GlobalData says US mobile operators are lagging behind international peers in adopting embedded SIM (eSIM) technology.
Lynnette Luna, Principal Analyst at GlobalData, notes:
“European operators significantly ramped up support for eSIM during the pandemic, as consumers avoided retail stores and valued the convenience of activating service directly on their smartphones.
By contrast, while major US carriers have enabled customers to add new service using eSIM on Apple devices and some Android handsets, they have not actively marketed the capability.”
eSIM-enabled devices simplify the customer experience, especially when traveling. Rather than locating and buying a local physical SIM, installing and activating it, then topping up pay-as-you-go credit, travelers can provision local service directly on their device.
“Many carriers remain wary of eSIM because it could make it easier for users to select and switch providers directly from their phones, increasing churn,” Luna adds.
“There is also a risk that device vendors such as Apple or Samsung could take over the customer relationship. eSIM can reduce carriers’ role as intermediaries—Apple, for example, has already encroached on carrier services like financing and maintains a direct billing relationship with users.”
The GSM Association reports that by the end of 2020 about 175 mobile operators across 69 countries had launched eSIM service for smartphones. Vodafone Group stood out for rapidly rolling out eSIM across many of its operating markets.
Other operators that introduced eSIM functionality in 2020 included Dutch carrier KPN, Tele2, Comviq, Bouygues Telecom, O2 Slovakia, Zain KSA, YouSee, and Mobily.
“US carriers have mostly treated eSIM as a driver of customer churn rather than a potential revenue generator, yet it can unlock new use cases that improve the customer experience and create revenue opportunities over time,” Luna explains.
Examples include up-selling and cross-selling services and bundles—such as shared data plans across multiple devices—enabled by eSIM and a supporting digital app.
Today nearly all smartphones still ship with a physical SIM, reducing incentives for major carriers to promote eSIM features. However, Apple is widely expected to introduce an eSIM-only iPhone within the next two to three years, which could accelerate broader adoption.
(Image Credit: mohamed Hassan via Pixabay)
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