Finally, the four main service providers in the US appear to be getting serious about business messaging. RCS-based business messaging enables operators to offer rich features (e.g. status, typing indicators, group messaging, file-sharing, cards, and carousels), and positions service providers to expand beyond the current global $16 Billion A2P messaging market.
On 24th October 2019 US service providers AT&T, Sprint, T-Mobile and Verizon announced the creation of a joint venture, called the Cross Carrier Messaging Initiative (CCMI), to deliver advanced OTT-like messaging services based on the GSMA’s RCS standard. The initiative aims to deploy an interoperable messaging service on Android devices next year (2020) which includes interoperability with Google’s Android Messages. Notably, CCMI is an alternative ecosystem to Google’s RCS Business Messaging, with the former controlled by the service providers.
As I highlighted in our June 2019 report, “Mobile Operators Must Accelerate RCS Deployments Or Risk $16 B A2P Messaging Revenue,” the opportunity for RCS in the consumer messaging domain is likely to be limited given the popularity of OTT services like WhatsApp, Facebook, and iMessage. As a consequence many service providers that have launched consumer RCS services have struggled to gain traction. In contrast, carrier messaging (e.g. SMS) provides universal reach and is trusted by businesses for reminders, alerts, two-factor authentication, and other uses. Importantly, RCS business messaging will have the potential for operator messaging to provide a rich channel to enable consumers to communicate with brands (e.g. customer service queries), make bookings, reservations, and appointments, or make transactions among others. These new use-cases for carrier messaging have monetization potential.
While I believe the creation of CCMI is a positive move for service providers, major challenges and uncertainties continue to remain:
- Service provides face stiff competition from the business messaging services of WhatsApp, Facebook and Apple. These providers have launched business messaging as a route to monetizing their free-to-use consumer messaging services. Can service providers move fast enough on RCS business messaging to compete?
- Apple continues to not support RCS on iOS. That remains a problem because a high proportion of US smartphone owners use iPhones. Will working as group provide US service providers with the necessary clout to demand Apple support RCS on future versions of iOS?
- How will consumers and businesses perceive CCMI vis-à-vis OTT as a customer engagement channel and how does this vary by country and industry sector? Previous Strategy Analytics’ research has identified smartphone owners in India prefer alerts and notifications delivered via carrier messaging more than OTT messaging apps, particularly for receiving trusted alerts and notification from banks.
- Is the cross carrier collaboration sustainable? The history of the mobile industry is littered with the failure of cross carrier initiatives, with Softcard (formerly ISIS) the most notable example. There are more grounds for optimism with RCS, since messaging is in the wheelhouse of service providers. However, diverging approaches and agenda between AT&T, Sprint and T-Mobile, Verizon still has potential to derail progress.
- Will other service providers in other countries follow the US carrier decision to launch their own RCS business messaging ecosystems, or will they decide to partner with Google or alternative platforms from Samsung? Working together will enhance interoperability challenges and reduce potential fragmentation, but importantly puts the business model in the control of the service provider.