Free over-the-top (OTT) messaging apps with text, VoIP and even video features have made the traditional operator revenue model of paid messaging subscriptions, and even monthly voice minutes, obsolete. With continued smartphone growth and so many free alternatives available, subscriber expectations have changed and users are becoming less likely to pay for basic messaging services, eroding a multi-billion dollar revenue stream for mobile operators. These driving factors have forced operators to rethink their approach and created a push for Rich Communications Services (RCS) as a standard that will help mobile operators compete with OTT services. So far, the standard has seen limited uptake, and the value to operators is still in question.
Intrigued by the growing popularity of over-the-top (OTT) messaging services such as WhatsApp, Kik, and Line, I recently participated in an industry workshop to better understand how wireless operators are responding to these new offerings. At the center of the discussion was a focus on Rich Communication Services (RCS), a specification for the next generation of messaging offerings by operators. As the room full of experts discussed the finer points of RCS, a few key takeaways really stood out:
Consumer usage of mobile video calling is skyrocketing, thanks in part to the large displays, front-facing cameras, and 4G/LTE network speeds of today’s advanced smartphones. Free video calling services, such as Tango Mobile, are growing at a phenomenal rate, with 80 million active users and an additional 200,000 joining daily.
For years, mobile operators predicted that mobile video calling would be the ultimate app to drive data consumption on a mass-market scale. With that said, this recent surge in usage must be great news for operators, right? Yes and no. According to a recent article by The New York Times, while the rise of mobile video calling is creating new business models, it’s also creating new stresses on mobile networks.