Can Operators Make Money from RCS?

By June 13, 2014blog

By Gil Shapira, VP Business Development

RCS allows operators the opportunity to replace the fragmented user experience created by competing OTT messaging applications and provide users with a single, standard service/application for VoIP features, video sharing, video calling, instant messaging, image and file transfer, and geo-location sharing all from one application at a high QoS.

Until recently, it has had limited success and a disappointing uptake, especially when compared with leading OTTs. Driven by GSMA3GPP andOMA standards announced back in 2008 – RCS has not been adopted at the same pace as other innovations in the mobile apps arena. As a latecomer it has followed in the tracks of disruptive free OTT VoIP, Video and other messaging apps that eroded operators’ traditional revenue models. With so many free alternatives, subscribers were simply not willing to pay for such basic messaging services.

Operators have been forced to offer their RCS services as a free alternative in the hope it will compete with OTT services, but things are beginning to change.

With the recent launch of RCS-enabled handsets more operators are now launching Joyn and RCS 5.1 services, which may finally give RCS some momentum and a chance at achieving success. It is still unclear if it will succeed in becoming the de-facto standard which runs on all devices.

My view is that RCS will not change the OTT landscape. The competition has a huge head start, massive subscriber base and an innovative track record. For RCS to survive over time and make up ground on OTTs, it must be  turned into a revenue generator. Only then will operators be encouraged  to push it forward. .

So how will operators be able to cash-in on RCS? If they offer it as a basic free offering, they can monetize RCS by:

  • Personalizing communications while upselling virtual goods
  • Monetizing APIs by allowing developers, content providers and enterprises access to the RCS community
  • Reselling BI and analytics of user behavior (as long as it’s controlled and accepted by end users)
  • Offering higher QoS and SLA at an additional charge
  • Creating RCS offerings for Enterprise customers which are willing to pay for tailored solutions

To compete in today’s market operators have to shorten the innovation cycle and deploy new features in cycles of months, not years. Can they do it? I’m not sure.

The stakes are high and having RCS pre-installed in handsets is going to change the landscape dramatically

Who will win this messaging battle…the OTT players? …Operator’s RCS services? Or are we facing an even more fragmented messaging market. With major US carriers launching RCS this year we can be sure on one thing, 2014 has been an exciting year so far!

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