Thursday, 16 March 2017

eSIM opportunity for MVNOs, MVNEs and manufacturers as per Dallas MVNO conference


The eSIM is a hotly debated trend and was the subject of the two panels I spoke on in the Dallas 2016 Wholesale Connectivity Convention where in addition to the usual blurb I was ken to get actual dates from panellists on when they thought the technology would become mainstream. I warned I would write these dates down and blog about them, but have stopped short of saying who said which date in order to protect the innocent!
eSIMs were an integral part of 
There were two panels,  The Panel on Global connectivity with eSIM as a sub topic (morning) with Gigsky, my old client Tim previously of Microsoft, now with Transatel and the omnipresent Dave from Aspider.
Speaking with Gigsky, Transatel and Aspider on eSIM as part of how global connectivity can drive growth
In the afternoon session we had another old client of mine, Federico Homberg from Deutsche Telecom, Steffen Frenck from the SIMalliance, David Buhan from Gemalto and Tony Wyant from Gigsky again. The key outcome for me is that I asked all the panel and some of the audience to give me a date when they believed that eSIM would make mass market (and yes I did emphasise that I was taking notes), when it would appear as a viable option in Niches (alongside normal SIMs) and two in between options emerged: mainstream in niches, such as smart watches; and "in every new car".
Mainstream eSIMs are still a way away, however for certain specialist players / trusted parties there are niche opportunities
The writing on the wall is that that mass market eSIM is a good few years away / not coming anytime soon and the reasons for this discussed and offered were:

Supporting eSIM is complex and requires trust from vendors

Many MVNEs and MVNOs saying they are going into eSIM, that they can support eSIM, etc, etc. However they generally stumble on the following.

Financials

eSIM means distribution is "easy" (although its not necessarily the case, see "managing eSIM is complex" below), however the reality is that the business is very unpredictable;
  1.  essentially people can take an eSIM for a month, a week, a day or even just a few hours in an airport, and then not return for a few months if ever, yet someone is stuck with paying costs for that user on an HLR, CRM, billing system, etc. most of which are billed somewhere along the line on the fact that they will be used for a good few months, not a day here or there.
  2. forecasting is impossible
  3. USP / customer ownership - there is very little to leverage other than cost
  4. loyalty - there is none in many cases!

Managing eSIM is complex

The biggest issue I have come across to date is the concept that many have whereby they say "we can support eSIM", when in fact is what they mean is "we have tested eSIM".  This gap between what you can do for 1, 10, 100 or even low 1,000s of SIMs vs. what you can scale is the bane of the mobile industry and one of the key limiting factors of MVNOs and MVNEs growing, and often sadly also the demise of MVNOs and MVNEs as it prohibits them hitting critical mass. The bad news is that it only gets worse when you add the scale and complexity of eSIM.

This is a bit like saying, "I can send an email, sending emails works from our systems" which just about anybody can say, however this is very, very different from being able to manage a busy inbox efficiently, and even further away from having an email sending system and email management system installed, integrated and working for a specific application! does not mean I have an email campaign management system!

The most recent case was a couple of years ago and eSIM was at the core of the service proposition; At the 11th hour the need for a third party eSIM platform and integration was required. In hindsight it all became clear to me, as said MVNE did not even have simple OTA ability in house, so managing sSIM was a whole level of pain higher. 

eSIM requires trust and relationship management

the eSIM relationship is one that often requires deep sharing of what many MNOs, MVNOs and OEMs consider highly confidential data that very few people in the business, let alone outside of the business are allowed access to. Mismanagement of this type of data to the wrong party or a party who cannot manage security credibly is asking for that OEMs customers to have their private pictures shared or their phones calls disclosed, and so again, there is a litmus test here. Having spent last two years integrating a whole suite of MVNE services to make the most complete MVNE service we were amazed how many services are not even using basic security, like SSL for portal and API access for example, how is an OEM going to trust a service like this with deep access to their OS, for example? 

MNOs have no need or requirement to support eSIM in short to medium term

The biggest issue however will be MNO resistance, as they really have no need for eSIM in the mainstream in the timescales that are above:
  • Handsets are getting bigger
  • The device ownership timescales are getting longer
  • MNOs have invested in significant retail and distribution presence

The upside to eSIM opportunity in the immediate term

The upside for MVNOs and MVNEs that can pass the tests above, is that the emerging opportunities are often too niche or too International/complex for the MNOs (e.g. multi IMSI).