Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this article, Helen Gaden of the MVNOs Series talks us through some of the key findings of a recent report they conducted into eSIM and the opportunities and challenges it presents for IoT.
The Internet of Things (IoT) is opening up entirely new markets for mobile connectivity, and in doing so is reshaping the mobile industry ecosystem almost from scratch. From mobile phones, tablets and a handful of other gadgets mostly focused on consumer markets, demand for mobile services is now coming from dozens of different industry verticals, for hundreds of different purposes – everything from automated smart appliances in our homes to industrial machinery, connected vehicles and self-driving drones to monitoring systems in agriculture, healthcare, utilities and more.
It is a truly massive economic opportunity for the mobile industry and beyond. By 2025, it is predicted that there will be 25.2 billion connected devices in circulation. With all of them relying on mobile networks to stay on line, the mobile industry will be contributing close to $5 trillion in economic value – almost 5% of global GDP.
The catch is how the mobile industry embraces this opportunity and provides for all these new connections across so many new devices. The emergence of 5G, with the massive increases in network capacity and speed it will bring, will certainly help. But that does not resolve another, perhaps more fundamental challenge – how to provision, authenticate and manage network access for the mass deployment of billions of new devices when traditional mobile ecosystems have been based on a one-connection-per-user model.
That’s where eSIM comes in: to many analysts and observers, the switch from a removable SIM card to a user identification module hard-wired into a device has transformational potential for IoT. By 2025, it is estimated that eSIM will be present in two billion devices, with the proportion of total connections expected to rise steadily. But just how far do the opportunities for this virtual technology reach?
According to IoT solutions specialist Arm, eSIM will pay an integral role in revenue success for IoT, the technology they have called the “trillion device opportunity” for the mobile market. Arm predicts that revenues from IoT alone will be worth $10bn by 2025, but insists that embracing eSIM will be integral to that coming to pass.
So, what makes committed eSIM evangelists like Arm put so much faith in the technology when it comes to IoT? The added flexibility eSIM creates in the relationship between device/client and network provider might loosen the grip operators have traditionally enjoyed on network access, but it also opens the door to many more use cases for mobile technology.
For example, the connected car sector has stood out as an early adopter of e-SIM, with predictions that there will be 250 million connected vehicles on the road by 2020, while the total number of connections is expected to increase by a CAGR of 31%. Major manufacturers like General Motors, Jaguar Land Rover, Renault Nissan, Scania, Volvo, BMW and Daimler have all enthusiastically backed eSIM, partly because of the convenience of being able to embed a single, secure connection module in all vehicles ready to be shipped to any market.
But the connected vehicle sector also underlines the value of flexibility in network connectivity for IoT use cases. Connected cars rely on networks to provide a variety of services to vehicle owners, such as infotainment, real-time navigation, pay-as-you-drive insurance and breakdown services, telematics and diagnostics. With critical real-time services like navigation and breakdown provision, there’s a great deal of value in the subscription modules automatically picking up the best available network connection as the vehicle moves from place to place – especially when crossing international borders. This is of particular concern to the logistics and transport sector where fleet management and asset tracking systems need to be effective everywhere the vehicle or shipment goes.
There is also the potential for different services available in a vehicle to use different types of network according to their requirements, all provisioned through the same e-SIM. For example, while infotainment services like video streaming require the kind of high-bandwidth data services offered by 4G LTE, sending diagnostics and telematics data is much less bandwidth-intensive, and use of low-power networks like NB-IoT would be much more efficient and cost effective. The ability of eSIM to store multiple operator profiles at once opens the door to these kind of flexible choices, meaning network services can be matched closely to specific requirements.
The opportunities and advantages of a highly agile, adaptable connectivity ecosystem extend well beyond vehicle and transport industries. In utilities and agriculture, the use of self-driving drones to monitor pipelines, crops and other assets over large geographic areas offers a similar example. Automated drones require guaranteed connectivity wherever they go, with seamless transition between networks as required. Again, simple observational data such as that transmitted from sensors might be most efficiently carried on IoT-specific LPWAN networks, while streamed video would require 4G LTE or, in years to come, 5G. Goldman Sachs sees the value of the self-driving smart drone market as potentially rising to $100bn.
In manufacturing and industrial IoT, e-SIM is seen as a key enabler of so-called predictive maintenance, the use of predictive analytics and AI technologies to anticipate system issues in advance and take action before outages occur. A step beyond proactive maintenance, which seeks to resolve performance issues in the shortest possible time frame using advanced system monitoring, predictive maintenance promises to push availability, efficiency and performance guarantees to new heights.
The prerequisite for predictive maintenance is exceptionally high and consistent levels of data capture, which according to Arm poses a major obstacle. With the sophistication of modern digital processing systems, it often falls to OEMs to provide maintenance for equipment and machinery as an aftercare service. But their issue is that they ‘lose sight’ of their product as soon as it leaves their factory for the client. With e-SIM, data monitoring and analysis can be switched on instantly, providing a full picture throughout the lifecycle of the product, and with no interruptions even if it moves locations. It is this level of continuous performance data streaming that effective predictive maintenance relies on.
So overall, the widespread adoption of e-SIM gives equipment manufacturers opportunities to innovate with the type of devices they can add value to with connectivity and the range of form factors they can give those devices, including shrinking sizes and improving efficiency. It lets them rationalise product ranges with single designs that can be deployed across a wide range of markets, and it allows them to improve service and maintenance SLAs through predictive maintenance.
For operators, more connected devices across more industries opens the door to new markets and potentially enormous increases in their client base. Yes, e-SIM challenges the one device, one network model around which operators have built their traditional business models, loosening ties with customers and introducing more competition. But that in itself should be seen as an incentive to transition to the more service-oriented business models that best suit B2B markets.
Rather than jealously guarding activation to their networks through their own proprietary SIMs, operators should be encouraged to work in partnership with IoT service providers offering their expertise to support flexible, scalable ‘Network-as-a-Service’ platform models that meet the demands of business and enterprise clients.
For more insights into the relationship between eSIM and IoT, download the full report: “eSIM: Challenges and Opportunities for IoT.”