Following our story yesterday on how the virtual sim could allow consumers to break free of network contracts, we take a look at how the virtual sim could affect the telecommunications industry.
The mobile telecommunications industry undergoes constant changes and positive developments from increased smartphone penetration, growth in mobile data revenue to value added services. However, Apple’s introduction of iPad Air 2 and the idea of the virtual sim has implications for operators.
Joao Sousa, partner at telecoms advisory firm Delta Partners, says Apple’s move will mean that operators will be highly dependent on data revenues. If the virtual sim becomes a reality in smartphones, operators will have to transform into ‘whole sellers’.
“While operators will need to drive short-term data offers, multi-device offers and/or subsidies, they will also sell more data, due to higher number of LTE-enabled iPads,” he says.
Sousa says operators may also be able to increase data revenue from international customers by capturing share of data traffic versus WiFi networks. He says operators need to increase focus on network quality, as customers will have easy access to other operators’ networks.
Apple’s launch of the virtual sim could potentially improve the overall value proposition for the customer around LTE-enabled iPads with the goal to increase sales of higher-priced iPads.
The virtual sim means increased iPad usage while on-the-move, while using mobile networks and enabling international roaming. The virtual sim could encourage operators to increase iPad subsidies and to gain bargaining power on iPhone subsidies negotiations.
Sousa says introducing virtual sim into smartphones would enable better experiences for customers, in particular business customers travelling abroad because of the decreased cost of international roaming. He says Google and Samsung introducing the virtual sim concept in Google Nexus and Samsung Galaxy, and Apple introducing virtual sims in iPhones, would drive the introduction of virtual sims.
“To remain relevant in a very competitive landscape, the operators will need to be more creative and deploy services beyond connectivity,” says Souza. “The industry will also require all to excel in service quality and customer experience”.