Disruptive innovation championed by over-the-top (OTT) service providers shook the traditional revenue model of mobile operators, and the struggle is well-documented. According to ABI Research’s mobile carrier revenue and profit market data, operators’ messaging service revenue is expected to continue its downward trend, decreasing at an annual rate of 7.8% until 2021. ABI Research looks at Google’s latest effort to promote rich communication services (RCS) as a strategy for mobile network operators to defend their messaging revenue.
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Google Launches Android Messages
Google renewed its effort to push rich communication services (RCS) to be the next SMS and MMS protocol before Mobile World Congress 2017. The company introduced Android Messages, an Android app that will support traditional SMS and MMS, as well as group chats, higher quality images, location sharing, video calls, and a host of third-party applications.
Google’s effort is based upon its acquisition of Jibe Mobile in September 2015. Founded in 2006, Jibe Mobile’s RCS solution delivers an end-to-end platform for mobile network operators (MNOs) to enable them to launch their own RCS services. Prior to the acquisition, Google has been promoting the adoption of the RCS chief alternative, WebRTC, in an aggressive manner. However, Google Hangouts, Google’s very own WebRTC platform, has not been popular among users and is currently replaced by Google Allo and Google Duo with integrated virtual assistance. The launch of Android Messages provides certain confirmation on the value of RCS as a revenue generating tool. Through the introduction of Android Messages, Google is using a four-pronged approach to maintain its relevancy in the messaging app market.
Haven't We Been Here Before?
RCS is not a new concept; GSMA released the first set of RCS standards back in April 2013. That had little impact on the dominance of OTT apps, such as Facebook Messenger, WhatsApp, WeChat, and Line, which led the market with a slew of exciting features. Fast forward to 2017, while the latest version of RCS, RCS 6.0, was released in March 2016 with group chat and file transfer capabilities, WeChat is on its path to evolve into a “super app” that combines instant messaging, video call, social posting, gaming, payment, and corporate communication tools all into one single platform. Facebook Messenger, on the other hand, introduced Facebook M, an artificial intelligence platform that incorporates various bot functions.
During Mobile World Congress 2016, Google announced strategic alignment for the development of RCS with 16 MNOs. The announcement stirred up some debates within the industry, as MNOs finally seemed to achieve a consensus to push for global RCS adoption. Now, 12 months into the announcement, only a handful of major operators voiced their support for Android Messages in 2017. There is no doubt that a list that features Deutsche Telekom, Globe, Rogers, Orange, Sprint, Telenor, and Vodafone are impressive, but the urgency of other operators is severely lacking.
In addition, out of the 20 smartphone vendors that pledged their support to preload Android Messages, Samsung and Apple are the two most glaring omissions. Apple, as usual, will not be supporting RCS and will continue to enhance its own proprietary communication services, iMessage, while Samsung has been rumored to be developing its own virtual assistance platform, which will likely share similarity to Facebook M and its integration with Facebook Messenger. ABI Research believes the omission of Samsung, which commands the largest market share in both the budget and premium segment of Android smartphones, definitely hurts RCS adoption.
Going Beyond Messaging and Video Calling
Nonetheless, ABI Research still believes that MNOs have to defend whatever ground that they have left in the declining messaging business.With the rich communication format provided by the RCS solution, MNOs can still provide excellent services for some vertical markets, especially in application-to-person messaging (A2P) and in potential applications in other verticals, such as mission critical, utilities, hospitality, games, and events. The basic requirement for the deployment of the full RCS suite lies within the deployment of IMS, which was a challenge few years ago when MNOs were less keen to adopt IMS. Now, with the proliferation of VoLTE, IMS deployment is no longer an inhibitor.
To better engage the business community, Google additionally introduced an early access program that will allow businesses to learn and build with the technology. To date, several companies signed up. Virgin Trains, Walgreens, IHG, Time Inc., and Uber are participating in the program, exploring the possibility of integration of appointment scheduling, prescription refilling, ticket booking, and the ability to read receipts or get directions. Google is certainly trying hard to grow its influence in the messaging market. With the success of the Android platform, coupled with the sense of urgency from MNOs, the company might be able to finally move the needle.