eSIM – chip instead of plastic cards – digital

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For consumers, the eSIM has many advantages on mobile phones, but it has not yet prevailed. That could change in 2020.

Some things take a little longer, even if they actually offer many advantages. Most smartphone users, for example, are still fiddling with their SIM cards, although there has long been a superior alternative: the eSIM. The technology has been available for years, but only gradually are more devices coming onto the market that they have installed.

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That is the main difference to the plastic card with chip, which everyone knows: The eSIM is a tiny, five by six millimeter chip on which the profile of a cell phone contract can be loaded. eSIM stands for embedded SIM, so the chip is permanently installed in the devices, but – unlike the battery, for example – this is by no means a disadvantage. Because the profile can be deleted at any time and replaced with a new one, thus offering customers greater flexibility, among other things, there is no need to wait for new SIM cards when changing providers.

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Network operators were not fans of the new flexibility

It is precisely this added flexibility that has not necessarily sparked enthusiasm among mobile operators. In addition, two profiles can theoretically be loaded onto an eSIM, for example one for data and one for telephoning. The providers don’t like that either, because customers can choose the cheapest offer. Why the providers preferred to stay with the plastic SIM for a long time – after all, they didn’t want to make it too easy for customers to quickly change providers.

The big three, Telekom, Vodafone and Telefónica, meanwhile, all offer the option of using eSIMs. However, many users are not yet able to do this, because so far only a few manufacturers have installed eSIM chips in their devices. The pioneer is the Apple group, which provides the technology in all of its newer smartphones, starting with the iPhone XS. Samsung is now following with the Galaxy S20 series, the newer pixel smartphones from Google also come with eSIM, but they do not play a major role in the market.

The end of the conventional SIM card was predicted years ago. In fact, it would make things a lot easier. Customers no longer have to handle the cards, anyone who already has a contract with a provider can activate the built-in SIM in a few seconds, says Tim Mois, the head of Sipgate.

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Sipgate is a full mobile virtual network operator, i.e. a mobile operator who has everything that the three major providers have, apart from transmission towers and a radio license. Sipgate secures access to the masts through a cooperation with Telefónica.

Sipgate, actually primarily known for its products for making calls over the Internet, therefore has a platform that can be used to offer both landline and mobile calls. “2020 could be the year of the eSIM,” Mois believes, “now the wave is beginning.” This is an indication that more and more devices with built-in eSIMs are coming onto the market, including some smart watches, for example. But also the mobile association GSMA, which organizes the Mobile World Congress, the most important branch fair, is for the eSIM.

For providers like Aldi, eSIM could spoil the business

In 2023, the GSMA estimates, 50 percent of smartphones in Germany could already have an eSIM, “that will gain strong market power,” Mois predicts. But what do customers benefit from, apart from the fact that they no longer need a physical card? For example, you could use two networks at the same time, says Mois, for example to combine private and professional use on one device. This could be used in companies that allow or require employees to bring their own device. The landline number could be used on the cell phone without having to set up a forwarding.

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Mois predicts that this will not remain without effects on the market, because only a few providers can handle eSIMs. These included the three large mobile communications groups Telekom, Vodafone and Telefónica as well as three to four virtual network operators. Providers like Aldi, Mois believes, would lose their relevance as a result. You will have to see whether this happens, because: Some things just take a little longer.

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