The embedded SIM (eSIM) offers new revenue streams to an oversaturated telecoms market while we wait for the generation of low-power narrowband IoT devices and standards to take off. And it promises to do so on several levels, as the GSMA standard for eSIMs is actually two standards: one for IoT and industrial applications, and the other for consumer.
I talked with Manoj Kumar Rai, director of M2M solutions for Asia and Japan at Gemalto, who observed that when Samsung made headlines last year with its Gear S3 smartwatch, it was not the first device with an embedded SIM, but it was the first to be compliant with the new flexible GSMA eSIM standard.
The eSIM means that consumers can buy the Gear S3 from the manufacturer’s store and then choose from the two different providers that are on offer rather than buying the device and connectivity separately. It also changes the relationship between the telcos and the device manufacturers – in Singapore, the Gear S3 only comes with a choice of two telcos: Singtel and StarHub.
One use of eSIMs that has been mentioned in Singapore’s public sector is the ability for a government agency to move its users to different networks for quality of service or even load-balancing reasons, distributing loads evenly among operators.
For the industrial M2M use case, the eSIM that Gemalto manufactures would be pre-personalized with an initial bootstrap so that it could go online via the lead MNO in order to download and provision the SIM data from a provider of choice.
Automotive telematics is a huge market, and the use of eSIMs greatly simplifies the production and number of different SKUs (stock-keeping units) needed. Cars made in Japan can be shipped with the same telematics module, which the local dealer can personalise with a local data plan later.
Gemalto’s Rai explains that the GSMA had started working on the M2M eSIM standard back in 2013 and the specification is quite mature. The consumer specification, however, only started in July 2015.
The eSIM differs from traditional multi-IMSI and global roaming contracts in that it a GSMA standard, as opposed to proprietary solutions that only work within one global roaming alliance. A multi-IMSI SIM can indeed switch IMSIs to connect to a home network, but those profiles need to be loaded and finalized in advance. If it is in a country without an IMSI profile, it falls back to roaming – and increasingly these days, many countries are putting limits on the time an overseas SIM can roam.
What the GSMA eSIM standard offers is the ability to download the full profile and change alliances and networks later. This ability for contextual change and long-term reliability is particularly important in a world where IoT or smart vehicles have a lifespan of over a decade, Rai said.
As an example, starting in January 2015 Russia mandated that new vehicles be equipped with remote telematics with two profiles. In the event of an accident, it would call for assistance and report the crash via the Glonass Emergency Response System, but for day to day operations the car manufacturer can use another profile of its choice. This requires an eSIM with two profiles: one for Glonass and the other open to personalization.
Rai said that all MNOs are busy responding to the RFPs to provide for this new market. A typical lead MNO bootstrap provider only provides enough data for the car to download a local profile and is active only for a short time. He would not share typical revenue numbers but said it was much less than ten dollars per eSIM. However, once multiplied by tens of millions (the GSMA expects the automotive IoT market to be 41.7 million vehicles by 2018), that becomes a significant amount, and considering that this is new revenue coming into an already saturated market, it is clear why the telcos are excited. Going forward from cars to the broader IoT spectrum, the numbers are even bigger.
The consumer eSIM specification, on the other hand, does not have any lead MNO, and eSIMs are provisioned over the Internet via Wi-Fi. In this sense, the consumer eSIM is more of an evolution and offers users the added convenience of simply using software to sign up to new providers and plans.
While today the focus was still on eSIMs, Rai said that going forward, IoT would need to break free of the huge power requirements of cellular technology. To that end, Gemalto is talking with the GSMA on NB-IoT, the LoRa Alliance and Sigfox to help shape the standards of the future.