eSIM technology: the next generation of IoT connectivity

08 August 2023

There’s no doubt that businesses understand the importance of digital transformation; adopting new technologies and digital tools to enhance productivity and increase both customer and employee satisfaction. For many businesses, IoT has been crucial for survival, helping to manage assets and business operations, develop new products and services or improve efficiency in the supply chain.

IoT solutions are flexible enough to meet the needs of a range of different sectors so no matter what industry you’re in, it has the power to transform your business. The great thing about IoT is that it can be integrated in many ways and continues to evolve alongside other technology solutions to fulfil customer demands. At the core of a cellular IoT solution is the SIM card, and like any other technology, SIM cards have developed to meet customer needs and use cases in both consumer and IoT markets.

Virtualisation of the SIM card

The SIM card is an integrated circuit that securely stores the subscriber identity number (IMSI) and the sensitive network authentication keys. The SIM, in a combination of hardware and software, provides secure identification and authentication for subscribers onto mobile networks (2G, 3G, 4G, 5G, LPWA).

Its main feature is to encrypt all the communications between the customer equipment and the operator to ensure that each user gets access to the contracted communication service and to support the integrity of the billing process. Mobile network users also recognise SIM cards as a key security element to choose the mobile network technology for the communication of their products.

Traditionally, SIMs have been available as a plastic card with a chip. Over the past decade, the SIM has evolved and is now available in different form factors and grades to meet the different requirements (such as size, memory, temperature range, etc.) from different use cases (e.g., automotive, utilities). The latest development is called an embedded SIM (eSIM or eUICC).

The eSIM is simply a capability that enables SIMs (of any type) to switch from one MNO to another without the need to physically change the SIM. The change of connectivity provider is done over-the-air (through a process called remote SIM Provisioning – RSP). With eSIMs, the profile of a chosen provider can be installed, activated, or changed via an encrypted communication over a mobile network, meeting the highest customer safety requirements.

What does this mean for IoT customers?

As products have a longer lifetime, eSIM capability removes the difficulty and cost to physically access and replace soldered SIMs. The flexibility of switching operators gives customers flexibility, enabling new use cases. eSIM capability is usually deployed in combination with automotive and industrial SIMs because of the longer lifetime of products, and the difficulty and cost to physically access and replace soldered SIMs. To remotely provision an eUICC, it is necessary to have some software loaded in a server, called subscription manager (SM).

The eSIM functionality allows the IoT customers to change the connectivity provider in cases such as the end of the contract, or using an alternative provider if the coverage is not good. The eSIM also enables new uses cases such as to manufacture off-the-shelf IoT devices with an initial connectivity provider that can be changed to another provider depending on where the service is going to be used. Or the option to add highly regulated markets to the customers footprint by using a single connectivity supplier that enables the switch to a local supplier to comply with the local regulation.

This capability will drive adoption of IoT, make it easier to deploy IoT solutions, and is opening new use cases and applications that were not possible before.

Creating new standards for eSIM

According to the GSMA, there is good progress being made in the adoption and awareness of eSIM technology. Related to IoT, we believe that about 25% of overall SIMs today are eSIMs and that eSIMs will grow with a 30% CAGR.

The GSMA has developed a standard that has been accepted by most of its member operators around the world. This allows the intrinsic ‘digital signature’ content of a SIM card to be downloaded ‘over-the-air’ (OTA). So, eventually most SIMs will be eSIMs with OTA switching capability.

The future of business connectivity

eSIMs are also crucial for industries looking to improve their sustainability practices. The streamlined production and distribution process for eSIM technology will have a more positive impact on the environment. As they do not require plastic packaging like traditional SIM cards, businesses will be able to reduce unnecessary waste and carbon emissions.

Businesses can rely on a global IoT network to deliver benefits and results. Most platforms are built to be scalable, accommodating growth and upgrade necessary requirements for businesses.

eSIM technology will increase the need for connectivity management platforms (CMPs) to help manage the state and levels of complexity on the platform. IoT management will be simplified for organisations – giving visibility and control of IoT devices anywhere. The entire IoT infrastructure will be centralised on one platform with transparency around the data and diagnostic of the devices.

With a resilient platform available from the touch of a phone, businesses can save money with secure and reliable data connectivity for all critical business applications on the IoT platform, which will help them to respond quickly to opportunities and threats.