eSIM Technology – Interview with Sunrise, TIM, Deutsche Telekom

Before our event “Future of eSIM Conference” scheduled in Hamburg on May 2-3, we have asked our expert speakers to share their professional opinion regarding the hottest questions about current and future eSIM market state. In this interview we have asked 3 Experts:

Sergio Cozzolino, Innovation Department – eSIM ecosystem Project at Telecomitaliaa

Dr. Jörg Henkel, Senior Expert Wholesale Business Development at Deutsche Telekom AG

Domenico Palomba, Business Partner Manager at Sunrise Communications AG

We will discuss such topics as eSIM Standartisation & Regulation, eSIM Security, How eSIM digitization will affect Operators, new eSIM management value chain, how fast embedded sim will become the mainstream and many more. Before we will start, let us understand better.

What are the main Advantages of eSIM?

Sergio Cozzolino: The main advantages of the eSIM are mainly related to the remote provisioning of profiles during the life cycle of the product. This will allow the dynamic personalization of the eUICC based on Customer requirements. In addition, the eUICC will also allow the presence on the same module of multiple subscriptions (one active at time). These features are simplifying the management of M2M applications and could allow also a better Consumer user experience.

Jörg Henkel: eSIM was the missing piece to cover the complete end-to-end sales process via e-Channels. eSIM will allow for more innovative device designs (smaller) and features (e.g. water-proof).

Domenico Palomba: I see the eSIM technology is one of many enablers to remove barriers on the full Digitalization process of provisioning mobile telecommunication services.

With a simplified and fully digital process for the eSIM delivery, it represents a big opportunity for additional telco operators to join the market (less entrance barriers).

For the MNO’s, it is a strategic innovation to continue supporting the cutting edge technology, and to provide the MVNO’s and the MVNE’s capabilities to enter the market for the benefit of wholesale revenues.

For the customer, it represents an expected and logical digital evolution of a technology that is already +20 years old. If well implemented, it will be a fabulous digital customer experience. As all Digital transformation processes, it represents a possible black-hole where digital pitfalls may easily nest.

Is eSIM a new landscape for connected devices? How fast it will become the mainstream?

Sergio Cozzolino: YES the eSIM was mainly designed for the M2M solutions, including also the new consumer electronics devices which require connectivity (Wearables/Watches/tablets/PC/Game Console/….). The first sectors which will take benefit of the eSIM technology are the Automotive and Metering applications but others will follow.

Domenico Palomba: eSIM seems to be the most logical pattern that connected devices and IoT shall follow. I believe the acceleration to become mainstream is happening now. As soon as the operators and manufacturers will realize the enormous customer advantages, eSIM will soon become the mainstream for all devices. Primary devices will take more time though, due to large footprint and customer’s acquaintance to existing SIM.

Will deployment of eSIM be regulated? What is the current situation and what Telecom Operators should expect in near future?

Jörg Henkel: In general, existing rules, guidelines and consumer protection measures that already apply to mobile operators will remain applicable also in an eSIM environment.

The role of mobile operators e.g. regarding switching and number portability is unaltered in an eSIM / “over-the-air” provisioning environment. Operators will have to make the necessary arrangements and agreements to make the provision work correctly. This can also be seen in the European Electronic Communications Code (EECC) which is currently transposed into national laws in EU.

Generally, Legislators and regulatory authorities are not engaging directly in developing technical aspects and specifications for eSIM. Currently there are no new regulations foreseen which would be specific to new technical functions in an eSIM context. Operators will maintain their usual responsibilities also in an eSIM environment.

Sergio Cozzolino: The Standardization is crucial for an interoperable product and the eSIM as a connectivity enabler has to be standard (product/provisioning process/ certification/ security/….). As a global product there could be specific customization linked with local regulations (e.g. CI adoption). The success factor of eSIM should be the interoperability and the common security certified by global procedures (e.g. GSMA SAS process) to allow the profile management in a safe mode.

Domenico Palomba: I believe a regulation will be heavily required very soon. As digitalization processes remove any geographical barrier, I see a need for a global regulation for the eSIM provisioning. At the moment different national operators have to commit to different national requirements. This is representing a limit to the expansion and a barrier for global operators.On the other side, regulation will be more and more a topic with the widespread of the technology, as it opens up additional possibilities for non-local use of telco services with total loss of control.

What is the Future of eSIM Security?

Domenico Palomba: It is quite hard to say. I see one possible evolution would be the standardization of customer’s identification methods (biometrical identification) as part of eSIM security mechanisms.Sunrise is already using face recognition to meet Swiss standards in customer identification. As this regulation requirement is mandatory to provide mobile services, I see it as a natural evolution of eSIM security to introduce biometric identification for the eSIM securities.

Sergio Cozzolino: The security has been a crucial driver for the development of eSIM specifications and MNOs have always required to gain at least the same security levels as today available in the traditional SIM environment. Security procedures are in place in the entire profile management chain with additional certification and Accreditation schemes for the players involved in the process.

What would the new eSIM management value chain look like?

Sergio Cozzolino: The new eSIM management value chain sees different rules compared to the traditional SIM process.

First of all today MNOs usually choose and buy the SIM cards from SIM vendors with specific customizations (Profile plus Services installation) and then distribute them to the end Users. With the eSIM the OEM manufacturers choose the eUICC to embed within the device and the MNOs are only able to download through the provisioning platforms their subscriptions.

The SIM Vendors continue to produce the eUICC and in addition provide also the Profile Management Platforms, which could be managed also by other parties. In this new scenario the MNOs don’t own any more the eSIM and the life cycle of the eSIM is linked not any more with the subscription but with the device. New procedures should be put in place for device repairment (profile removal and transfer on another one) and local swap profile swap between MNOs profiles could be easily managed by the Customer.

Domenico Palomba: With regards to eSIM management, I believe we have not yet captured all the marketing opportunities. As an example, we have the same SIM producers, that are actually using similar existing mechanisms to provide SIM profiles, with the same today’s existing technology.Since the eSIM is pure digital, there are potential opportunities to actually “produce” the eSIM on a realtime basis, based on the specific customer needs.This would open up the eSIM business to more operators, rather than only Telco operators.Potentially any Business actor that is interested in securing information, delivering credentials to certified/trusted customers or connected devices, or provide calculus power for encrypting/decrypting and storing information, can use the eSIM as a vehicle to do that: Insurance and Bank service providers, Governmental institutions, Blockchain client devices, etc.

How Operators effectively monetise eSIM and increase customer retention on networks?

Domenico Palomba: Telco operators see the opportunity for the innovation, and they increase customer retention offering services in any possible channel that the manufacturers offer.

Any Telco operator that is willing to remain on the market has to implement the eSIM technology. Simply put, none of the ETACS operator is now still surviving. The same will happen with SIM.

On the other side, monetization of the eSIM technology and use of the same for customer retention is still far to come. Surely dual SIM devices are representing an opportunity for additional market penetration, but they also offer a great opportunity for a more competitive market.

As usual, the differentiation will happen on the level of offered services, ease of use, and price.

Sergio Cozzolino: MNOs could monetize the eSIM thanks to the increase of connected devices that the Customer will enable. The opportunity to manage a unique number with multiple SIMs provides to the end User an easier tool to manage effectively all his/her devices.

How eSIM digitization will affect operators’ processes and customer experience?

Sergio Cozzolino: This a radical change for the subscriptions management: new channels could be enabled (e-commerce/web/mobile/…) where regulations allow. The transition from physical to digital will require a Customer education to manage the subscription in a different manner compared to the traditional SIM. The SIM portability (from one device to another) will be replaced by a profile transfer and the opportunity to manage different profiles on a unique eUICC will be a value for the end user. MNOs could take advantages from logistic cost management but need to improve the Customer Service support to facilitate the user experience. New business models could be developed to enlarge the customer base with additional connected devices

Jörg Henkel: eSIM simplifies the interaction with customers. For customers the user experience will be better, e.g. no fumbling around with Nano-SIMs and tools to open a SIM card slot. For operators eSIM might simplify the logistics in the long run.

Domenico Palomba: Processes, especially Caring and Sales processes are transforming, following the digitalization flow. An example may be sufficient here: for around 20 years, every Telco operator has applied a price to the SIM card he was selling. This is justified by the costs to produce the card, and any card sold represented a transaction on the accounting systems, registering the revenue, updating the stocks, etc. etc.All these processes have now gone, they need to be completely redesigned having in mind that the eSIM is not material anymore. For some countries, due to accounting rules, it may also affect taxation.From the Customer experience point of view, as it happens for any digitalization process, it may represent an additional hassle for non-digital natives.Again an example immediately gives a glimpse: any company operator is now offering devices over their e-Shop sales channel. Customer has the freedom to select a device that is then comfortably shipped at customer premise, usually sided with a SIM card that customer can plug in and use. Any issues with the device (wrong color, broken, old model, etc. ), is easily resolved with a ship back and return. Everything comfortably using postal services. No need to return the SIM card, which remains available to use the service with other devices.With eSIM, customer is not able to unplug the eSIM, during device replacement he is left without any service. Operators need to think about the drawbacks of digitalization while redesigning their own processes.

What are the barriers and challenges your company is facing in implementation eSIM Technology?

Domenico Palomba: Sunrise is planning a long roadmap for Digital transformation in the eSIM technology. Main barriers are the needed integration with manufacturers, most of them not yet clear about the strategy of adoption of this technology, especially on the Primary phone devices. Part of the challenges are also due to lack of standardization, especially on the backend server sides.

With regards to standards, manufacturers are barely agreeing on features and capabilities that the eSIM can support. In this context, operators and eSIM producers are unfortunately delaying their plans for transformation.

Sergio Cozzolino: eSIM Technology requires a complete restructuring of the MNO’s internal processes with the adoption of the Profile Provisioning Platforms (SM-DP/SM-SR/SM-DP+) and new mechanisms for subscriptions sales. This new technology also offers many advantages for the logistic management of the subscriptions enabling new channels (digital) and reducing costs.

What you will be speaking about at eSIM Conference? and why these type of events should companies attend?

Sergio Cozzolino: My presentation will cover both the commercial impacts deriving from the introduction of the eSIM and the technical aspects linked with the new management process of the profiles. A special focus will be on the Customer experience and the impacts of this transition from physical to digital solution

Jörg Henkel: I will speak about eSIM in the eyes of government and regulatory officials and how roaming regulations (e.g. regarding permanent roaming) might or might not affect or interfere with eSIM use cases.

Domenico Palomba: I will be focusing attention on the Customer experience and how it is heavily affected in any digitalization process. eSIM is a big transformation towards digitalization.

Customer are so familiar with current SIM experience that any single aspect of this process (like SIM replacement due to different form factors, SIM changes because lost/stolen) are already given for granted. With the advent of the digital eSIM, many concepts like deletion of eSIM profile (equivalent to trash the SIM) or early and permanent binding of eSIM to a device will take long time to be fully owned by both customers and service owners. I will show how bad implantation of digital transformation projects can lead to bad, even worse than today, customer experience.

Companies should attend to these events these events represent a big opportunity to identify similarities, differences among unique company’s experiences and to bring in synergies that can surely evolve into durable network opportunities.

Come and meet Domenico Palomba, Jörg Henkel, Sergio Cozzolino and many other experts personally in Hamburg on May 2-3 at co-located events “Future of eSim Conference” & “5G Congress”.