Will eSIMS Bring Down the Cost of Data?

e-sim

There is a general recognition around the world that most telcos have resigned themselves to the fact that they can no longer charge exorbitant prices for voice, text and movie streaming. Instead, they have concentrated on gaining revenue from data that the public simply can’t do without.

Now all that might change in the near future as eSIMs may come to the rescue just like other new technologies have done in the past. How telcos will respond is yet to be seen.

What telcos have lost

Anyone who is not a millennial or a generation Y mobile phone user will remember just how expensive mobile phone calls were not so long ago; say, more than ten years ago. For a start, there weren’t so many mobile phone devices anyway. People used to use things called “public phone booths” if they were away from home. There are still plenty of these ghosts around. You can see them all over Australia with the Telstra sign on them, but have you ever seen anyone using them? Probably not unless someone had stolen their mobile phone! The fact was that no-one liked ringing a mobile number back then because it was too expensive. Even text messages were charged at 25 cents or more each and were more expensive the longer they were.

Those days have definitely gone. To a certain extent we can thank Skype and Voice-over-IP for that. Text messaging went the same way when WhatsApp, iMessage, Facebook Messenger and Skype came along.

Voice and text costs plummeted as long as you had a mobile plan. In Australia, it’s easy enough these days to find plans that give you unlimited national phone calls and text messaging and it’s not expensive any more as long, as you are careful, phoning or texting internationally. Netflix and others (Stan and Presto in Australia, for example) have done what the other apps have done for movies and TV.

Data is where telcos are now making their money

All the telcos have left to make heaps of money out of is data. Of course, not every country is as bad as each other. Competition certainly has an effect. Canadians and New Zealanders bemoan their limited choice and particularly high data costs compared to the rest of the world, but data is certainly still expensive everywhere compared to every other service that telcos still offer. The fact that in many less affluent countries data is a lot cheaper (just look at some of Australia’s neighbours, for instance. Malaysia, Indonesia and even Fiji are way cheaper than any of Australia’s main telcos), suggests that telcos are milking their consumers)

How can eSIMs save the day?

If you don’t know what an eSIM is, you soon will do, especially if the promise of forcing telcos to lower their data rates comes true. An eSIM is short for “embedded SIM” and is an integral part of the hardware of the phone. It’s already been trialled in Asia and the U.S. and China is shortly to be producing a range of mobile phones with eSIMs in them. The reason for expecting eSIMs to be a winner is that you don’t have to be loyal to any one telco. You can switch companies online without having to replace one telco’s SIM with another. To use an eSIM will mean that your phone will be built with eSIM capability and will be automatically unlocked. Telcos will be forced to compete like never before and that can’t be bad ultimately for consumers. Of course, it won’t make much difference if you happen to live in the backblocks of Australia where Telstra remains supreme and after the latest ACCC decision (which appears to have gone against the chance of domestic roaming) appears to remain so. But for the majority of people around the world who live in or close to a large city where there is at least one telco operating, it should help to lower costs through increased competition. And as we have already discovered, there is little else left for telcos to cut costs on except data.

Summary

Telcos have had to adapt to competition for some of the services they provide. Long gone are expensive mobile phone calls and text messaging. Movies and even sports coverage is getting cheaper, too. What has been the constant complaint of those who love lots of data is the cost of it. The development of eSIMs, together with the expected accompaniment of near universal unlocked phones and increased competition between telcos should hopefully bring down data prices.

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.