eSIM battle? The GAFAs have won.

For years, the mobile communication industry has been the theater of a war for end user control. As the ARPU remains the #1 measurement means, the entity that controls the end-user relationship is the one in power.

The arrival of the eSIM (embedded SIM) in smartphones is the outcome of a long battle in this field. While the concept of eSIM was forged more than 7 years ago, when it was demonstrated that a SIM could be soldered inside a handset and have its subscription-related data remotely updated, most stakeholders, especially the mobile network operators, have taken positions that slowed down the adoption of the concept.

Google just announced it is bringing together its Pixel and Google Fi offers.

Originally Project Fi, was launched in 2016 as a global MVNO. Now, Google announced its service would work on most Android phones and iPhones, with a regular removeable SIM card, just as any other MVNO. The specificity of Google is that it has roaming agreements with T-Mobile, Sprint, and US Cellular in the US and many other operators in the world. In addition, Google Fi offers includes free international roaming, access to 2 million secure Wi-Fi hotspots and data protection through a Google VPN. This is far from being a discount offer as they charge US$ 20 (EUR 17.60) for a line for texting and talking and US$ 10 (EUR 8.80) for every 1 GB of data.

Google Pixel 3 which launched a couple weeks ago, includes an eSIM that works with Deutsche Telekom and Vodafone in Germany, Sprint in the US, EE in the UK, Airtel and Reliance Jio in India, and Truphone and Gigsky in various other countries. Going into the same direction, Google also announced it would bring a better support for eSIM to Android-based handset vendors.

Also, a couple months ago, Apple announced its iPhone Xs and Xs Max now contain an eSIM along with the more traditional removeable SIM (cf. Smart Insights Blog on September 13, 2018). At that time, Apple announced 16 operators worldwide were supporting its eSIM. Since this announcement, many mobile network operators are announcing offers dedicated to the Apple eSIM. For instance, T-Mobile in Germany, Austria and Czech Republic, 3 in Denmark and Sweden, Vodafone in Spain and Germany, Du in Dubai, and Truphone that targets travelers, all support Apple’s eSIMs. In Canada, Bell, Fido, Lucky Mobile, Rogers et Virgin Mobile propose eSIM offers. Now, in the US, AT&T is first to announce that its subscribers can use its services either in the regular SIM or on the eSIM.

These moves undoubtedly represent a victory for the handset vendors in their war with mobile network operators. Connectivity is more and more controlled by Google and Apple, even if for the time being, the contract the user signs is still a relation with the mobile network operator. How long will it last before end-users will buy a handset with communication services from hardware manufacturers and totally ignore the operators?