With eSIMs new iPhones make life better for you, harder for telcos

Each new iPhone is usually good news for mobile network operators. The latest Apple device always comes with upgrades that make it easier to play games, watch films and download reams of data. More data means bigger phone bills.

There’s a chance, though, that this week's arrival of the next generation of iPhones might not be so welcome. That’s because there’s a possibility that Apple could introduce so-called electronic sims, or eSIMs. Even if this doesn’t happen this time around, the shift to the new technology looks inevitable.

The classic SIM card is a small chip that’s inserted into the phone manually – making it more awkward to change your mobile network provider.

You have to go to a shop to get a new sim or have one delivered physically. The eSIM is virtual, meaning that just changing your phone’s settings would theoretically allow you to switch carriers.

It’s almost certain that this would accelerate price competition. Whenever it’s made easier to jump from one operator to another, consumers take advantage and seek better deals. Churn – the industry term for customer losses – spikes.

European chipmaker STMicroelectronics dropped a heavy hint about eSIMs at an investor day in May, saying it expected to deploy its own device in a major mass-market smartphone by the end of the year.

Whether it’s talking about this year’s iPhone will become known tomorrow, but it’s hard to see how the mobile phone operators can resist this technology for long given its usefulness for consumers.

Apple will certainly argue it that way. It’s already used in some iPads, and STMicro supplies an eSIM for the Apple Watch.

Apple can’t totally dismiss the concerns of the big phone carriers. After all, they spend huge sums on marketing the iPhone, and sell it in their stores. But the technology giant is willing to throw its weight around.

While the eSIM might reduce some logistical costs for carriers such as Verizon and AT&T, in the longer term it will become harder to differentiate between network providers.

It might make sense for Apple and other phone-makers to keep the classic SIM port alongside an eSIM in the near term. That would give operators time to adapt, while making it harder for them to object.

But the danger for carriers is that the shift to eSIMs moves them further down the path to becoming little more than utilities.

There are very few people who don’t have a smartphone already, meaning it’s increasingly a battle for market share rather than new users. The prospect of a new wave of price wars is not a happy one.