Why mobile operators want your second SIM card slot

February 07, 2018 13:13
It is becoming increasingly difficult for mobile operators to attract new subscribers through handset sales as most people simply hate being locked up to  long-term contracts. Photo: AFP

Hong Kong is one of the world's most competitive mobile communications markets with four mobile operators and more than 10 mobile virtual network operators competing in a city with a population of just above seven million.

Amid the intense competition, many mobile operators have adopted various strategies to retain subscribers and attract new ones.

Some are giving away free SIM cards with mobile data usage for their customers' second SIM card slot and offering them contract-free price plans.

This is a good business strategy. It is becoming increasingly difficult for operators to attract new subscribers through handset sales as most people simply hate being locked up to a two-year contract.

One company that has adopted this strategy is SmarTone Telecommunications. It recently launched Birdie Mobile, an online-only mobile operator that offers simple, contract-free service plans.

It is offering free mobile data usage and voice minutes for two months to build up its brand.

Market watchers say Birdie plans to launch a 5GB mobile data usage service plan at a monthly fee of only HK$90 with no administrative and value-added service fees.

Such a price point is way lower than current offerings in the market, which charge users more than HK$100 each month. It is obvious that the company is using the Birdie brand to compete in the mass market while SmarTone itself is focused on premium and business customers.

However, even prior to the launch of Birdie Mobile, other companies have been working aggressively to tap the business potential of the second SIM card slot in the smartphone.

Club SIM, a free SIM card offered by HKT's The Club, is a market leader in this respect. It offers various service packages on a contract-free basis. For example, users only have to pay a small amount for a gaming package, which enables them to play certain mobile games without paying the bandwidth fee.

Users may also choose a plan that allows them to use a specific amount of mobile data for 90 days, instead of paying for a monthly package.

Such flexible options are best for people who own many devices for mobile internet use: they allow customers to use their SIM card in a flexible way across several devices without wasting money on a long-term contract.

Mobile operators are now finding it hard to attract subscribers as many users are unwilling to buy flagship handsets via mobile subscriptions.

The second SIM card provides the opportunity for mobile operators to explore a new revenue source amid the tough competition in the market over the past few years.

The launch of Club SIM and Birdie Mobile suggests that mobile operators could benefit more by adopting a multi-brand strategy that takes advantage of their huge customer base.

On the other hand, mobile virtual network operators like HKBN, which leases mobile capacity and resell it to customers at a low price, may find it hard to win new customers by offering cheaper prices because of their cost structure limitations: they need to pay leasing fees to the network operators for capacity.

Hence, they can just compete for the mobile user's primary SIM card slot but will not be able to tap the business potential of the second SIM slot.

The emerging challenge for mobile operators is that the SIM card itself may soon disappear. Smartphone makers have been working for a long time to introduce an e-SIM card into their devices as part of efforts to overhaul the design of the handset.

An e-SIM card will be embedded in the smartphone and users can activate it without having to go to a mobile operator to secure the service. Apple Watch Series 3 Cellular edition is the latest device that has an e-SIM card inside.

So sooner or later, most, if not all, smartphones will use an e-SIM card and will have no need for a SIM card.

When that happens, mobile operators will lose a unique way to grow their relationship with their customers and users will just choose from the operators' price plans and activate the service online.

That means the role played by mobile operators in the market could be marginalized as users can just switch service providers without having to change the SIM card in their smartphone.

Given this very likely scenario, it is crucial for mobile operators to boost their online exposure to ensure that users remember their company names and brands before they sink into oblivion.

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EJ Insight writer