iPhone eSIMs are a golden opportunity for CSPs to go digital

esims digital
BUT WHERE DOES THE SIM CARD GO?: Guests explore the capabilities of new iPhone XS following Apple's Sept 12 event revealing its latest gadget lineup. Image credit: Apple

eSIMs may push the mobile operator further down the value chain. But it also enables them to shift investment to truly digital strategies.

It wasn’t a surprise, but Apple’s announcement earlier this month that the next iPhones will have embedded subscriber identification modules (eSIMs) represents a further erosion of the mobile operator’s traditional role and relevance. Future iPhone owners will be able to make a simple out-of-the-box choice about which network and which plan to adopt – no mobile phone shop, no SIM hassles, no speaking to different customer service and sales functions. For the consumer it makes life much simpler.

But is it necessarily bad news for communications service providers (CSPs)?

On the face of it, the adoption of the eSIM pushes the mobile operator further down the value chain. If consumers don’t need to go through the mobile operator to buy their new phones, then what do they need them for? Does the mobile operator simply become the petrol in the motor car – something that needs to be paid for but only in order to activate the functions on the device?

eSIM’s silver lining

However, there is another way of looking at the inevitable transition to the eSIM: it could be a way for CSPs to reduce costs. In many countries in Europe, North America and Asia, mobile operators have made significant investments in retail stores, but in a digital age they are starting to question the investments. Vodafone, for example, has set ambitious targets for cutting the number of stores it owns.

So long as devices contain physical SIM cards that need to be replaced if you are changing networks or, in some cases, changing devices, there is a case to be made for retaining a large retail footprint. People just don’t like being left to fiddle with SIM cards and would rather go to a store to sort out their new device or contract.

It is much more difficult for an operator to unilaterally embark on a cut in its retail presence if its competitors do not. But the decision by a device vendor to embrace the eSIM is likely to affect all operators. If they cut back on retail equally, they are all likely to generate cost savings. Very few consumers are going to stop using mobile communications just because their local operator shop has shut down.

Digital improvements

From a branding and visibility perspective there is a big downside to cutting back on retail. For mobile users that embrace the eSIM capability, their only relationship with the operator will be for billing purposes or to address problems and faults. Without the store presence, how will operators achieve the visibility that they need to protect (or build) their brand?

Building a stronger digital capability represents the best opportunity for rebuilding the customer relationship. Most operators have launched or are launching self-care apps and would like their customers to use them to manage their relationships.

Some CSPs are introducing chatbots. For example, as part of a TM Forum Catalyst project called Phygital Store, Orange has been looking at how to make the retail experience itself more digital. During the project, which was demonstrated at Digital Transformation World in May, the team showed how a consumer could order a new phone online and complete the transaction in store by interacting with a robot.

Still, from the consumer’s perspective, most telecoms operators remain in the slow lane when it comes to providing digital customer service and experiences. Self-care apps are achieving reasonable penetration, but few customers rely on them for managing the relationship with their service provider. They simply do not provide enough benefits, ease of use, flexibility or real-time capabilities for customers to rely on them.

To change this dynamic, and to start building a true digital brand, CSPs need to demonstrate that they understand their customers’ preferences and usage habits. They should replace sporadic, mass communications with personalised, regular and more useful communications.

Reinvesting just a small proportion of the savings that can be made from physical retail closures will make an appreciable difference and start to change perceptions about the role, and the value, of the operator.

Mark Newman, chief analyst at TM Forum Written by Mark Newman, chief analyst at TM Forum | Original story posted at  TM Forum Inform

The TM Forum’s Digital Transformation Asia event is coming to Kuala Lumpur on November 13-15. Disruptive.Asia is an official media partner with the event. All the details you need are right here.

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