RCS can help MNOs fight back against OTTs by enabling them to create not only a competitive messaging service, but a marketplace that drives real value.
Operator messaging revenue is one of the biggest victims of the OTT digital revolution. According to Juniper Research, consumer migration from operator voice and text services to OTT messaging and social media applications cost network operators nearly $104 billion last year alone – an amount equivalent to 12% of their service revenues. Despite the fact that many operators provide free unlimited texting in some of their basic packages, messaging apps from OTT players continue to dramatically dominate consumer usage and significantly disintermediate operators from their customers.
Line and WeChat, which are fast becoming the operating systems for the device and the customer, have grown by forming communities that attract vast, captive and engaged audiences. These communities create commercial opportunities through their ability to communicate offers and adverts from third-party brands.
China’s WeChat, for example, is arguably the most powerful success story. What started as a messaging service has developed into an enormous commerce-oriented community that is turning China into a cash-free society. WeChat is indicative of a messaging service evolving into a marketplace, and it represents a blueprint that other OTT services have or might follow.
Keep in mind, however, the OTT messaging landscape certainly is not perfect. It continues to be entirely siloed, requiring consumers know which messaging apps their friends and business contacts use, and to ensure that those apps are downloaded onto their devices. Without this, individuals cannot receive messages or offers. Operators that are considering playing catch up in a quest to recover messaging revenues via a simple P2P communications channel will find some of the same limitations when it comes to bringing consumers back.
So, is there any chance for operators to claw back some market share from the OTT service providers, and in places where the OTTs have not yet had success? And does the opportunity exist for operators to innovate in the space and reinstate messaging as a profit center?
The simple answer is yes. Thanks to the underlying benefits of RCS, operators are well positioned to leverage cross-carrier interoperability messaging in a marketplace model, ripe with advertising opportunities.
One advantage operators have is that the monetization potential of messaging marketplaces relies on trust and a consumer willingness to engage. A number of recent high-profile instances in which internet companies abused their positions in the use or capture of sensitive user data has eroded trust in those organizations. As public opinion continues to challenge internet companies, operators can begin to capitalize on their already trusted relationship with the customer. The messaging marketplace is just the place to do it.
Tip of the iceberg
Major operators are now launching their own OTT-like messaging communities to emulate the likes of WeChat and Line. The three major operators in Japan – KDDI, NTT DoCoMo and SoftBank – recently launched +Message, Japan’s first cross-operator RCS-based messaging platform. This represent a truly bold and ground-breaking level of operator partnership, but it also is indicative of clear intent from those three operators to challenge the dominance of Line, Japan’s leading OTT messaging service.
Earlier this year, we saw Google announce it would abandon the ongoing development of its Allo messaging platform to focus instead on uniting the global operator community behind its own RCS-inspired messaging client called ‘Chat.’ Google, too, recognizes the huge potential that lies within mobile operators to join together and take the fight to the OTTs. The sentiment behind Google’s decision is to be applauded – however, it’s more likely that operators across the globe will follow the same model as the Japanese trio of KDDI, DoCoMo and SoftBank to collaborate and create their own services according to commercial priorities and needs of their existing customers.
IP-based technology like RCS gives operators the platform to emulate the same P2P messaging functionality as OTTs, while also setting themselves up for scaled incremental feature and functionality to drive new revenues and customer satisfaction. But they must go further by working together to deliver advanced, compelling chat features and interoperability to stay relevant and drive customer engagement, and ultimately new revenues. Failure to innovate and deliver on these services will see operator customers use RCS for only the most basic of messaging use cases. The result will see operators re-enter a downward messaging revenue spiral.
By including an application-to-person (A2P) element, operators will be able to provide brands with the opportunity to combine communications and commerce. Messaging is, after all, becoming the most common way for enterprises to talk to, market to and care for their customers. The issue here is that the most common and lucrative means of delivery – A2P via SMS – has seen its revenues plateau or decline. The future is A2P via IP. This is what WeChat has been harnessing, and where operators must follow.
A2P game changer
An operator-led A2P/IP messaging marketplace can provide customized touchpoints from which to message customers across any digital channel. By generating and analyzing contextual intelligence around what the customer is trying to achieve, the operator can assess and act on sales and advertising opportunities or deliver customer care services as part of its wider retention strategies. Next, AI-driven chat bots could deliver care services via a messaging marketplace before the customer even knew what he or she needed. This could have a massively positive impact on NPS scores or other measures of customer experience.
Operators have so much to gain from creating their own messaging marketplace. In some ways it requires them to follow the OTT example, but the real value lies in the wider application of A2P messaging services and chatbots to optimize their own customer care, marketing, sales and broader partnership strategies.
One thing is certain: without pursuing messaging marketplace-like services that drive a value-based exchange between the subscriber and the operator, the disintermediation will continue, as will the loss of potential new revenues. Acting now requires courage and confidence if operators do not want to risk being left behind a second time.
Written by Mary Clark, chief marketing officer and EVP Product at Synchronoss