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OTT (over-the-top) applications are now the primary channels for P2P (person-to-person) communication, while SMS continues to be the mainstay of application to person (A2P) enterprise messaging which is effective because it is ubiquitous, secure and the most trusted format by consumers.
Enterprises will send 2.8 trillion A2P SMS messages by 2022 with revenue of $26.6 billion.
At the same time, smartphone technology is facilitating new patterns of consumer use. In terms of P2P messaging consumers have become habituated to more immersive OTT chat app formats like Line, KakaoTalk, WeChat, Viber and WhatsApp, that enable richer features like file and image transfer and group chat.
Comparing these features to SMS messaging, it’s obvious that there is a growing user experience gap, which is fuelling consumer demand for similar richer experiences from enterprises and the brands that they interact with. As a result, over the last few years most OTTs have opened up support for enterprises to do A2P messaging in addition to allowing people to chat to friends and family.
Being able to ‘chat’ to a bank for example, at a convenient time – whilst on a bus, or waiting in a café, is becoming an expectation. Not only is this kind of responsive customer communication highly prized by consumers, it is one of the prime ways in which enterprises can successfully differentiate themselves in highly competitive sectors like commerce and banking.
However, unlike SMS, which is a native function of every handset, chat apps rely on an install. This means enterprises have to support an ever-growing number of messaging channels, all of which only access a subset of the customer base since not everyone has downloaded every chat app.
Alternatively, an enterprise might offer its own branded app as a container for customer service functions - an expensive option that experience tells us has been met with limited success. Why would a consumer download an enterprise app that was only used once or twice a year? As a result, many customer relationships aren’t adequately supported by the OTT messaging environment or by enterprise applications. So how can enterprises meet this demand?
For some time now, telcos and messaging providers have been touting the arrival of RCS messaging. Billed as the next-generation messaging protocol – SMS 2.0 - RCS is championed by the GSMA, Google, Android phone manufacturers like Samsung, and mobile carriers around the world. It combines an OTT app-like experience, with the potential ubiquity of SMS so that rich features such as images, QR codes, linked buttons and chat can all be used in a branded environment on the native handset.
There’s evidence that RCS adoption is accelerating. New stats from Mobilesquaredshow that the Asian RCS market will grow from 472m users in 2019, to 1.6bn by 2023.
At the OS level, Android and Microsoft support RCS. According to the latest IDC figures, Android had an 85% market share of the 1.5 billion new smartphones shipped in 2018. Crucially, Android OEMs like Samsung, LG, and Huawei support RCS, so via the usual two-year renewal cycle of smartphones, RCS will grow significantly as a native function of nearly all new Android devices - an installed user base of approximately five billion globally.
Operators now need to invest
Getting RCS to market has been a slow process. To date, the GSMA lists 75 mobile operators worldwide (including KDDI, NTT Docomo, KT, SK Telecom and Globe Telecom in the APAC region) that have adopted its Messaging-as-a-Platform (MaaP) and Universal Profile specifications within their networks, so that RCS is enabled. But there is still some way to go as many mobile operators have yet to do so.
Mobile operators of course have multiple priorities, not least rolling out 5G which is absolutely critical to reducing churn and competing for new revenues from the services that 5G enables.
Part of the problem lies with the messaging ecosystem. To enable RCS, mobile operators need to implement a technology that supports both P2P and A2P messaging traffic. The vendor community for providing RCS infrastructure (with appropriate SLAs) either on-premise or on an as-a-service basis, is relatively small.
Moving forward more vendors are entering the space and, by providing turnkey solutions for operators, will help to accelerate RCS adoption.
In order for mobile operators to capitalize on the next generation of enterprise messaging, launching RCS and building a large user base which will entice enterprises to embrace this new channel is critical. If the mobile operators are slow in doing this a large part of the B2C messaging market that is SMS-based today will move to OTTs instead of remaining with the mobile operators. In addition, the mobile operators would miss out of the growth that the richer and more conversational forms of messaging supported by these new technologies will drive.
Consumers are telling us that they are more than ready for RCS, whilst enterprises, which are dependent on RCS being available to their customers, are also keen to start engaging with the new messaging standard. The next twelve months will see the messaging ecosystem shake out its wrinkles so that RCS will become table stakes for any enterprise that is serious about customer service, communication and engagement.
Robert Gerstmann is co-founder and chief evangelist at Sinch.
Article first published in www.telecomasia.com