eSIM is short for embedded SIM, which is a SIM chip integrated inside the mobile device. As compared to the standard SIM card that can be removed, an eSIM is permanently embedded inside the device. While standard SIM card is provided by the respective telecom company, an eSIM is installed by the device manufacturing company. Standard SIM cards have to be changed when choosing a different telecom service provider, but eSIMs don’t need to be changed irrespective of the telecom service provider you choose.
Benefits for customers: In India, customers currently have to follow the MNP (Mobile Number Portability) process to switch from one telecom service provider to another. MNP system is quite useful, but it is still a long-drawn process with several steps. Moreover, the SIM cards also need to be changed when opting for MNP. An eSIM will make it simpler to switch from one operator to another, as these can be programmed to accept any operator of your choice.
Benefits for telecom operators: Although eSIMs will put more pressure on telecom operators to retain customers, they can benefit from partnering with IoT (Internet of Things) providers. This is definitely the future, especially after 5G becomes mainstream throughout the world.
eSIM usage: Devices with eSIM are already available in the market. However, these are largely limited to IoT and Machine-2-Machine (M2M) solutions. Mobile phones with eSIM include only a few devices such as certain iPhone models and Google Pixel 3. Globally, eSIM market was estimated to be worth $253.8 million in 2018, which is expected to grow 31% by 2023.
eSIM launch in India: eSIM technology is already available in India for IoT and Machine-2-Machine (M2M) solutions. Mobile devices with eSIM have been launched by Airtel and Jio, but these are fairly limited in numbers. In India, overall eSIM usage in smartphones is less than 1%. However, eSIM penetration is expected to grow 25% in India by 2025.
Telecom operators in India are willing to shift to eSIM, but manufacturing of smartphones with eSIM is still at a nascent stage. To make progress, mobile device manufacturers will have to lead from the front. If mobile devices with eSIM are made available at affordable rates to the masses, then telecom operators can initiate the switch from standard SIM system to eSIM system. Reliability and cyber security aspects will also need to be considered before switching to an eSIM ecosystem.