SummitX 2024: The eSIM Impact on Telecom Retailers and Carriers — a SWOT Analysis

One of the best-received breakout sessions at SummitX 2024 was that of eSIM expert Emir Aboulhosn, CEO of NetLync, whose presentation was ​“Revolutionizing Consumer Experiences in Retail with eSIM.”

Aboulhosn shared a brief history of eSIM and a primer on the technology, and then offered a deep dive on the opportunities and challenges of eSIM that face wireless retailers and telecom carriers today. 

Here we summarize both the live presentation and iQmetrix’s post-event interview with Aboulhosn, placing the eSIM impact into a SWOT analysis from the perspective of both wireless retailers and carriers.

Where are we now with eSIM adoption?

eSIM has been around for over a decade, as Apple first trialed the technology in 2014, but carriers have been reluctant to adopt it until recently. This was largely due to fears over increased subscriber churn rates in a sector with already-high attrition rates, if it was as easy to switch carriers via eSIM as expected. In fact, despite more widespread adoption in Europe and Asia, in the U.S., AT&T, Verizon, T-Mobile and nearly all network operators support eSIM as of the iPhone 14 eSIM-only device launch in September 2022. 

Aboulhosn told iQmetrix, ​“We are inevitably moving towards eSIM because both Apple and Google are obsessed with the customer experience, and they want to ensure any transfer between devices is seamless. The OEMs also want the hardware real estate that is freed up by not having a traditional SIM card taking up space.”

Since the 2022 iPhone launch, carriers around the world have started to follow US carrier’s lead or be left behind, given that the device manufacturers are determined to push the eSIM agenda. Fortunately for the carriers, the fears they had over eSIM haven’t come to pass. 

Aboulhosn said, ​“So far, eSIM hasn’t created the increased subscriber churn for carriers they were afraid of, because it’s still too inconvenient to switch carriers, even with eSIM. You still have to get a brand-new plan, have credit checks, share customer information, move everything over, all the things that are challenging to set up in the first instance. Most people would rather stick with their carrier and negotiate a new rate plan or discount.”

This has meant that carriers and retailers alike have recently become much more open to the opportunities that eSIM offers and the strengths the technology carries that they can leverage, while also adapting to weaknesses and threats as they arise. 

An eSIM SWOT analysis: the wireless retailer perspective

The SWOT analysis examines:

• Strengths of eSIM technology that the retailer can leverage to its advantage
• Weaknesses that put the retailer at risk when it comes to implementing or selling eSIM
• Opportunities for the retailer’s future business created by eSIM
• Threats that eSIM adoption might pose to the retailer, or threats to eSIM adoption itself.

Strengths

Improved customer experience: Wireless retailers are already (or should be) focused on elevating and streamlining the customer experience, and eSIM is one more way that retailers can build this muscle. Aboulhosn said, ​“The established model is to go to the store, stand in line, upgrade the device, maybe change rate plan, get the phone activated, and so on. It’s a several-hour process. With eSIM, the entire process is much faster.”

Flexible service option: Wireless retailers are highly accustomed to offering a wide range of products, rate plans, and technologies. eSIM-only and eSIM-enabled devices should be easy options for the retailer to add to its arsenal of product offerings and give consumers a wider choice. Added to that, the faster in-store service opens up time for the sales associate to engage with the customer, educate them on the benefits of eSIM, and potentially upsell with add-on services and accessories. ​“All of which is easier to do because the sales rep isn’t faced with a wall due to customer frustration,” Aboulhosn added.

Sustainability: Many retailers have goals to make an impact in terms of improving sustainability, and eSIM is an eco-friendly product that helps them towards those initiatives.

Weaknesses

Device upgrades needed: For customers to use eSIM, aside from iPhone users since iPhone XS who already have an eSIM enabled phone, most will have to upgrade to newer Android devices . The device upgrade cycle currently averages nearly three years, so it could take a bit more time for adoption to be widespread.

Lack of customer awareness: Partly due to carriers’ reticence and those long buying cycles, awareness of eSIM is still relatively low. Many customers today have a phone with a SIM card, and will only buy a temporary eSIM when travelling abroad, to avoid roaming charges for data. iPhone 14 and newer users the US are using eSIM in daily cellphone use. However, Aboulhosn is confident this will change and eSIM-only phones will become the norm in the next few years.

Need for store associate training and education: ​“Store associates shouldn’t need a lot of training, as these are simple processes,” Aboulhosn said, ​“but it can be surprising how many staff aren’t aware of the newer technologies.”

Opportunities

New digital customer segments and retail approaches: eSIM offers retailers a way to get in front of different customers with fresh retail strategies, Aboulhosn asserted. ​“What if I was a local retailer, and instead of the customer coming in to browse devices, they make an online order that I can fulfill and activate in-store in a few minutes? Or, I could even offer a service to deliver to their nearby home or office, and activate the phone for them on the spot. All of a sudden, I’ve taken my footprint outside of the store and the customer is wowed by an incredible experience. That’s how you build customer loyalty. And people will pay for that convenience.”

Personalized in-store experiences: The improved process and wait times will hugely help with customer personalization and increased loyalty, Aboulhosn said. ​“We can reinforce those relationships, making it a more qualitative versus a quantitative experience.”

Cost savings: With potentially more focus on digital and hybrid retail strategies, along with reduced processing times in-store, there is a strong potential for cost savings when it comes to workforce management. When each customer’s journey doesn’t take an hour or more, wait times are decreased and staffing can be reduced or optimized. 

Threats

Potential reduced store traffic: The biggest threat eSIM poses to the wireless retailer — and the one keeping retailers up at night — is that the customer could simply order their phone and activate it 100% online, bypassing the store entirely. Some might choose to never set foot in their local wireless store again. ​“When retailers look at eSIM at first glance, it seems like it could be a threat — that customers will go entirely digital,” Aboulhosn said. ​“But it’s not always easy to get a phone sent through the mail without a signature, and that doesn’t work for people who aren’t always home. So your retail strategy needs to cover all the bases, and that’s where this turns into an opportunity (see above).”

Potential regulation changes: Like any technology, eSIM is subject to regulation, and local regulatory changes affect its use. Policies that support the use of eSIM technology will encourage more carriers and businesses to invest in this technology, but some local regulators could also go the other way. 

Advice for the wireless retailer

“It’s up to the retailer how they adapt to eSIM technology,” Aboulhosn said. ​“Are you going to tell yourself it’s a threat, or that it’s an opportunity? Those who see it as an opportunity will adapt in ways they need to, find ways to innovate, and capitalize on it. Those who only see it as a threat will be left behind.”

An eSIM SWOT analysis: the carrier perspective

Strengths

Improved customer convenience and onboarding: With the eSIM activation and data transfer process no longer taking up time in the store, it gives the customer a better experience, as mentioned above. But it also gives the customer less time to both consider changing their carrier, or to consider changing their device to a rival option. This is an advantage for both telecom carriers and the OEMs. Faster service equates to happy customers, who are thus less likely to churn, not more likely, Aboulhosn explained. ​“If the customer has a seamless experience, they’re not thinking about changing their wireless carrier.”

Cost efficiency/​better use of device real estate (no physical SIMs): Since the eSIM takes up much less space than physical SIM cards, devices can be improved in other ways, with batteries offering longer life, for example. This is an advantage to carriers who can offer superior devices, as well as retailers. 

Weaknesses

Need for system upgrades: Like with any new technology, there can be initial technological teething problems. Carriers must adapt their systems and infrastructure to support eSIM technology, if they haven’t already done so. 

Customer education required: With eSIM awareness still relatively low, it will be a few years before adoption is widespread, and it will be incumbent on both carriers and device brands to educate consumers on its benefits.

Dependency on device compatibility: Carriers also have to rely on device brands to gradually upgrade their new models to eSIM technology. However, with Apple and Google (Android) pushing hard for eSIM, this should be an easy barrier to overcome.

Opportunities

Expansion into new markets with digital-only services: Carriers can jump on the digital-only opportunities, and capitalize on the segment that the retailers stand to lose as some consumers choose a purely online purchase and activation experience. For those customers, carriers can offer a 100% digital path with ship-to-home delivery of the device and DIY online activation. 

Enhanced data insights for personalization: eSIM’s digital purchasing pathways offer additional opportunities for capturing customer data, allowing the carriers to tailor marketing and promotions in a personalized way.

Threats

The main threat that most carriers have been concerned about, as mentioned in the introduction above, is the risk of increased churn — and so far that hasn’t come to pass. Instead, the key threats are:

Rising competition from digital-only providers: Carriers do face increased competition from savvy MVNOs such as Mint Mobile, who are capturing market share and don’t have a physical retail presence. The adoption of eSIM and the cost savings involved only aids smaller players in gaining easy footholds in the market, and traditional carriers will have to adapt and innovate to stay competitive.

Regulatory changes: Again, eSIM adoption could be affected by government policy, which is an unknown risk factor at this time.

Advice for the telecom carrier

“Carriers need to accelerate their digital transformation to keep up with this changing technology,” Aboulhosn said. ​“They also need to adopt a consumer-first mindset, rather than be concerned about risk factors. Those who give their customers the best experience will win here.”

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