Over-the-top (OTT) apps are now the primary channels for person-to-person (P2P) communication, while SMS remains the mainstay of enterprise app-to-person (A2P) messaging, which is effective because it is ubiquitous, secure, and the most trusted format by consumers.
"Companies will send 2.8 trillion A2P SMS by 2022 with a turnover of $ 26.6 billion".
Analyst firm, Mobilesquared.
At the same time, smartphone technology is facilitating new consumer usage patterns. In terms of P2P messaging, consumers have become accustomed to more immersive OTT chat app formats like Line, KakaoTalk, WeChat, and WhatsApp, which enable richer features such as file and image transfers and group chats.
Comparing these features to SMS, it's clear that there's a growing gap in user experience, fueling consumer demand for similarly richer experiences from the businesses and brands they interact with. As a result, in recent years, most OTTs have opened up support for businesses for A2P messaging, in addition to allowing people to chat with friends and family.
Being able to "chat" with a bank, for example, at a convenient time
Whether you're on a bus or waiting in a bar, it's becoming an expectation. Not only is this type of responsive customer communication highly valued by consumers, but it's also one of the key ways businesses can successfully differentiate themselves in highly competitive industries like retail and banking.
However, unlike SMS, which is a native feature of every phone, chat apps require an installation. This means that companies must support an ever-growing number of messaging channels, which only reach a subset of their customer base since not everyone has downloaded all the chat apps.
Alternatively, a company could offer its own branded app as a container for customer service functions—an expensive option that, in our experience, has met with limited success. Why would a consumer download a business app that's only used once or twice a year? As a result, many customer relationships aren't adequately supported by OTT messaging environments or enterprise applications. How can companies meet this demand?
For some time now, messaging and telephony service providers have been touting the arrival of RCS messaging. Billed as the next-generation messaging protocol—SMS 2.0—RCS is endorsed by the GSMA, GoogleAndroid phone manufacturers like Samsung and mobile carriers worldwide. It combines an OTT app-like experience with the potential ubiquity of SMS, allowing all the advanced features like images, QR codes, linked buttons, and chat to be used in a branded environment on the native phone.
There is evidence that the adoption of RCS It's accelerating. New statistics from Mobilesquared show that the Asian RCS market will grow from 472 million users in 2019 to 1.6 billion by 2023.
At the operating system level, Android and Microsoft support RCS. According to the latest IDC data, Android accounted for 851 TP3T of the 1.5 billion new smartphones shipped in 2018. Crucially, Android OEMs like Samsung, LG, and Huawei support RCS, so over the usual two-year smartphone renewal cycle, RCS will grow significantly as a native feature on nearly all new Android devices, representing an installed user base of approximately five billion globally.
Traders now need to invest
Bringing RCS to market has been a slow process. To date, the GSMA lists 75 mobile operators worldwide (including KDDI, NTT Docomo, KT, SK Telecom, and Globe Telecom in the APAC region) that have adopted its Messaging as a Platform (MaaP) specification and Universal Profile within their networks, enabling RCS. But there's still a way to go, as many mobile operators have yet to do so.
Of course, mobile operators have multiple priorities, not least the rollout of 5G, which is absolutely critical to reducing churn and competing for the new service revenues that 5G enables.
Part of the problem lies in the messaging ecosystem. To enable RCS, mobile operators must implement technology that supports both P2P and A2P messaging traffic. The vendor community for providing RCS infrastructure (with appropriate SLAs) both on-premises and as a service base is relatively small.
Going forward, other vendors are entering the space and, by providing turnkey solutions for operators, will help accelerate RCS adoption.
For mobile operators to take advantage of the next generation of business messaging, it is crucial to launch RCS and build a large user base that will encourage businesses to embrace this new channel. If mobile operators are slow to do this, much of the B2C messaging market currently based on SMS will move to OTT providers rather than remain with mobile operators. Furthermore, mobile operators would miss out on the growth that will be driven by the richer and more conversational forms of messaging supported by these new technologies.
Consumers are telling us they are more than ready for RCS
