Editor’s Corner—eSIM could help save rural carriers

phone SIM card (Pixabay / Pexels )
eSIM technology promises to replace physical SIM cards. (Pixabay / Pexels)

Mike Dano ORLANDO, Fla.—A surprising topic came up here at the Competitive Carriers Association’s annual trade show: eSIM, and how it might help save the business of smaller and rural wireless network operators.

eSIM is a technology that promises to allow users to remotely switch from one carrier to another—it essentially replaces the physical SIM card that’s ubiquitous in today’s phones. eSIM technology was primarily designed by the GSMA for IoT applications, for example to allow automakers to ship cars anywhere in the world and then to remotely activate service for those cars without needing a technician to physically install a new SIM card for the local country.

It’s a technology that has been talked about for years, but it took a big step forward in the consumer market this year when Apple installed it in its new iPhones (that followed Apple’s earlier move to use eSIM in its iPads and then later in its cellular-capable Apple Watch).

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However, in its iPhones Apple is currently promoting eSIM technology as a way for its customers to operate two phone numbers simultaneously—dubbed dual SIM—like one for personal use and one for work, or for frequent international travelers. And there are plenty of caveats around Apple’s eSIM implementation—for example, only one phone number can handle a data session; the other number is reserved only for voice calling and messaging.

eSIM concerns

But it’s the potential—and threat—of eSIM technology that has engaged some of the nation’s biggest regional wireless network operators. Michael Prior, CEO of ATN International, which counts tens of thousands of wireless customers in the Southwestern United States, the U.S. Virgin Islands and elsewhere, explained that one of his concerns about the future of the wireless industry is that an internet giant like Google or Amazon could take over the customer experience.

Prior said that Amazon’s vast retailing operations could well take over the sales of smartphones too. For example, a customer could purchase both their device and service from Amazon without ever knowing that a company like Verizon or ATN is actually providing service to that device.

Already there are examples of this trend. Google continues to operate its Project Fi MVNO service that essentially allows customers to surf seamlessly among millions of Wi-Fi hotspots as well as the networks of T-Mobile, Sprint and U.S. Cellular. More recently, eBay announced it would allow customers to purchase service for the phones they buy on the site via a partnership with MVNO Red Pocket.

The concern, ATN’s Prior explained, is that wireless providers will lose their connection to their customers, essentially becoming wholesale suppliers.

And that’s where eSIM technology fits in. If the technology is widely adopted, not only would it allow customers to purchase a phone and then select service later, customers could even switch service at any time depending on which company is offering the best deal. Such a scenario could allow a customer to use Verizon’s network in the morning, but AT&T’s network in the evening.

But that, Prior explained, is exactly where the opportunity is for the nation’s smaller wireless network operators. He said that smaller operators could be considered directly alongside larger operators, and if their network is better in a particular area, they could then gain customers in that location far more easily than running a retail operation and convincing customers to purchase phones and service carrying a non-nationwide brand, like ATN’s Commnet Wireless brand.

With eSIM, a wireless customer could potentially switch to Commnet’s network simply by navigating to the “cellular service” option on their phone and tapping Commnet’s icon.

Planning for eSIM 

Craig Sparks, chief innovation officer at regional operator C Spire, said that’s exactly the future C Spire is eyeing. Indeed, just last month the company inked a major agreement with Microsoft to use embedded SIM technology in smartphones and tablets for companies and businesses. In a release about the announcement, C Spire noted that “eSIM offers a streamlined user experience for managing cellular connectivity for enterprises, enabling IT teams to provision, deploy and manage cellular connectivity through mobile device management. This is especially important to companies like C Spire, which operates the nation's largest privately-owned mobile communications unit.”

Of course, this eSIM-powered scenario—allowing customers to switch service on a whim—could pose a threat to some carriers, particularly larger ones like Verizon and AT&T that want to retain a tight grip on their wireless customers. That desire is clearly highlighted by AT&T’s video strategy, built on its DirecTV and Time Warner acquisitions, that works to tie a customer to AT&T’s network by bundling mobile services with TV offerings.

Perhaps as a result of such eSIM concerns, the U.S. Department of Justice is reportedly conducting an antitrust investigation into the nation's four largest wireless carriers, with a focus on AT&T and Verizon as well as the GSMA, about possible collusion over eSIM technology. Specifically, the agency is looking at whether the companies worked together to prevent broad adoption of the technology, which would allow customers to more easily switch carriers.

As Prior and Sparks noted here at the CCA show, eSIM presents both threats and opportunities to the nation’s smaller wireless network operators. On the one hand, the technology could more easily allow customers to leave, or could allow companies like Amazon to gain the upper hand. But it could also create opportunities for smaller wireless network operators—those with superior services—to get a better chance to more easily steal customers from the nation’s bigger players.

For regional wireless network operators—those dealing with declining roaming revenues and a merger that could reduce the number of nationwide wireless operators from four to three—eSIM could well create a welcome opportunity. — Mike | @mikeddano

Editor's Corners are opinion columns written by a member of the Fierce editorial team. They are edited for balance and accuracy.

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