Galaxy Phones Also Equipped with eSIM... Winds of Change Blow [Cha Min-young's Post-it]

Government Plans to Introduce e-Sim System on September 1
Devices, Telecoms, and Retailers Have Divergent Views

[Asia Economy Reporter Cha Min-young] #. On September 1st, the era of '1 phone 2 numbers' will begin, where smartphones will have built-in eSIMs (embedded Subscriber Identity Modules) and users can directly subscribe to their desired carriers at home via internet connection. Perspectives on the introduction of the eSIM system vary across the device, telecommunications, and distribution industries connected through the vast smartphone ecosystem.

The biggest change is in devices. Samsung Electronics unveiled the eSIM feature in the ‘Galaxy Z Fold4 and Flip4’ series at the Samsung Unpacked event on the 10th. Since the release of the Galaxy S20 series in 2020, Samsung has supported eSIM on about 18 overseas models but had not introduced it in domestic models until now. This marks the first time eSIM is equipped on a Galaxy phone for the domestic market.

Most iPhone users can use eSIM. Apple has supported both eSIM and physical SIM cards on 15 models, regardless of domestic or overseas versions, starting from the iPhone XS model in 2018. Apple Korea’s website and stores also provide guidance on how to connect eSIM. Chinese brand Xiaomi currently equips all 12 domestic models released in Korea, including the Mi series and Redmi series, with eSIM. According to the GSMA ‘Global eSIM Market Outlook Report,’ over 500 million smartphones worldwide had eSIMs in 2022, and this number is expected to exceed 2.4 billion by 2025.

The number of smart devices equipped with eSIM functionality is also expected to increase. For smartwatches, eSIM service has been available through carrier-specific smart device plans. Samsung Galaxy Watch series and Apple’s Apple Watch, which support LTE connectivity rather than Wi-Fi only, fall into this category. Since the release of the ‘iPad Pro 11-inch’ model in 2020, iPads have also been equipped with eSIM.

The 'Galaxy Z Flip4' device model unveiled at Samsung Electronics' Unpacked event on the 10th

Telecom operators are in the final stages of system development in preparation for the September launch. The integrated management system for device unique identification numbers (IMEI) is also being enhanced. There is speculation that eSIM-exclusive plans will be introduced, so product planning is expected to be thorough. Changes must be communicated to dealerships and training conducted. For Mobile Virtual Network Operators (MVNOs) that lease networks from Mobile Network Operators (MNOs), this is seen as an opportunity. Since eSIMs are likely to be used as secondary phones for work, demand for more affordable plans is expected to increase.

On the other hand, there are concerns that the use of mid-range smartphones as secondary phones will decrease, potentially negatively impacting manufacturers’ profits. The distribution industry also anticipates that if eSIM usage becomes widespread, non-face-to-face activations will increase, causing offline sales to slow down.

With the expectation of more frequent number portability, government concerns over limited number resources are also expected to grow. Under current law, carriers reassign new numbers within one month. The ‘phone number recycling restriction period’ for carriers is at least 28 days, except for exceptional cases. This is an unavoidable choice due to limited number resources. According to the office of Kim Young-sik of the People Power Party, as of the end of May, the number of phone numbers held by carriers is 33.8 million for SK Telecom, 24.56 million for KT, and 15.56 million for LG Uplus, with unused numbers remaining at 3.89 million, 6.11 million, and 3.52 million respectively. The ratios are approximately 11.5%, 24.9%, and 22.6%.

If domestic smartphone eSIM services become commercialized next month, number portability will become easier, potentially worsening the problem. A telecommunications industry official appealed, "A fundamental consideration is needed on ways to increase the limited number resources."