How an RCS solution can help operators counter the threat of OTT players

In 2019 over 2.5 billion smartphone users were using Over The Top (OTT) messaging services – a number expected to pass 3 billion in 2022. Because of this, more and more enterprises are thinking about moving A2P SMS traffic to OTT. So, how can MNOs counter this threat? We caught up with Romain Deruffe, Global Solutions Director at Sinch, for some Q&A on how operators must act to protect A2P messaging revenues.

Q: Would you say the rise of OTT messaging poses a threat to operator revenue from traditional A2P messaging?

By now, talking about the threat of OTT players will sound like a broken record to some operators. It is, however, a real problem. From a demand point of view, end-users want richer content and more interactive ways of communicating. OTT players like WhatsApp and Viber have already captured a big chunk of the P2P market by allowing users to send enriched messages containing pictures, videos, location data, etc. Now, they’re allowing enterprises to use OTT channels to reach consumers which is a potential goldmine. So far, this business has been small compared to SMS A2P messaging, but it’s growing at a steady pace.

Operators that act now can hold onto existing revenues and grab new ones. If they do nothing, they risk losing out on both counts to OTT players and, at best, will only get paid for the data used to deliver those OTT messages.

Q: What is RCS, and how does it differ from standard SMS?

RCS stands for Rich Communication Services. To understand the difference between RCS and SMS, we first need to understand the differences between MMS (Multimedia Messaging Service) and SMS.

The main difference between SMS and MMS is that MMS allows rich content – pictures, videos, location, etc. MMS is all about multimedia messages, but rich messaging via RCS manages this in a much more interactive and engaging way.

RCS offers the ability to send a carousel of pictures that can function as a catalog and allows video to open up new opportunities and start conversations in new ways. RCS messages work with other elements of a smartphone, like a web browser, maps, and other apps, meeting user demands for a better and more seamless UX.

Q: How can an RCS solution help operators counter the threat from OTT players?

With RCS, operators can secure some of that rich messaging revenue. RCS offers a rich messaging experience with all the cool features from OTT channels. RCS also has a significant advantage over OTTs – messages are sent directly to the native inbox. No app downloads required; it’s already there waiting to offer a more organic and enriched experience. All the A2P messages customers receive today – bank notifications, delivery updates, etc. – will evolve seamlessly to RCS when it rolls out.

Another benefit of RCS is the built-in verification. If you, for example, receive a message from your bank via RCS, the message contains the bank logo and a verification badge – it can be trusted, which helps counteract SMS fraud.

Q: What are the next steps for RCS roll out?

Operators are becoming increasingly aware of the possibilities this powerful new channel offers their A2P business. They also know what’s at stake if they don’t launch RCS and fail to claim their share of the market. Operators have the advantage – they’re already part of the A2P SMS value chain between brands and their customers. RCS offers the opportunity to build on this existing traffic and, with the right RCS solution and partner, gain access to national and international brands looking to connect with subscribers on the operators’ network.

Many operators are now starting up internal RCS projects or are looking at RCS platforms, releasing RFPs. Some have even already launched their RCS service and published prices for A2P RCS messaging. How operators choose to move forward has proven to be very market dependent. In China, for example, RCS is included as part of the 5G roll-out and has been from the very beginning.

Q: What are the key success factors for a broader RCS rollout?

For early adopters of RCS, there are benefits in terms of infrastructure, security, knowledge, and of course revenue. The problem is that one operator alone will not drive enterprise adoption since enterprises will only reach that operator’s share of the market. Cross-carrier collaboration is essential for RCS to be successful. We can already see that countries enjoying the most success with RCS are those where operators are working together.

The coming years will be interesting. In some markets, all operators have launched RCS, and it’s doing well. Today, with 473 million active users the focus is on RCS enablement, and 2022 will likely be the year we see operators start to bring revenues in by connecting enterprises and customers with RCS.

Did you know that Sinch offers RCS solutions for different deployment scenarios including ‘RCS as a service’? Contact us if you want us to tell you more about our RCS offering. If you want to learn more about how you can seize the wholesale business opportunity for messaging in 5G? Download our guide!