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Esim a Seismic Shift in MVNO Mindsets

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MVNOs are on the verge of a new dawn in mobile network technology with plastics sims soon to be outmoded by embedded sims (eSim) – and the impact will be far reaching. Optus Head of Marketing & Strategy Wholesale John Castro gives the low down on how MVNOs can get Tsunami ready…

One topic dominated discussion at the recent MVNO World Congress in Amsterdam, April 2016 – the arrival of the eSim and how it was poised to change the MVNO landscape forever. If we trek back a few years, the conversation was centred on what 4G or the explosion of data meant for MVNOs. This year’s preoccupation with eSim technology however, represents a radical move – given standard sim technology has dominated how we do things for the past twenty-five years – making it the last thing in the mobile value chain that was yet to innovate.


Plastic sims will soon be flushed to sea as eSim technology means your sim will be embedded on-board your device – which makes your digital identity transferable in real-time. What this means for the consumer is a seamless transition from network-to-network and device-to-device. Castro says this technology is a huge win for consumers.


“No longer is the customer having to go into the store to get a different sim, or log online to wait two days for a sim to be delivered to your home, no longer are you having to go through the process of removing one sim, putting in another on the device, waiting hours for it to be provisioned or being ‘locked in’ to a service provider, all that vanishes in an eSim world,” says Castro.


What eSim potentially means for MVNOs will depend on which sea they swim in. Castro asserts that MNVOs whose market position is defined solely by price point will be the first to cry mayday.


“Some MVNOs see the eSim as a threat because historically they have played only at the budget-seeking end of the market. As the technical hurdles or barriers that make customer churn to the latest SP offering i.e. ‘best deal’, disappears. Only customers who aren’t with you for price may be retained,” says Castro.

It is now more pressing for MVNOs to have a clear differentiation strategy. MVNOs are already feeling the pinch due to high market saturation and competitive intensity – particularly in European markets, so the need to develop a non-price point value proposition is vital to bind them to your brand and service.


Castro says that one way MNVOs may respond to this challenge is to adopt a highly definitive and sophisticated niche strategy.

“All innovation represents growth opportunity – whether it be strategic or operational. In the case of the eSim, it will no doubt be a great leveller of competition. No longer will MNVOs need Retail, as the need for sim distribution is significantly reduced, and no longer can MVNOs rest on the cheapest deal in town,” says Castro.


While the majority of MVNOs in Australia may not have the eSim revolution on their sonar at the moment, Castro says that it is inevitable so preparedness is key to survival. ESim currently has a foothold in some fringe markets – such as the smart watch. Some smart watch manufacturers are trying to take the lead and steer the eSim market by introducing their own eSim version to test the waters. While smart watches are presently a niche application – the ramifications for broader markets are huge.

“International standards for the eSim are not yet ratified, particularly around interoperability – but all indicators suggest we may only be two years away from this being bedded down. Anything that is designed from the consumer up will win out,” says Castro.


While it is easy to assert that a definitive niche strategy is critical in such a climate, what might this look like in execution? Well, Castro cites an example of a niche strategy that is working particularly well for a US-based MVNO – PRIDE Wireless – whereby it aligned itself to a specific micro community which allowed it to flourish on non-monetary terms.


“PRIDE Wireless’s (PW) entire value offering is pitched solely towards the LGBT community in the US market – whereby its audience reach is tens of millions of consumers. This is an example of an MVNO that has a very niche differentiation strategy. In appealing to this consumer group, PW becomes a channel and an advocate for LGBT issues, and in turn, its customer base rewards PW as being an instant brand ambassador – it’s a win-win scenario,” says Castro.


Finding socio-political elements as a way to elicit consumer loyalty is one way MVNOs can unlock the puzzle of trying to become more meaningful to the consumer – and thereby engaging an emotional connection to the consumer – which may translate to brand loyalty.


“Associating higher purpose to consumer products is clever, it is a conversation changer and is almost certainly not price led!” says Castro.


The message is clear, so take heed MVNOs. The future is coming and without a definitive niche strategy and operational excellence to execute on promises, you may find yourself swept away in the tidal wave of change – and no one wants to end up on a desert island without a customer in sight.


Update 19 September 2017: Optus Wholesale is committed to developing new technologies for our Service Provider Partners, including eSIM. At this stage, we are exploring this capability for our Wholesale partners


Join the Optus Wholesale network and let your customers benefit from the innovative services and products of a Tier 1 Telco. Register your interest

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