How the arrival of the eSim in NZ could shake up the mobile marketby Peter Griffin
The arrival of eSIMs could see better deals for consumers.
The so-called Subscriber Identity Module, a wafer of plastic and metal, authenticates the connection and identifies our account settings, and has been around for decades. SIM cards have gotten smaller in recent years. But a new move by Spark seeks to do away with the SIM card entirely.
The debut of the eSIM will see that information contained on the SIM card instead held in a chip connected to the phone’s circuit board. Eventually, the slot for a SIM card will disappear from phones entirely, freeing up space for a bigger battery or additional memory storage.
But the arrival of eSIM has bigger implications for us as mobile phone users. It will make it easier to change mobile phone provider, eliminating the need to pay a visit to a Spark, Vodafone or 2Degrees store or buy a new SIM card from the supermarket.
Once eSIM is adopted by Spark’s competitors, we could see parallels with the video streaming market, where users can jump from Netflix to Lightbox, Neon to Amazon Prime, paying month by month to access the best new content, then deactivating their subscription when the library has been tapped out.
It could also allow you to have numerous phone accounts stored on one phone. Maybe Skinny has the best mobile data deal, but you want to keep your work-related web surfing separate on your Vodafone account. Changing mobile accounts is no longer a matter of switching out SIM cards or using a dual-SIM phone, but simply selecting the alternative account in a settings menu.
Initially, Spark’s eSIM will only work with the latest model iPhones (iPhone XS, XS Max or XR running iOS 12.1 and above) and the Samsung Galaxy Watch, which can utilise a mobile data connection in the watch to be used completely independently of your smartphone.
Spark users with a late model iPhone or Galaxy Watch can scan a QR code or download an app to their smartphone to activate the eSIM. Nothing will really change for Spark eSIM users on the phone, at least until Vodafone and 2Degrees adopt eSIM and make switching between carriers easier. A small but growing range of phones supporting dual-SIM card slots have been available in New Zealand for a few years now, allowing SIM cards for two mobile networks to be inserted and switched between in a phone’s network settings. I’ve made good use of that functionality keeping my Skinny plan active as I pick up a local SIM for travelling in the US and Europe. But not all phones have dual-SIM capability and eSIM will make the process of switching networks even easier.
The introduction of the Unlimited Wearable Plan from Spark for the first time allows a smartwatch device to have its own connection tied to the same account and mobile number as your phone.
The $14.99 per month plan will offer unlimited data, calls and texts. That will appeal to people who are happy leaving their phone behind while exercising or walking around town, but still want to be able to access apps on their watch, receive notifications and make phone calls. Admittedly, that’s a niche market currently, but with the Apple Watch Series 3 and Series 4 also touting the eSIM functionality, you can expect more and more smartwatch owners to explore this option.
The evolution of eSIM
The GSM Alliance, which sets standards for the mobile phone networks and technologies used around the world, first came up with the embedded SIM in 2013.
The benefits of a smaller and more secure SIM module for mobile phone users seemed obvious. But the development of eSIM hasn’t necessarily been greeted with enthusiasm by mobile phone carriers. In the US market, it challenges the long-held practice of locking mobile phones to one network to make it difficult for users to move to a new network provider, a tactic New Zealand operators have flirted with over the years.
AT&T was the first US carrier to adopt eSIM support late last year and its rivals are set to follow having finally accepted the need to move away from physical SIM cards. There will be lingering nervousness that wide availability of eSIM in phones will increase “churn” in the mobile prepaid market - the move of subscribers between operators as they seek the best deal.
Consulting firm McKinsey said other factors important to mobile users are likely to come to the fore in keeping them loyal.
“Consumers may still prioritise a deal that offers a superior user experience and acceptable call quality. Satisfied clients will likely stay with their operator as long as locked-in customers do,” the firm wrote in a report on the impacts of eSIM.
New Zealand’s prepaid mobile market is fairly evenly spread between our three big players Spark, Vodafone and 2Degrees, with Vodafone having the largest prepaid customer base according to the Commerce Commission’s 2018 report. The mobile operator has indicated that it too will adopt eSIM, likely this year.
One global provider?
The rise of the eSIM ushers in a new prospect – one of a mobile virtual network operator offering services across the world under the one mobile brand.
Without the need for SIM cards to be provided through a retail channel and allowing mobile users to set up a connection from their phone in minutes, an Amazon or Apple could begin to offer phone connections with their devices, doing deals with local mobile providers to gain network access.
A whole new wholesale market could open up, says McKinsey, where mobile users simply connect to the network offering the best coverage and pricing, their eSIM managing their connections behind the scenes.
“The customer could then be ‘auctioned’ dynamically among network operators for a period of time. Electronic profiles could even be switched among operators seamlessly for the client.”
The benefits for mobile users who are travelling overseas will be particularly noticeable as plans can be selected and activated from the phone, removing the need to pick up a SIM card at the airport on arrival to take advantage of local prices, which are usually lower than roaming charges.
Connecting the Internet of Things
The arrival of eSIM is also considered integral to supplying connectivity to a growing base of Internet of Things devices. SIM cards embedded in cars and remote terminals, such as ATMs, security cameras and vending machines, have typically required their own mobile data plan to provide internet access.
Just as Spark is now connecting the Galaxy Smartwatch with its own service to go alongside a smartphone plan, consumers could have eSIM-enabled devices configured to share a data connection across them.
That, says Internet of Things pioneer Kevin Ashton, who visited New Zealand earlier in the month, could pave the way for connectivity to be provided to a much broader range of devices at a more affordable price.
“It has always been a challenge using the cellular network for the Internet of Things because cellular pricing plans and infrastructure were originally geared for voice communication,” he says.
“If you wanted to put a smart electricity meter into your home to analyse your electricity consumption in real-time, the cellphone company would try to sell you the same plan as for your iPhone. The fact you were only going to be using a few kilobytes of data a few times a day didn't matter.”
“We may well see a pricing plan that lends itself to IoT devices that only need to communicate once in a while.”
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