2022: the year of eSIM? It’s a cert for roaming and MVNOs

Back in July, I wrote about the implications of roaming charges creeping back into the pockets of people going abroad. Scrapping ‘Roam like home’ was, it seems, inevitable as operators looked for ways to manage risks associated with leaving the EU. By the autumn, EE, Vodafone, Three had announced plans to charge you for using your phone the minute the seat belt light went out.

The announcements were of course all made when going abroad was far from our minds, so probably lost on the average consumer. Now there’s a little more hope of holidays. The abundance of adverts on prime-time TV emphasise that tourist operators are hoping to capture the mood with January deals, and I sense people will go for them. Bill shock will be far from their minds, but it’s a real possibility now.

It won’t have gone unnoticed by the serial business travellers, however. When big international conferences and face-to-face sales meetings are back on roaming charges will hit budgets hard.

Technical delays

Analysis in Mobile Europe this week, highlighted that reversing roaming charges isn’t that easy. Vodafone and EE have said they will need to delay their plans because of the ‘unexpected’ technical difficulties they are encountering. This has led some analysts to speculate that VMO2’s decision not to reintroduce roaming rates wasn’t a result of philanthropy but technical capability. I’d say it’s. smart comms – taking an internal disadvantage and turning it into a PR advantage.

Though roaming fees are back on the agenda, this hiatus presents real opportunity for MVNOs. It’s a change in direction that they can capitalise on and use to steal a march on the MNOs.

Don’t forget, in the past, MVNOs have had a difficult time managing roaming. Wholesale costs have always been prohibitive to them putting competitive offers into the market. With no ownership of the network, it was a very one-sided cost too. MNOs benefit from incoming and outgoing roaming costs that can be ‘netted off’. No such luck for MVNOs they were exposed on margin and revenue. To the point that Roam like Home was legislation that some MVNOs challenged and called for exemption from.

In a twist of fate, MVNOs can now exploit the situation. As I see it, there are two clear choices. 1. be a PR hero, like O2, and differentiate by shouldering the costs and attract frequent travellers who will be higher value. Or 2. do the opposite and introduce roaming charges in line with the market and recover margin they have been losing through Roam like home.

eSIM – the real genie in the bottle for MVNOs

But there is a third option – a genie in the bottle. eSIM is where the money will be. It’s ripe for making international customer acquisition a cert.

What do I mean?

eSIM makes it easy to offer great SIM only deals without the need for a physical SIM. It just requires an eSIM profile. For MVNOs based in a European country (or any country for that matter) it’s the perfect way to target the mobile customers coming for short or long-term trips for business or pleasure.

Roaming was always important to people because you could be contacted on your number. But with apps like Teams and WhatsApp in the mix who needs to know your number? The mobile number is becoming less relevant provided you have access to high quality and affordable (read cheap) data.

With that in mind it’s unlikely that every visitor will need or care about having a number. But if you do, then it’s possible thanks to eSIM which provides a local number using local tariffs. It’s quick and easy to set up, which is what travellers will want.

Given operators seem to be reticent to implement eSIM, MVNOs could win here and trigger a far faster adoption of eSIM than expected. Operators will shudder at that prospect. But in the absence of being able to compete they are setting up the perfect conditions for MVNOs to take on the challenge. Customers will discover eSIM.

I know the received wisdom has always been that eSIM makes it easier for churn to manifest. But in markets that have high rates of eSIM penetration that’s not really been the case. It’s not a given IF you get your proposition right.

I’d argue that roaming supports this eSIM ‘stickiness’ too. If I was running an MVNO in any country that gets or will get lots of inbound international travellers, I would be seriously thinking about my eSIM strategy.

Why would you not offer an easy way to download a local SIM profile with lots of included texts and data? No searching for retail outlets, no fiddly set up and no plastic – a good eco message consumers want to hear. Just a new profile on my phone that works seamlessly and makes my holiday go swimmingly wherever I am.

Holidays will feel like a luxury, especially given the economic context households are managing right now. Every penny for hotels, flights, excursions, food and drinks will be scrutinised. Which is why I say, that for the MVNOs that can take some of the bill shock out of the equation, it will be piña coladas all round.

If you want help developing an eSIM strategy, then get in touch. I can help you design propositions for your target customer that will stand up to consumer scrutiny and win brand loyalty.

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James Gray

Managing Director at Graystone Strategy

James has over 20 years of experience working in the telecoms and retail industries. He is an expert in subscription-based business models, CRM, direct and indirect channel management and major proposition development and launches. He has held a number of Marketing Director and Consumer Director roles.