Discussion Papers

No. 422: The relevance of embedded SIM (eSIM) for competition and consumer in the mobile communications market

(Full version only available in German)

Authors: Christin Gries, Christian Wernick


After having been developed for Machine-to-Machine (M2M) communication, embedded SIM (eSIM) solutions are about to be launched in the telecommunications consumer segment. eSIM represents a fundamental change to the industry and particularly to key processes such as provisioning and operator switching.

The push for eSIM solutions was initially driven by device manufacturers such as Apple and Samsung. Their market penetration is still at a very early stage. Some proprietary eSIM products for consumers have been deployed by major device manufactures, whereas a GSMA specification shaped by MNOs was completed in 2016 to pave the way for standardised products based on secure interoperable solutions.

Due to the potential role of eSIM as a game changer in mobile communications, this discussion paper aims to generate a well-founded understanding of characteristics and potential use cases based on the technical architecture, differences compared to the traditional SIM cards and their potential impact on existing processes and market structures.

We elaborate the specific characteristics of the eSIM and distinguish proprietary from standardised solutions (i.e. those based on the GSMA specification). Major areas of eSIM deployment are analysed, in particular differences between the M2M and the consumer segment. We address future fields of applications for eSIM and study its potential to generate new revenue models, ease provisioning processes and improve customer satisfaction. Based on a SWOT analysis for the main market actors (equipment manufacturers, SIM providers, MNOs, and service providers) we analyse strategic options, incentives and motivations of the relevant players in order to assess whether eSIM solutions are likely to change existing competitive and market structures.

Despite a low market relevance of existing eSIM products and a couple of open questions (e.g. regarding operator strategies and the detailed implementation of offers), some general trends for future eSIM development and its implication on the market, competition, and consumers can be derived at this early stage. We do not expect eSIM to become a game changer in the mobile market in the short run. It offers, however, some potential to ease existing processes, improve customer satisfaction and generate new sources of revenues, e.g. through big data or the provision of bundle products. It is very likely that MNOs will keep their key position in the mobile market. Nevertheless, in the medium and long term eSIM may contribute to increase the risk of market entrance by disruptive players threatening the business of traditional telecommunications companies.

Discussion Paper is available for download.

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