In anticipation of the longstanding tradition of September Apple reveals, tech watchers and enthusiasts have engulfed themselves in a number of rumors ranging from the new device’s screen specifications to its reversion to the iconic Apple iPhone design. While all rumors thus far seem to play well in favor of all consuming and retailing parties, one particular rumor has left the telecommunication industry rattled.
Ever since the first sim card was introduced in 1991 by Giesecke & Devrient of Munich, the telecommunication service providing industry has been the central module driving the success of mobile development. The purpose any mobile device serves is to reduce the impact of distances between people by providing seamless real time connections for communication across the globe. As the world steps up to develop 2G into 3G into 4G and enhance internet connectivity to unprecedented speeds, the mobile is the device that develops to facilitate these connections. Without connections, mobile devices are useless, and without mobile devices, connection providing sim cards are useless.
Ever since Apple capitalized on the forefront of the cellphone industry with its iconic iPhone, telecom service providers have formed associations with the tech giant to be its retailing partners in many parts of the globe, selling provider locked versions of the iPhone to their customers. These devices are chained down to the service provider they are bought from and changing service providers entails replacing the entire device as well. What may be a couple dollar sim card to replace, becomes a couple hundred-dollar cellphone to do away with, which adds in a financial factor that helps service providers retain their customers. Most iPhones in the United States are bought this way: through service providers. This has been a mutually beneficial tactic used both by Apple and many companies such as AT&T to establish a greater customer base and consequent monopoly in the cellphone and telecommunication industries respectively.
In a world where almost 67% of the population owns a mobile phone, with many users operating multiple devices, the real challenge of telecom service providers isn’t attracting brand new customers into the market but attracting customers from other service providers towards their own brand. The sim locked mobile phones made it most difficult for customers to leave their current providers ensuring that telecom companies do not have to worry about losing users. As this is a hassle for consumers, to combat this, many sim unlocked devices have also been made available. Even with those, however, service providers own rights to the sim card being used, its services, and the telephone number it operates on. A far less pressing reason to stick to the service provider you’re already using is not wanting to go through the hassle of changing phone numbers and sims and packages and much more. It may not be as decapitating as the sim locked cellphone, but it is an argument for retention nonetheless.
Since the foundation of the cellphone industry, mobile phone developers and service providers have worked hand in hand with mutual exclusivity. With the rumored incorporation of Apple’s eSim, the telecommunication industry sees a direct threat to its decades long established monopolies as Apple will now be able to empower the consumer to switch network providers with a simple click or a phone call. This may be wonderful news for Apple and its customers, but network providers such as AT&T and Verizon do not seem nearly as thrilled.
The eSim is a built-in chip that is soldered into the motherboard of the mobile device and given the ability to communicate with any network service provider free-to-air. Just like you have the choice to select any WiFi in the menu and connect to it, this allows the user to select any of the available service providers in the region and change this at any instant they so choose from within the iPhone’s settings. According to Uni-fi Roaming Solutions’ 2018 Strategy Report, the eSim is the most prominent and rapidly emerging technological development of the century. Google’s Pixel 2 was the first cellphone device to use an eSim last year and the iPhone is not waiting long to catch on too. The current growth rate of eSims is projected to increase by 600-800% over the next five years and many industrial companies other than the telecom providers are expected to be just as interested and invested in the electronic chip, incorporating it into headphones, home devices, and much more. According to the strategy report, Europe and Asia are each expected to be twice as supportive of the eSim than the Americas and the use of the eSim is set to revolutionize the roaming experience. 2018, 2019, and 2020 are the three years expected to provide greatest industrial changes to support the eSim’s integration across the globe and a massive industry keen on the eSim is the vehicle and navigation industry.
Apple’s wearables are already well versed with the eSim. The Apple Watch saw the prominent application of the eSim within its design due to its inability to make space for a sim card tray. The success of that venture has left ideas in the minds of iPhone developers to incorporate the same principle, allowing for sleeker iPhone designs and more space for better under-the-hood processing capabilities. Discarding plastic sims benefits Apple by allowing the company to innovate its phone design for better and attract more customers. It also grants unprecedented freedom to iPhone users so that they do not feel tied down to any service provider, but instead hooked to the goodness that the device itself has to offer.
This is a big step for Apple as well as its partnered telecom providers. Although Apple seems more sure of its fan base to be ready to take on this step, telecom providers have operated primarily on retention and losing this control will severely impact their standings within the industry. If Apple goes through with the decision to switch to the eSim this year, 2018 will be the year to watch and 2019 will only see more of the domino effect that is to follow.