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Top1. Introduction
Mobile data traffic has grown remarkably fast, with an increase of 18-fold within the previous five years (Cisco, 2017). This growth in traffic is one of the main challenges of mobile network operators (MNOs), which are constantly building new infrastructure to meet increasing consumer demands. Despite these measures, customers occasionally find themselves unable to use mobile services because of congestion, network blackouts, or coverage white spots. Researchers and practitioners are actively seeking ways of addressing these problems. Thus, some operators have exploited unlicensed spectrum bands by deploying Wi-Fi hotspots in public areas, while some others have used small cells operating in licensed bands to address both coverage and congestion problems. Apart from these measures taken by individual operators, cooperation between MNOs could potentially help to mitigate congestion by jointly optimizing network utilization. Different models of dynamic spectrum access have been proposed, varying in the extent of spectrum openness and collaboration between operators (Zhao & Sadler, 2007). However, despite the promising potential of spectrum sharing (Basaure, Suomi, & Hämmäinen, 2016), mobile operators have not been active in its implementation.
Problems due to congestion, network blackouts, or coverage white spots can also be addressed by customers by using several mobile subscriptions from different operators, which is referred to as end-user multihoming. Multihoming is particularly popular in developing and emerging markets. Multihomed customers typically use handsets with multiple Subscriber Identity Modules (SIM cards) that enable them to access the services of several operators with a single device. A recently developed reprogrammable embedded SIM (eSIM), which can become a new standard for SIM cards, can significantly advance end-user multihoming by enabling its smooth functioning in all eSIM devices. Embedded SIM can contain several operator profiles, corresponding to different subscriptions, which can be downloaded over the air. After profiles have been stored in a SIM, a user can swap between them locally. Therefore, embedded SIM may eventually help to implement the “always best connected” concept (Gustafsson & Jonsson, 2003) by enabling the dynamic selection of a network that provides the best combination of service price and quality.
However, the implications of embedded SIM on the business of mobile operators remain unclear. Since eSIM is reprogrammable and may contain several operators’ profiles, it will reduce the customers’ switching cost incurred when changing from one operator to another. The switching cost will be essentially zero if eSIM-based multihoming is widely supported and operator selection is fully automated and dynamic. This would likely significantly change the dynamics of market competition. On the other hand, the change in competition will be minor if eSIM-based multihoming does not penetrate the market or operator switching is strictly controlled by MNOs. Moreover, although eSIM-based multihoming with dynamic network selection may considerably affect the market, it remains unclear whether it will promote healthy competition, or lead to devastating price wars and a decline in investments. Therefore, this research aims to determine drivers and possible scenarios for the diffusion of eSIM-based multihoming, as well as the potential changes that it can bring to market competition.
The study utilizes causal loop diagrams for creating qualitative system dynamics models for the diffusion of eSIM and eSIM-based multihoming with dynamic network selection, as well as market competition under the conditions of eSIM-based multihoming. Potential outcomes of eSIM multihoming diffusion and its possible impacts on competition dynamics were further studied based on the constructed models. The models were created iteratively through extensive desk research and interviews with 13 experts. The results of this study can be relevant to policy makers in assessing embedded SIM as a tool for increasing market competition and for mobile operators in developing their eSIM and multihoming strategies.