Rich communication services, or RCS, messaging is taking hold, with brand-side early adopters including the NBA’s Sacramento Kings, Virgin Trains in the U.K., and French football team Paris St.-Germain.
Just like RCS, the OTT offerings promise an app-like user experience that’s altogether more engaging than is available via SMS. However, four key differences set them apart.
1. Coverage -- Today, OTT providers have great coverage. WhatsApp, for example, claims 1.5 billion monthly active consumer users. RCS usage by comparison is relatively small, but is growing rapidly with support from Google; Microsoft; Samsung and other OEMs; mobile operators; communications platform-as-a-service providers; and messaging service providers. RCS will be a native feature on all handsets and networks supporting it -- i.e., subscribers won’t need to download an app.
Approximately
60 mobile operators in 45 countries have adopted the
GSMA’s Messaging-as-a-Platform (MaaP) and
Universal Profile specifications within their networks, so that RCS is enabled. Importantly, MaaP not only creates the foundation for RCS interoperability, but also makes chatbot or artificial intelligence (AI)-based services for offerings like personal banking and money transfer possible in an RCS session.
At the OS level, Android and Microsoft support RCS. According to the
latest IDC figures, Android has 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.
Notably, Apple is yet to get on board, but is said to be in discussion with Google, the GSMA, etc. In the meantime, any RCS message sent to an iOS handset is replaced with an SMS message.
2. Personalization -- When interacting with enterprises, consumers no longer accept a one-way dialogue -- requesting a bank balance via text for example. Rather, today they expect to be able to interact with enterprises, in the moment of need, on the platform of their choice via a two-way conversation.
The ability to provide that interaction, in a personalized way, where and on what platform the consumer wants, is increasingly critical to business success.
To give that more context, at a recent GSMA RCS lab in London, a Google spokesperson predicted that over the next five years, $800 billion will shift away from 85% of companies to the remaining 15% that get personalization right.
Enterprises are responding. Recent
Adobe research shows that European brands are investing in AI to deliver more personalized experiences to consumers; 89% of respondents said they see personalization as a key to success.
Both RCS and chat apps are designed to meet personalization head-on. These new rich business messaging channels, when combined with well-designed customer profiling and AI systems, offer brands an opportunity to achieve a much more natural way to engage and share rich information with their consumers.
3. Personal Data and Trust -- Consumer trust is vital to operating any kind of online service. Companies like WhatsApp and Facebook base their commercial models on monetizing user data, enabling targeted advertising. The same isn’t true for mobile operators. While they can analyze and aggregate user data to inform marketing decisions, they don’t sell it for advertising purposes.
The General Data Protection Regulation in Europe, as well as the patchwork of sector-specific privacy regulations in the U.S., have heightened consumer sensitivity to the use of their personal data, placing transparency and informed consent as key principals in its use.
And for enterprises to be compliant, messaging network traffic and data can’t be routed via countries outside regulatory jurisdiction. Compliance needs to be examined at every stage of the journey.
4. Pricing -- Direct or Indirect? -- Point four is directly related to point three. OTTs take a blended approach to monetizing their services by extracting value from user data and charging businesses for use.
WhatsApp’s approach is a case in point. Businesses can respond to messages from customers at no charge for up to 24 hours, but are charged a fixed rate by country and per message for communications sent after that. They’re also charged when they initiate the communications.
RCS, on the other hand, extracts no value from user data. Like SMS, it’s charged by the carrier to the enterprise (often via an aggregator). Unlike SMS, the payload per message is much higher (images, audio, videos, etc.). While RCS is relatively new and players are ironing out how to charge for it fairly, a likely model will entail a per-transaction charge supplemented with a per-session fee to support more interactive use cases. With buy-in from all in the value chain, a price point between 10% and 15% more expensive than SMS is anticipated.
Overall, the real benefit of RCS is that in many respects it’s an open standard supported by a complex ecosystem, which is simultaneously cooperative and competitive. Ultimately this will boost feature availability for consumers and enable enterprises to bring the next level of engagement to customer interactions.
It also means that RCS comes with the same important guarantees as SMS. That is, guaranteed message delivery, a secure connection, low to zero latency, regulatory compliance, and more.
With RCS, the messaging experiences can be customized, branded, and built using an evolving toolkit of features and, in what is an improvement over SMS, the sender is verified. Chat app providers, on the other hand, operate from within a walled garden where the messaging experience has the look and feel of the app owner. That may be OK for small businesses that are happy to prioritize function over form, but large enterprises are likely to require the more sophisticated options that RCS offers.
