Nick Lane, Chief Insight Analyst at Mobilesquared discusses the findings of a recent study that analyses insights into 69 mobile operators and shares his views on the impact of Rich Communications Services (RCS).
The GSMA paints a bright future for Rich Communication Services (RCS), forecasting that it could be worth $74 billion by 2021, and believes that ultimately, RCS will replace SMS altogether.
RCS will provide a secure ecosystem in which messages can be sent without the threat of grey route traffic undermining pricing models and disintermediating the mobile operators, which has blighted the A2P SMS space. In effect, RCS will provide a pure messaging environment where mobile operators remain an integral element of the value chain.
Undoubtedly, RCS represents the logical evolution of messaging for mobile operators. It delivers a richer and more immersive experience, not forgetting actionable analytics on a par with data provided by OTT messaging services.
However, mobile operators are notoriously slow when it comes to deploying new platforms and associated services. Not to mention the fact that A2P SMS actually functions pretty well today.
Research into the mobile operator view toward RCS, conducted by Mobilesquared on behalf of the Mobile Ecosystem Forum (MEF), reveals that two-thirds of mobile operators have or plan to invest in RCS over the next couple of years. Content sharing, branded experiences and 1-2-1 chat were the main mobile operator drivers.
What’s more, virtually every mobile operator with an RCS strategy will invest in Authentication APIs, and a significant percentage will also invest in Voice APIs. Around one-third of mobile operators are planning to invest in Chatbot APIs on the belief that they will better enable customer services and support, make shopping, purchasing and banking easier.
But not every mobile operator is convinced by RCS, citing a lack of RCS strategy to a lack of understanding what RCS could deliver, not enough demand, and a lack of revenues.
The research also revealed that mobile operators expect average monthly wholesale revenues of US$624,457 within 12 months of deploying RCS, rising to US$835,870 per month within three years of deployment – a growth of 34%. To hit the predicted $74 billion revenue projection, mobile operators would, on average, need to be generating monthly revenues of $7.3 million (based on 850 mobile operators).
Clearly, the mobile operator-based revenue projections suggest a slower-than-expected commercialisation of RCS, which also indicates that RCS will have minimal impact on A2P SMS traffic and revenues in the short-term, but will start to erode white route revenues in the longer term when both A2P RCS and SMS will co-exist.
The White Paper, called The Outlook for Enterprise Messaging: The Impact of RCS on SMS, is based on mobile operator research representing 69 mobile operators and groups worldwide. The research is available for Future of Messaging Participants to download now.