Ericsson’s eSIM solution could rattle telcos

Swedish company Ericsson has launched its eSIM solution, removing the need for a physical SIM card in customer devices.

The eSIM will offer remote provisioning of user profiles and device management, allowing providers to manage user profiles more flexibly. 

A consumer survey conducted in five countries suggests that the advantages of eSIM will translate to 10–15% revenue growth per eSIM smartphone subscriber. Initially, this revenue growth will be due to customers more easily adding new devices to existing bundles.

Ericsson continues to espouse assurances that eSIM will benefit CSP’s but, for many telcos, eSIM technology represents something of a threat.  

eSIM technology will greatly improve the ease of switching provider, potentially allowing a user to purchase, set up and connect a new device in minutes. Savvy users will have the opportunity to switch frequently to take advantage of the latest promotions.

“Most communication service providers see eSIM-enabled smartphones as more of a threat than an opportunity,” said Lynnette Luna, principal analyst at communications-focused research firm GlobalData. “But eSIMs may very well be what CSPs need to break the falling ARPU [average revenue per customer] curve, if they implement and market the capability correctly. The eSIM can enable new use cases that can actually strengthen the customer experience.” 

Nonetheless, forecasts suggest that eSIM technology is here to stay. The eSIM Device Sales Forecast Report: 2019–24 by Ovum suggests that eSIM device sales will see rapid growth, estimated to top 1 billion by 2024.

Like it or not, telcos must find a way to make eSIM work for them, whether by upselling to customers to add more devices or embracing a more dynamic pricing model.

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