The GSMA paints a very bright future for Rich Communication Services (RCS), forecasting that it could be worth $74 billion by 2021. Similarly, former CEO of Jibe Mobile, and now Head of RCS at Google, Amir Sarhangi, predicts that RCS will have cannibalised 30% of A2P SMS traffic within three years.
Perhaps to be clearer, that should state that RCS will cannibalise 30% of white route A2P SMS traffic, as RCS will provide a secure ecosystem in which messages can be sent without the threat of grey route traffic undermining pricing models and disintermediating the mobile operators. In effect, RCS will provide a pure messaging environment where mobile operators remain an integral element of the value chain.
Undoubtedly, RCS represents the logical evolution of messaging for mobile operators. It delivers a richer and more immersive experience, not forgetting actionable analytics on a par with data provided by OTT messaging services.
However, mobile operators are notoriously slow when it comes to deploying new platforms and associated services. Not to mention the fact that A2P SMS actually functions pretty well today.
Research into the mobile operator view toward RCS, conducted by Mobilesquared on behalf of the Mobile Ecosystem Forum (MEF), reveals that two-thirds of mobile operators have or plan to invest in RCS over the next couple of years. Content sharing, branded experiences and 1-2-1 chat were the main mobile operator drivers.
What’s more, virtually every mobile operator with an RCS strategy will invest in Authentication APIs, and a significant percentage will also invest in Voice APIs. Around one-third of mobile operators are planning to invest in Chatbot APIs in the belief that they will better enable customer services and support, make shopping, purchasing and banking easier.
But not every mobile operator is convinced by RCS, citing a lack of RCS strategy, to a lack of understating in what RCS could deliver, not enough demand, and a lack of revenues.
The research also revealed that mobile operators expect average monthly wholesale revenues of US$624,457 within 12 months of deploying RCS, rising to US$835,870 per month within three years of deployment – a growth of 34%. To hit the predicted $74 billion revenue projection, mobile operators would, on average, need to be generating monthly revenues of $7.3 million (based on 850 mobile operators).
Clearly, the mobile operator-based revenue projections suggest a slower-than-expected commercialisation of RCS, which also indicates that RCS will have minimal impact on A2P SMS traffic and revenues in the short-term, but will start to erode white route revenues in the longer term when both A2P RCS and SMS will co-exist.