The Road to a Business Messaging Ecosystem

Mavenir - Man on phone in office
7 November 2018
Authored by: Guillaume Le Mener

With Rich Communication Services (RCS), brands and enterprises are able to include enhanced interactive content right in the native messaging suite itself – eliminating customers’ worry about juggling multiple apps, and providing Mobile Network Operators (MNOs) with a high demand from many sectors, including marketing and retail. 

On the other side, with P2P traffic and interconnect revenue at very reduced levels, MNO’s core network departments are struggling to justify the network investment required to upgrade from SMS to RCS.

According to GSMA, SMS remains the world’s largest messaging platform with 4 billion monthly active users (MAU) and 2 trillion messages exchanged in 2017, and the SMS-based business to consumer (B2C) market is worth USD $60 billion. In contrast, WhatsApp and Facebook Messenger have around 1.5 billion MAU each—a number of users that RCS is expected to reach by the end of 2019[i].

Messaging Apps by Monthly Active Users

SMS: The Largest Global Messaging Platform – Source: GSMA, 1Q2018
 

With conversational and group messaging, picture sharing, audio and video, rich cards, and delivery and read receipts—among other features—RCS turns the smartphone into the kind of digital billboard that is coveted by brands. Because RCS provides a seamless evolution—with SMS/MMS fallback—those 4 billion SMS users can be converted over time by updating the software on their devices or gradually with the device renewal cycle. Similar to the transition from black and white to color television—or from plain-text to HTML-based email—eventually, all mobile users will be RCS enabled! This represents an unfragmented mobile ecosystem that is very attractive to brands due to its reliability, security and reach, and opens up a massive B2C messaging market, estimated around USD $125 billion by GSMA.

RCS and MaaP Revenue Potential

Led by this B2C revenue potential, within MNOs, the departments responsible for A2P revenue are pushing for the deployment of RCS services into their networks but are experiencing resistance from organizational structures where the core network investments were normally under the consumer/P2P business unit. As a result, some MNOs have looked at outsourcing their RCS service to a third party in the cloud that lures their core network teams with the promise of free P2P traffic—which will allow them to reduce the implementation costs—but at the expense of losing control over the subscriber ownership and possibly yielding a significant chunk of their A2P/P2A revenue.

Why Outsource Mobile Messaging?

With Samsung implementing RCS in their built-in messaging application and Android 8.0 Oreo integrating the RCS enabled Android Messaging, a large number of Android devices sold in 2018 are already RCS enabled. Manufacturers can also update older devices ‘over-the-air’ as part of their regular update cycles. So with the exception of iPhones, the device ecosystem is starting to be ready and in compliance with the GSMA Universal Profile (UP). But upgrading a network to include all the elements required to provide an RCS service requires planning and investment presenting MNOs with a tough decision.

Some third parties have taken advantage of this challenge and have built cloud-based solutions that represent a complete outsourcing of the RCS messaging service, which is offered to MNOs as an over-the-top (OTT) solution in which the RCS messaging service provider retains control of the relationship with the brands and aggregators.

Benefits of outsourcing RCS messaging include:

  • Faster initial rollout — compared to in-network solutions.
  • Free P2P messaging — most RCS OTT service providers include P2P messaging at no additional cost per user and the RCS messaging content will still be carried by the MNO data network.
  • Free P2P interconnect for RCS users in the OTT provider’s hub — messages sent to an MNO that is not part of the RCS OTT service provider’s hub will need to be terminated by the MNO themselves—by direct peering to other MNOs per IR.90 specifications—or by means of a messaging hub or interconnection service provider.

But the OTT RCS Service providers are still in the business of making money and will try to obtain profit in multiple ways such as:

  • Harvesting of metadata — The RCS OTT provider harvests the messaging conversation for keywords, trends and metadata to sell to brands for advertising purposes.
  • Share of the B2C traffic — The RCS OTT provider retains a significant percentage of the revenue generated by businesses’ A2P/P2A traffic

Is Outsourcing Mobile Messaging Worth it?

Outsourcing your mobile messaging means yielding the control of the end-to-end messaging value chain to the third party, as a result, the third party has the last word over the service behavior, reliability and evolution. As a result, an MNO that outsources its mobile messaging faces the following disadvantages:

  • Lose control of the user-brand relationship — the OTT RCS provider is now the entry point for brands and aggregators.
  • Lose control of the end-to-end security — once the RCS traffic reaches the OTT provider, the MNO has no control about what is done to the user conversations and metadata resulting in security questions and data privacy.
  • Lose the “clean channel” guarantee to brands —The MNO is perceived as a clean channel subject to more regulations and guarantees, vs OTT RCS provider.
  • Lose ability to control spam and A2P gray routes — the MNO will be depending on the OTT RCS provider to control the delivery of unwanted or fraudulent messages to the end users.
  • Lose B2C revenue — an MNO yielding a part of the B2C revenue in exchange for RCS deployment savings will lower costs on the short term, but on the long term it may be forfeiting a large amount of income.
  • Lose differentiation — the third party controls a big part of the ecosystem and delivers the same cookie-cutter solution to all the MNOs.
  • Regulatory risks — depending on the third party’s network architecture and geographical dispersity, as well as data storage and retention policies, it may be complicated to guarantee compliance with data privacy and protection regulations or lawful interception requirements.

How Can MNO’s Monetize RCS?

By leveraging a cloud-based RCS interconnect hub and messaging-as-a-platform (MaaP) deployment, MNOs can serve as an efficient means of deploying secure, advanced RCS communications. This would allow MNOs to capitalize on monetization options, without the complexity or cost associated with large-scale network infrastructure projects. 

A platform such as this would provide the freedom MNOs need to select architecture, fallback scenarios, chatbot frameworks, or any number of other options on their own terms. Time to market for RCS services would be significantly reduced, and CSPs would remain in control of their messaging ecosystem, along with the customer data they own, handle and manage.

Mavenir’s RCS Business Messaging solutions allow MNOs to protect their growing A2P revenue by providing a fast and simple approach to implement RCS messaging into the wireless network, from the cloud, with full compatibility with GSMA Universal Profile, and with an option to migrate to an in-network CAPEX model in the future once the RCS Business Messaging business model matures.


[i] GSMA

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Guillaume Le Mener
Guillaume Le Mener
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Guillaume Le Mener

Guillaume is GM, Enterprise Solutions where he leads the global rollout of Mavenir’s mobile native UCaaS solutions.

Previously, Guillaume was responsible for Corporate Development and Global Marketing. Prior to that, he served as the Senior Director of Business Development and Global Product Marketing for Netscout (formerly Tektronix, a Danaher company) and with InfoVista where he held various roles including Presales Director for EMEA and NA, and Product Management and Product Marketing Director.