, aren’t you? Like, you’re, the more sticky, you can make your proposition. The longer they stay with you, the better opportunity you’ve got to generate a continual revenue from them.
PK: So, banks have traditionally have always been super sticky and that’s why Revolut has a place in the market. But they also know that because it’s becoming less sticky, they need to create it as well. And they’re doing that. To create additional value. Yeah, yeah, but they’re doing it really well.
HW: But I think to round out the point there is that in the laptop space, in the banking space, it could be any industry, any, any company that has a digital footprint. eSIM enables the opportunity for them to upsell, you know, mobile plans into their existing customer base. That’s the real beauty I think for me of eSIM, it’s taking what was a relatively siloed industry, I would say lots of customers but relatively siloed industry and it’s making it accessible to a whole broad set of different industries, you know?
PK: Yeah, but the eSIM as we see it from the customers we have, the eSIM enables anybody with a digital footprint as you say, we see online gaming communities, we see retail shops that have some kind of loyalty or some kind of offering and it’s a good extension of that. So, depending on who you are and how the stickiness is, it’s a really good way of creating more stickiness and upsell.
HW: Absolutely. I liken it quite a lot to what the banking industry had a few years ago with embedded finance, you know? Now whenever you buy a product, you’ve actually got a finance to it as well. And I see that’s the same with what we’re seeing with eSIM as having an embedded connectivity product adjacent to any kind of core product or user journey. It’s quite interesting. Yeah.
eSIM Use Case #3: Wearable Devices
So just touching in on one of the other top eSIM use cases, wearable devices and I think something interesting that I’ve noticed throughout the, my learnings of the eSIM industry is Apple with the Apple Watch for example, they came out with, you know, eSIM, consumer eSIM type technology and that was a long time ago. Yeah. But it didn’t seem like that same trend moved into smartphones and other consumer devices in the same way. And and I guess maybe you’ve got some insights there, but I guess the primary reason why consumer eSIM was important within smartwatches because of the physical limitations of the size of the device. Yeah. Having physical SIM card in there is a challenge.
PK: And so, number one, the size that you take up with the SIM card for a watch or even smaller devices, which we will see. We will see smaller and smaller devices of course, even though we don’t have the imagination right now, they will continue to get smaller at a certain pace.
So, the even the smallest physical SIM is too much because you need to have a holder for it. You need to have a door, you need to be able to open up the device, and if you want to say, produce a waterproof or water-resistant device, having a physical SIM card slot will ruin that right away. So, the perfect extension of making the SIM card smaller is, in that sense, making it downloadable so you can really seal your hardware up.
There are many use cases in IoT as well where you want a sealable device, a waterproof dustproof device for tracking, for harsh environments and so forth. The same goes for rocket laptops in the end. So, but many wearables, because of the size restrictions alone, is ideal for eSIMs.
HW: Good for eSIMs, yeah. It’s almost necessary, isn’t it?
PK: Yeah.
eSIM Use Case #4: Travel & Tourism
HW: Absolutely. So, let’s talk a little bit about travel and tourism and how eSIM has helped, you know, connectivity within those industries. And we talked a little bit about Revolut before, but an obvious use case would be around airlines, for example.
Obviously, airlines have, when it comes to travel, a very captive audience because they’re shipping around millions of consumers every day to different destinations. And in today’s fully connected world, everyone wants to be connected to emails, to social media, whatever it might be.
Maybe what do you see some of the use cases might be for consumer eSIM within the airline industry and the values that, that might bring to airlines who are looking to offer a connectivity product?
PK: Yeah. So that, two angles to it, of course, there’s the consumer angle or say the airline or MNO angle on it. Well, that was three. But the airlines, of course they upsell already today. Whatever they can within the needs of a traveller. So, you know how it is, you want to rent a car, you want a hotel room, you want a whatever airfare or, sorry, train fare, bus fare from the airport to the centre of the town you’re going to. So, it’s a completely natural extension to offer a roaming service as you’re booking a flight. And many airlines are already doing this. We’re participating in projects on this as well. So, it’s I would say low-hanging fruit, but of course, the devil is in the detail.
It’s about, it’s about having the right offer, the right price and you need to be aware of who your customers are as well. Many corporate customers don’t pay their own phone bill and they don’t even notice that there’s an additional roaming cost because it’s included in their environment or, sorry, in the subscription.
So, it depends on, you need to know your subscriber base as well as an airline in order to get it right.
HW: Yeah, it’s super interesting, isn’t it? And I think it’s like you say it’s a very obvious upsell to kind of sell into your customer base a connectivity product because that’s in very, very high demand these days. But you make a really good point. And as you’ve said, we’ve got experience in some of these types of projects. And I think one of the things that is going to be interesting to see how this, you know, how this story unfolds connectivity product into the travel industry is the question around the margins of a roaming product.
And as everyone knows margins, everyone in the telco industry knows that margins within a roaming business case are obviously quite thin. And so, it’s ensuring that the pricing can be right so that there is enough to go around for all parties involved because it’s a complex environment as well.
PK: It is.
HW: There’s a lot of parties involved in a roaming product.
PK: It is, so of course. Partnering is a key of doing something like this but also being able to distribute the margins that are a bit slim and reaching a certain volume. Of course. When it comes to roaming, volume is important.
HW: Yeah, absolutely. It’s everything, isn’t it?
PK: Yeah.
HW: Yeah, it’s the economics. Yeah, economies of scale. Super interesting. You know, I, I think that we talked about it before, but we’re gonna see the revenue pie growing.
PK: Yeah.
HW: From services like this and just from my own personal experiences, I have I think 7 or 8 eSIMs on my iPhone now and maybe another 3 or 4 on my Android device because I’ve got two and I switch between different eSIM profiles depending on the need that I have. And what’s really interesting is that, for me, previously I would just have left my phone off or I would have not enabled it roaming in in the settings. Whereas now I have a French SIM, I have a Nigerian eSIM, I have a Canadian and US North America eSIM and I switch them on, you know whenever I need to. And previously I would have just left them off because my national UK plan, again not naming any names. But you go to any major destination and the roaming fees could be quite exorbitant.
PK: Yep.
HW: Slightly to do with Brexit as well. And the fact that the UK is no longer within the Roam-like-at-home initiative. But touching on the point before about the revenue pie growing. For me, this is creating an opportunity for new revenue to be coming online for operators which wouldn’t have been there before because people, consumers just wouldn’t have turned it on.
PK: Yeah, it’s increasing the overall data consumption, quite simply, and this is what people want. And also getting back to the airline case, the airlines have the subscriber right there when they see the need. It’s a really attractive point to be selling roaming data capabilities, but that it changes the behaviour of the consumer quite drastically to keep using the normal data you would no matter where you are because it becomes easy and more affordable and you get a good proposal or a good offer from somebody and of course, you’re going to take it because we do want to be online.
HW: Absolutely, absolutely. Very good. One thing that I feel like I want to mention is a statistic that we’ve got here which is around the UK no longer being a part of Roam-like-at-home. So, in 2022 Brits accumulated over £539 million in unexpected roaming charges, facing real uncertainty using mobile abroad, an issue that could be avoided with eSIM.
So, I think just an interesting statistic and a very relevant use case that I just had last week, a friend of mine who was going over to go skiing in France. He sent me a message and said, can you tell me about some eSIM roaming services that I can use? So obviously, I pointed him to the ones that were relevant for Mobilise. I’ve got to get some feedback from him to see how it went. But yeah, I mean something that roaming for UK consumers just wasn’t an issue 3 or 4 years ago.
PK: Yeah.
HW: As it was for the rest of Europe, not an issue. You take your packages with you wherever you go in Europe. Now, these types of options for consumers are super important. You know, they’ve got that flexibility and freedom to be able to avoid high charges, but at the same time choose from multiple service providers to help them with the connectivity that they need, you know.
PK: Yeah.
eSIM Use Case #5: Connected Cars
HW: Interesting. So, another use case that we wanted to talk about here, which I think is the last one that we have on the list is connected cars. And I would probably classify connected cars as a little bit blurred between consumer eSIM and IoT. I think it often depends who you talk to.
But certainly, eSIM and the IoT version of eSIM, has been within the connected car industry for quite some time with the infotainment systems or the emergency services systems that exist in vehicles have had to be online for many, many years now. But maybe you’re able to talk a little bit about potentially some of the opportunities that we see with eSIM, consumer or IoT, within the connected car space.
PK: Yeah, so the automotive industry has always been a major driver for the telcos to do IoT services. I mean, the original IoT service was called machine-to-machine, and the original machine-to-machine was most likely the automotive industry. They’ve been driving a lot of the requirements in terms of the SIM card as well the sustainability and the the rocketness of a SIM card. How long can this SIM card last?
So, the automotive industry has forged the beginnings of the remote provisioning of a SIM card as well. This was how the eSIM sort of started as well. So, when an automotive manufacturer produces a car somewhere in a factory, they don’t know where the car’s going to end up in the end up in the end. So, they want to be able to at a late stage download a local subscription.
So, it may have changed now where they maybe don’t move the cars around quite so much as they used to, they’re able to produce more of a bespoke service car or know who is the consumer who will own this car, at least in the first go. But certainly, the automotive industry has been a major driver for connectivity and pushing the MNOs in terms of cost and service as well.
And with eSIM, it just takes everything that they have been doing in the last 10, 15 years and makes it super easy for them. And then you will also see them being some of the larger MVNOs in the world. And for the infotainment stuff, it’s a direct upsell opportunity to a consumer. What I’ve seen is that it’s been included the first 12 months or whatever and then you make an upsell to keep the service going and some of these automotive players are quite large in terms of how many subscriptions they have. They may even be venturing into being full-blown MVNOs themselves in order to take charge of the connectivity and the data surrounding it.
HW: Well, I mean in effect some of the newer infotainment systems, well I say newer, within the last kind of 2, 3, 4 years maybe it’s effectively a smartphone in the devices.
PK: Yeah.
HW: So, you can do it in the car, so you can do all the things that you can do on a smartphone like streaming video, YouTube videos. Obviously, you’ve got things like Google Maps and those types of applications as well. But again from some of the projects that we’ve been involved in, not only do they have, you know, these car manufacturers have huge customer numbers and subscribers effectively, but the volume of traffic that they’re generating as well is significant, you know?
And as we were rightly talking about before in the connectivity space, it’s all about economies of scale.
PK: Yep.
HW: So, the more traffic you can bring, you know, the better the rates that you can get.
PK: Yeah, there’s a big difference between a water metre and a car. So, the water metre volumes are huge, but the data is incredibly low because it needs to be like a perfected use of as little as possible because the money is of course way different. And automotive, they have high value and high volume also. When it comes to connectivity.
HW: Yeah. I’m really interested to see how the subscriptions evolve in the connected car space. I mean, I’m quite certain that the connectivity subscription that I had in my previous car was free, so I hadn’t paid. I had, I think, an annual service charge. So, I think it was, I guess effectively it was bundled into that. But the way that it seems like the usage consumption is going and the cost that that kind of imputes towards the car manufacturer, you got to think that in some point in the future there’s going to have to be some kind of cost to the consumer over there.
PK: Yeah.
HW: For that connectivity, you know.
PK: Definitely. But there are many ways of charging the fee of course. But if the growth in data volume keeps going, at some point you need to ask the consumer to chip in a bit.
HW: To pony up for some of it exactly.
Future Outlook of eSIM
So maybe we can just talk a little bit about where we see eSIM going over the course of the next, say 4, 5, 10 years. If you were to pull out Per’s Crystal Ball and say where do you see eSIM and you know the industry is around eSIM and what it’s enabling in say five years’ time, what do you think the future will look like for eSIM?
PK: I, the timing is difficult of course, but eSIM will be the preferred delivery method for connectivity. It will very quickly take over. So, the numbers we’ve seen from some of the MNOs is that it’s already now between 20 and 30% of all the SIMs they deliver. That the physical SIMs are declining fast, but the eSIMs are growing even quicker than the physical. So it is, it is what we want. And if we speculate, we always speculate with the knowledge we have today and it’s limited how this breaks and how this unfolds, I can’t really say.
But in five years, eSIM will be in everything. It’ll be all handsets, at least in our part of the world. Of course, there’s some cost constraints in other parts of the world that will maybe keep legacy devices with the physical SIM slot alive for longer. But we are also seeing that market develop into eSIMs to some extent. So eSIMs will be the preferred delivery method for all use cases.
Also, IoT use cases where the numbers are going to be staggering. The distribution ability in some of the IoT use cases are going to be massive. Massive numbers. Massive amount of connected devices, smart metering and so forth. But that’s as far as I’ll go in terms of prediction. But it will be the preferred delivery method of connectivity.
HW: Yeah, you touch on a really interesting point there as well is the rate of adoption is almost directly correlated back to the number of eSIM-capable devices out in the market. And today most of the eSIM-capable devices are more at the high end of the range, which.
PK: Yeah.
HW: By default, excludes many parts of the world because the affordability factor for some of those developing nations, let’s say. But what you do, what we are starting to see I guess is that the price point for those eSIM-capable devices is coming down gradually but more interesting for me, I think there’s manufacturers, I don’t know, let’s say maybe the tier 2, tier 3 manufacturers that have price points, device manufacturers that have price points quite considerably lower than say the Samsungs or the Apples of the world.
They’re starting to now produce eSIM-capable devices and those price points are obviously a lot more affordable in those developing nations. So, you would expect that in some of those developing nations you might have eSIM-capable device penetration of below 5%, which is maybe what Europe had 5 years ago? 6 years ago?
As those devices become more affordable, I guess we would expect to see, you know, a similar increase in the adoption of eSIM in those territories as well.
Yeah, I don’t think it will take that long, to be honest. I think with the current push, even the low-end manufacturers that are very cost-aware will implement eSIM and see it as a benefit to their overall cost structure because in the end, it’s not much of a difference in in the hardware cost side of things.
So, I think it’s going to be a lot quicker to get everybody on board. I don’t think there’ll be a long tail of non-eSIM compliant devices going into the market even in the developing markets. In 2 years from now, it’ll be almost saturated when it comes to new devices.
HW: Very interesting indeed. I mean I make that correlation back to the banking industry but you know 5, 6 years ago I would have done most of my banking in a retail store.
PK: Yeah.
HW: But then you had the advent of neo banks and all, you know much more digital-first approach to banking and I use Barclays here in the UK. I think 5, 6 years ago in my high street, there was 2 Barclays branches and now there’s none, you know, and everything is done on the mobile application, support calls, all that kind of stuff.
I see eSIM as the enabler in the telco industry to kind of transition the telco industry in the same way that it has, in the banking industry.
We were talking about where we see eSIM over the course of the next 5 to 10 years. And yeah, it’s super interesting. I was making a correlation between the banking industry and the telecoms industry. And 5, 10 years ago, all of the banking that I did personally was in-store, in a retail estate. But now with, you know, the digitalisation of the banking industry and you know the fact that like neo banks, Revolut we talked about, but Barclays, who’s I bank with here, their mobile app is amazing. You know you can literally do everything that you could possibly want to on there.
And in many cases, it’s far quicker to do via mobile application than it is in a retail store or calling them up their helpline. And I see a similar correlation in the telco industry in that eSIM is really breaking down that final physical barrier.
PK: Yeah.
HW: You know I can definitely see a time in the future where you know it’s a similar trend in the telco industry like the bank industry, that we start to see less reliance on the retail estate, much more advancement in the digital technologies and digital user experience, those types of things. To a place where we, you know, kind of see ourselves doing everything online within the telco space as opposed to retail or customer care all those types of things, so.
PK: Yeah.
HW: Super interesting.
So, I think that about wraps up the top five consumer eSIM use cases that we had on the agenda today. Really, really exciting times in the telco space. You know some of the things we touched on today, but does feel like we’re in a bit of an inflexion point in the industry or enabled by eSIM, a lot more use cases coming out now within the telco space enabled by eSIM. So, it’s a super exciting time.
And yeah, thanks very much for joining us on the podcast today, Per. As always, very engaging conversation. Next time we’ll ensure that we have a beer to loosen things up even more.
PK: Yeah.
HW: And yeah. Thanks for your time. Appreciate it.
PK: Cheers. No worries.
