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Vital Shpakouski
Philologist with higher education, professional translator, former volunteer and teacher, entrepreneur, and salesperson with 13 years of experience. Now I’m a copywriter in Internet marketing, writing about everything that helps businesses grow and develop. In my free time, I create music and songs that no one hears and take photos and videos that no one sees.
Since the release of the iPhone 14, Apple has limited its smartphone offerings in the US to models with eSIM support. However, according to one analyst, Apple is expected to expand this trend to Europe and developed Asian markets by 2024.
Currently, Apple has only made eSIM-capable devices available in the US. But this may soon change, as analysts speculate that Apple plans to remove SIMs from their devices by next year. As a result, at least one analyst predicts that Apple will introduce eSIM support to several markets in Europe and Asia.
eSIM for everyone?
The eSIM technology has been rapidly gaining popularity in the mobile industry, and its benefits are becoming more apparent. One of the advantages of eSIM is the ease of utilizing a single device for several lines. In addition, thanks to eSIM technology, consumers can easily port an existing number to a new carrier without needing to physically swap out a SIM card, further simplifying the process of switching carriers.
Moreover, the technology's international scale enables consumers to enjoy competitive sign-up deals as carriers combat churn. This competitive market can result in lower prices, additional inducements such as free access to different services (like Apple Music, etc.), accessories, or robust quality-of-service levels.
Dario Talmesio, an Omdia analyst, shared his guess with Light Reading and made the following predictions about how further eSIM usage would impact cell providers and customers:
- The absence of the SIM enables device manufacturers, in this case, Apple, to utilize the freed-up space for other components and services.
- Mobile service providers may now compete for clients on the device rather than simply online and in stores.
- Because services may now directly target users, carrier competition is getting more fierce.
- If switching providers gets simpler, user churn may increase.
- Prices could decrease.
- It's possible that Apple (and Google/Android) may impose fees as gatekeepers for cell contracts.
- Apple may be able to compete with current carriers as an MVNO (Mobile Virtual Network Operator) with the use of eSIMs.
- And as carriers work to serve burgeoning industries like wearables, automobiles, and more, eSIMs will be required. (Apple Watch has a separate eSIM.)
The Potential Benefits of eSIM Adoption
The convenience of using one device for multiple lines is just one of the many benefits of eSIM on an international scale for consumers. Additionally, with carriers fighting to prevent customer churn, eSIM adoption could lead to competitive sign-up bonuses, resulting in lower prices or additional incentives like free access to Apple Music or high-quality service levels.
The development of automated switching services, which will enable customers to be automatically signed to new arrangements depending on characteristics they view as relevant, may be influenced by increased eSIM use, claims Dario Talmesio. These elements might include the cost, the coverage, the data allotment, and others. It is anticipated that this automation will improve customer satisfaction and make transferring providers less complicated.
Apart from the potential benefits for consumers, there are also advantages for carriers. Other services like private, protected 5G communications between businesses might become simple to obtain as they transition from business models centered on network provision to becoming complicated network-based service and integration providers. This development will enhance the quality of service for business users and increase the value network service providers offer to high-value corporate clients.
Moreover, the ability to remotely equip managed devices with business-only second lines during setup could become a reality with tweaks to Apple's existing MDM ecosystem.
After all, since eSIMs on iOS allow a carrier store, it follows that carriers may likely be provided by API. An on-device network provision store for business users and business services might assist them in gaining access to the high-value corporate clients that the majority of high-end (and pricey) network service providers yearn for.
Apple's Revenue Streams from eSIM Contracts
Apple has the potential to generate revenue by offering customers the convenience of porting their old device's existing number to a new one, while also providing them with the chance to shop around for the greatest carrier offer. Currently, a selection screen while setting up iPads with eSIM capabilities already allows users to select their desired service from a menu of existing options.
To take advantage of this potential revenue stream, Apple could combine competing mobile services into its own store within the setup screen. On-device registration might lead to payment or subscription collection via Apple Pay or other third-party payment methods.
Another option could be to keep clients with their current provider but offer second lines during the iPhone setup process. With iPhones supporting multiple eSIMs, users could switch between networks at will, thanks to the eSIM, and even have different data and service bundles on each line. Apple could take a fee for facilitating these transactions.
The exact percentage that Apple takes as its fee is currently under review, but it is expected to be around 15%. While regulators may tweak Apple's approach, they are unlikely to deny Apple's right to make money from this service.
Can Apple Operate as a Mobile Carrier on its Own?
Thanks to eSIM and a network access store, Apple could potentially become an MVNO (Mobile Virtual Network Operator) in select regions. However, it's more likely that Apple will partner with existing carriers to provide bandwidth and coverage while incorporating its own services.
As Apple's arrangement with GlobalStar expands, it could integrate its unique satellite-based services alongside traditional carrier offerings. These developments are especially noteworthy as Apple progresses towards 6G.
To minimize risk, Apple might offer supplemental services alongside existing partnerships, being careful not to overshadow competitors or violate competition laws. Given the current regulatory scrutiny, even a company with a history of pushing legal boundaries for profit cannot expect leniency if it acts unethically in the highly competitive carrier industry.
While becoming an MVNO may be too complex of an undertaking, Apple could explore more sophisticated approaches to expand its network providing services and capture a slice of the market.
Competition Concerns
The challenge for Apple in offering multiple networks through its eSIM technology is the potential issue of competition. As a gatekeeper, Apple may face accusations of market manipulation, which would prompt regulators to investigate. Carriers would not remain silent if their businesses were impacted.
For example, Ofcom, the UK's communications regulator, examined this issue in December and acknowledged the potential benefits of eSIMs enabling carrier selection within apps. However, it also cautioned that Apple and Google might not face sufficient competitive constraints due to strong loyalty to their platforms. This could result in elevated commissions for prominence on their choice screen or app, leading to higher prices for consumers.
Moreover, this could limit or influence consumer choice based on the positions of providers on setup screens. Providers who do not wish to pay to be included may be excluded or given less prominent placement.
The Future is eSIMs, Regardless of Apple's Strategy
Ofcom predicts that eSIM technology will become the norm within the next decade. They anticipate that most users will switch to utilizing eSIMs instead of physical SIMs during the next five to ten years.
The question for Apple is whether it will make eSIM support mandatory globally at the same time it introduces its own 5G modems in iPhones, which is expected later this year. However, there are potential obstacles to this strategy, such as the complexity of implementing a new modem and the company's ongoing focus on augmented reality technology.
As a result, Apple may choose to delay the international rollout of mandatory eSIMs until it is more feasible. Alternatively, it could be building its 5G modem with eSIM integration from the start, which would make the success of the project most evident in countries like the US, where eSIM is already mandatory. Regardless of Apple's approach, it is clear that eSIM technology will be a key part of the mobile industry's future.
