The rise of RCS
In this article:
- Q: RCS has taken a while to get to market. Why is that?
- Q: How have consumer expectations and demands changed in terms of enterprise communication?
- Q: Were there any interesting use cases at MWC19?
- Q: Most OTT providers have launched enterprise messaging APIs. What’s your take on chat apps performing enterprise messaging functions?
- Q: How will pricing shake out for RCS messaging?
Every day, billions of people and thousands of businesses connect with each other via SMS. Not much has changed with the format in 30 years, but now the humble SMS is getting a long-anticipated reboot in the form of RCS (Rich Communications Services).
Touted as the next-generation messaging protocol and championed by the GSMA, Google, Android phone manufacturers like Samsung, and mobile carriers around the world, RCS combines an OTT app like experience with the ubiquity of SMS. Businesses can communicate with their customers in a rich, immersive environment that can include images, QR codes, linked buttons, maps, chat and more.
Getting RCS to market hasn’t been straightforward. It requires that all parts of the RCS ecosystem work toward its availability as a common goal. And at this year’s Mobile World Congress, aside from 5G and foldable smartphones, much of the ‘talk’ was given over to how RCS is rapidly approaching a commercial tipping point. Sinch’s Product Director for Rich Messaging, Jon Campbell, was there to take the temperature…
Q: RCS has taken a while to get to market. Why is that?
A: To date, the GSMA lists 75 mobile operators worldwide that have adopted its Messaging-as-a-Platform (MaaP) and Universal Profile specifications within their networks. More investments, decisions and trials are being deliberated, meaning the availability of A2P RCS has not been as fast as the ecosystem would like.
There are of course multiple reasons for this, not least because mobile operators have been focussed on rolling out 5G, which is absolutely critical to reducing churn and competing for new revenues from the services that 5G enables.
Yet in order for mobile operators to capitalise on the next generation of enterprise messaging, launching RCS is critical. A large part of the SMS based B2C messaging market today (as we’ve seen with P2P SMS), will move to OTTs instead of remaining with the mobile operators.
Q: How have consumer expectations and demands changed in terms of enterprise communication?
A: Outside of enterprise messaging, consumers are used to more sophisticated P2P messaging. Setting group chats, exchanging images and videos or sending other files are the norm. At the same time, consumers expect to be able to interact with brands and enterprises at times that are convenient to them, like filling in down-time whilst travelling to work on the train for example.
These are the contextual moments in which enterprises need to be able to respond to inbound enquiries, and it’s this change in consumer expectation that RCS so easily meets.
Q: Were there any interesting use cases at MWC19?
A: Brands and enterprises are certainly now coming forward, the education phase has now happened.
I think it’s interesting that when we look at SMS, roughly 80% of the traffic is one-way - a broadcast. That’s fine for things like two-factor authentication, but RCS opens up the opportunity to provide two-way interaction and focus on inbound strategies like creating loyalty. This means that there are plenty of areas of communication and customer service, like enterprise apps, that are ripe for disruption. Train ticketing, boarding passes for flights, hotel room access and information, can all be captured in an RCS message, but crucially contain a customer service element with minimal friction for the consumer.
RCS also provides the opportunity to dig deeper into commerce. High-value transactions can be immediately followed up with a two-way dialogue. Offering an electronic receipt or asking a customer to rate their experience are all possible (and represent great customer service) whereas integration with carrier billing or a payment platform like Google Pay, could enable enterprises to close a transaction from within a message in the inbox – ‘click to buy’ in response to a personalised offer.
Q: Most OTT providers have launched enterprise messaging APIs. What’s your take on chat apps performing enterprise messaging functions?
A: Chat apps are a great way to communicate with family and friends. However, by virtue of being OTT, they rely on the consumer installing an app, unlike SMS (and RCS as it rolls out) which is a native function of every handset. This means enterprises have to support an ever-growing number of messaging channels, all of which only access a portion of any given customer base.
As a result, many customer relationships aren’t adequately supported by the OTT messaging environment.
Q: How will pricing shake out for RCS messaging?
A: By virtue of the fact that the entire business messaging ecosystem has had to make significant investments to breathe life into RCS, it will be a premium to SMS (Carriers cannot charge more for P2P RCS however). The RCS channel will mean more rich media transport considerations, more storage, 2-way dialogue transaction storage for context and history and the incremental billing enhancements. That said, our own study, in conjunction with Ovum, showed that enterprises are willing to pay more for RCS, precisely because the engagement value is much higher. There are many interpretations of value; a high value brand is willing to fund full visibility of it’s brand with the same SMS experience vs. some brands will justify the RCS expense because of the direct sales impact as result of click throughs etc. On balance, if RCS can deliver great customer service, loyalty or a transaction, then the benefit far outweighs the nominal costs of RCS. It’s a no brainer.