The eSIM is great for you, but not so great for telcos
The eSIM has been in Australia for a while now. The technology embeds a SIM into your device so you don’t need a physical SIM to connect to a telco’s network.
This solves a lot of inconveniences when porting over from one network to another. For one, you don’t need to wait for a physical SIM card to be delivered to you before switching, or go to a store to pick one up. You also don’t need to go through that tedious physical switch from one SIM card to another for whatever your reasons may be – perhaps, for instance, it you have multiple phone numbers and want to switch between them.
This all sounds great for consumers, but not so great for telcos. So despite how promising the eSIM market is, major telcos seem bent on slowing its adoption rate and growth.
eSIM market growth is imminent, but major telcos fears are slowing it down. src
Boost Mobile founder says telcos are scared of eSIM
Boost Mobile founder Peter Adderton says the major telcos are scared of eSIM technology. The benefits it brings for consumers are challenges for telcos, particularly how easy it makes it for you to move telcos.
Assuming you currently have a Telstra phone plan. You’ve gone through the tedious process of waiting for a SIM card in the post, porting your number, and now you’d rather not waste the time going through it again just to switch to another telco. In other words, even though you might be aware of better deals out there, there’s an element of fatigue that discourages you from going through the switching process all over again.
The eSIM changes that. In a matter of seconds, you can access your menu, delete your current telco, add another telco’s plan and wait for your number to port. You could also log onto a telco’s website, find a better plan, purchase it, scan a QR code and your plan will be activated. That means you can switch at will, on demand, with no fatigue at all.
For telcos, that sounds like a threat to the bottom line. It sounds like a technology that makes it so much easier for a telco to lose a customer. It sounds like a disruptive technology that would force even more competition in the telco market, which is always great for the consumer, but scary for the telco.
As a result, telcos have been slow to unleash the full potential of the eSIM, limiting its capabilities to avoid such easy switches.
Telcos fears of the eSIM is evident in the slow adoption rate
Mr. Adderton points to the slow adoption rate of the eSIM in Australia as evidence of the major telcos’ fears of the technology. While the eSIM has been in Australia since 2017, eSIM plans in the country were mostly limited to wearable devices like the Apple Watch.
Eventually though, Australian telcos opened up to eSIM plans for larger devices. As smartphones like the iPhone 11 launched with the technology, the major telcos began to provide access to phone plans via the device’s eSIM.
However, their provisions so far have limited the power of the eSIM significantly. Remember that one of the key benefits of the eSIM is to switch telcos and plans in a matter of seconds. But if you purchase your eSIM phone from your telco, it will be locked to that telco – thus, you won’t be able to switch to another telco if you wanted to, until the phone is unlocked.
In fact, the primary benefit that telcos seem to boast about their eSIM service is that it allows customers have more than one phone number on one device, by attaching one number to the physical SIM card and another to the eSIM.
Final words – MVNOs lack of access to eSIM technology is another sign of telco fears
Despite eSIM devices being in the Australian market since 2017, MVNOs (Mobile Virtual Network Operators like Boost) have been blocked from the technology so far. There seems to be no feasible reason for this, other than the major telcos’ fears of the competition the technology will trigger when more companies can offer eSIM plans to consumers, who would then be able to switch to those plans at will.
The ACCC has expressed concerns over the lack of eSIM access for MVNOs, but has chosen not to regulate the technology yet. The major telcos have indicated that they will eventually open eSIM access to smaller telcos, but the wait continues.
It’s a rocky time for major telcos, indeed. The market seems volatile, or could be potentially volatile in the near future, Even beyond the challenges the eSIM will eventually bring, telcos must worry about the wave of satellite phone plans in the coming years, another disruptive force. And as far as the eSIM goes, it’s only a matter of time before the ACCC will have to step in if telcos do not open the eSIM door to smaller phone companies soon.
In the meantime, MVNOs can only watch from the sidelines as the big telcos sit on eSIM technology and suppress its benefits. With only three telcos having access to eSIM plans, the current competition isn’t much. But when MVNOs like Boost get access, the competition will balloon, and the full benefits of the eSIM will be realized for the consumer.