Rich communications services, or RCS, are flooding messaging, with early adopters of the side of the brand including the NBA's Sacramento Kings, Virgin Trains in the UK, and French football club Paris St.-Germain.
At the same time, over-the-top (OTT) providers are starting to roll out similar business services. Whatsapp has WhatsApp Business And Apple has Apple Business Chat, for example. In RCS alone, Juniper Research predicts the market will exceed $9 billion by 2022, so it's not hard to see why OTT providers are seeing business messaging as a prize worth pursuing.
Like RCS, OTT offerings promise an app-like user experience that's far more immersive than what's available via SMS. However, four key differences set them apart.
1. Cover -
Today, OTT providers have excellent coverage. WhatsApp, for example, claims 1.5 billion monthly active consumer users. RCS usage is relatively small by comparison, but it is growing rapidly with the support of Google; Microsoft; Samsung and other OEMs; mobile operators; communication-as-a-service platform providers; and messaging service providers. RCS will be a native feature on all phones and networks that support it, meaning subscribers won't need to download an app.
Approximately 60 mobile operators in 45 countries have adopted GSMA Messaging-as-a-Platform (MaaP) features and universal profiles within their networks, enabling RCS. Importantly, MaaP not only creates the foundation for RCS interoperability, but also enables chatbot- or artificial intelligence (AI)-based services for offerings such as personal banking and money transfers within an RCS session.
At the operating system level, Android and Microsoft support RCS. According to the latest IDC data, Android accounts 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 of nearly all new Android devices, a global installed base of around five billion.
Notably, Apple has yet to come on board, but it is rumored to be in discussion with Google, the GSMA, etc. Meanwhile, any RCS message sent to an iOS phone is replaced with an SMS message.
2. Personalization:
When interacting with businesses, consumers no longer accept a one-way dialogue, such as checking a bank balance via text. Instead, they now expect to be able to interact with businesses, whenever needed, on the platform of their choice via a two-way conversation.
The ability to deliver this interaction, in a personalized way, where and on what platform the consumer wants, is increasingly critical to business success.
To give that extra context, at a recent GSMA RCS workshop in London, a Google spokesperson predicted that over the next five years, $800 billion will move from enterprise 85% to the remaining 15% to achieve proper personalization.
Businesses are responding. Recent research from Adobe shows that European brands are investing in artificial intelligence to offer more personalized experiences to consumers; 89% of respondents said they see personalization as a key to success.
RCS and chat apps are designed to directly address personalization. These new, rich business messaging channels, when combined with well-designed customer profiling and artificial intelligence systems, offer brands the opportunity to achieve a much more natural way to interact and share rich information with their consumers.
3. Personal data and trust:
Consumer trust is crucial to the operation of any online service. Companies like WhatsApp and Facebook base their business models on monetizing user data, enabling targeted advertising. The same is not true for mobile operators. While they can analyze and aggregate user data to inform marketing decisions, they do not sell it for advertising purposes.
The General Data Protection Regulation in Europe, as well as the patchwork of industry-specific privacy regulations in the United States, have increased consumer awareness of the use of their personal data, placing transparency and informed consent as key principles in its use.
And for companies to be compliant, messaging network traffic and data cannot be routed through countries outside of regulatory jurisdiction. Compliance must be assessed at every stage of the journey.
4. Prices: direct or indirect? -
Point four is directly related to point three. OTTs take a mixed approach to monetizing their services by extracting value from user data and charging companies for its use.
WhatsApp's approach is a prime example. Businesses can respond to customer messages free of charge for up to 24 hours, but are charged a flat rate per country and per message for subsequent communications. They are also charged when they initiate communications.
RCS, on the other hand, doesn't extract any value from user data. Like SMS, it's billed by the carrier to the company (often through an aggregator). Unlike SMS, the payload per message is much higher (images, audio, video, etc.). While RCS is relatively new and players are studying how to charge it fairly, a likely model will involve a per-transaction fee combined with a per-session fee to support more interactive use cases. With buy-in from everyone in the value chain, it's expected to be priced between $10% and $15% higher than SMS.
Overall, the real advantage of RCS is that it is, in many ways, an open standard supported by a complex ecosystem that is both cooperative and competitive. Ultimately, this will increase the availability of features to consumers and enable companies to bring the next level of engagement to customer interactions.
It also means that RCS has the same important guarantees as SMS. These include guaranteed message delivery, a secure connection, zero-latency, regulatory compliance, and more.
With RCS
Messaging experiences can be customized, branded, and built using an evolving toolkit of features, and, in an improvement over SMS, the sender is verified. Chat app providers, on the other hand, operate within a walled garden where the messaging experience looks and feels like the app owner's. This might be fine for small businesses that are happy to prioritize function over form, but larger enterprises are likely to require the more sophisticated options offered by RCS.
