Recently, SK Telecom, which suffered a hacking attack, has been conducting free replacements of Universal Subscriber Identity Module (USIM) for its subscribers. However, due to a shortage of stock, a nationwide 'USIM crisis' is unfolding. Experts point out that the most rapid protective measure for USIM, the embedded SIM (eSIM), is not being actively promoted. Although eSIM has many advantages such as ① low cost, ② quick replacement, and ③ zero environmental pollutants, SK Telecom insists on USIM replacements.
According to industry sources, since September 2022, domestic devices launched support eSIM, but the current domestic eSIM subscriber rate is estimated to be only 1-3% of the total.
◇ 'USIM crisis' emerging as an alternative to 'eSIM'
On the 29th, industry sources reported that there are 23 million SK Telecom subscribers, but only 1 million USIMs are in stock. If you include the budget phone subscribers (1.87 million) using SK Telecom’s network, up to 25 million USIMs are needed. This is why eSIM, which can be replaced immediately with just a download without a physical USIM replacement, is emerging as an alternative. The scope of SK Telecom's free USIM replacement includes switching from the existing USIM to eSIM.
However, SK Telecom is focusing on USIM replacements rather than eSIM. After the hacking incident, the policy was changed so that eSIM, which could originally be downloaded remotely and installed, can now only be changed by visiting an SK Telecom store. This has complicated the 'quick replacement' advantage of eSIM.
An industry insider noted, “At this point, experiencing a USIM supply crisis, I do not understand the reason for not actively utilizing 'eSIM replacements', which is the fastest way to protect customers' USIMs,” and added, “If SK Telecom planned to utilize eSIM, it would have included a notice at stores stating, 'Since USIM supply is not smooth, you can first switch to eSIM.'” They also mentioned, “Even though there are complaints from customers who visited the store but could not replace their USIM, they are not actively promoting eSIM replacements.”
SK Telecom explained, “Fraud organizations engaging in smishing or phishing could send eSIM installation messages to customers due to this hacking incident, which can cause harm, so we have taken measures to allow eSIM installation only when visiting the store.”
◇ SKT's complicated calculation in utilizing 'eSIM'
What could be the reason for SK Telecom’s reluctance to utilize eSIM? On the surface, the average revenue per user (ARPU) generated from USIM sales is mentioned. It is a concern that if the number of eSIM users increases, this portion will decrease. The selling price of a USIM is 7,700 won, while eSIM costs 2,750 won, creating a significant price difference of 4,950 won. As the proportion of USIM subscribers decreases, the ARPU also declines.
The ability to sign up, cancel, and transfer numbers without visiting stores when switching to eSIM is also cited as a reason for SK Telecom's hesitation to utilize eSIM. If subscribers no longer visit telecom agency stores, it will weaken the market dominance built on offline stores and may benefit budget phones and self-sufficient devices focused on online sales.
Above all, if the number of eSIM subscribers increases, rate competition may intensify. Since devices installed with eSIM can support USIM as well, two SIMs can be operated in one device. This also allows for the design of tailored low-cost rate plans utilizing eSIM. For example, a user on a 59,000 won plan that offers 24 gigabytes (GB) of data and unlimited calls can combine one line with a low-cost plan in the 20,000 won range that has unlimited calls and another line with a 10,000 won 20GB budget phone plan.
◇ eSIM global expansion due to environmental issues… Korea is lagging behind
eSIM does not require materials that cause environmental pollution such as plastics or metals (gold, silver, copper, nickel, etc.) used for USIM. Typically, USIMs are not recycled and are mostly discarded. This is because subscribers do not return USIMs containing personal information to telecom companies or recycling firms but dispose of them themselves.
Assuming that all SK Telecom subscribers (approximately 25 million), including budget phone users, replace a USIM weighing 1g, the discarded USIM weight alone amounts to 25,000 tons (t). According to the Fraunhofer Institute in Germany, 5,695 tons of greenhouse gases are emitted during the entire process of producing, transporting, using, and disposing of 25 million USIMs.
From an environmental standpoint, using eSIM instead of USIM is a global trend. According to Counterpoint Research, it is expected that by 2025, 50% of global smartphones will be equipped with eSIM.
The first eSIM-supported smartphone was commercialized in 2017, but it was introduced in Korea only from September 2022. Apple proactively released eSIM-supported smartphones starting in 2018. Samsung Electronics also started releasing eSIM-supported devices from 2019, but the functionality was not included in the products sold in Korea due to the telecom company not supporting eSIM services. According to Samsung Electronics, domestic devices support eSIM functionality only from the models released after the Galaxy Z Fold4 and Galaxy Z Flip4, launched in September 2022. Apple has supported eSIM functionality since the iPhone XS, launched in 2018.
An Jeong-sang, a visiting professor at the Graduate School of Communication at Chung-Ang University, stated, “This hacking incident at SK Telecom has paved the way for the expansion of environmentally friendly and quickly replaceable eSIM use,” adding that “SK Telecom should seek ways to remotely install temporary eSIMs on older devices that do not support eSIM in cooperation with Samsung Electronics.”