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.
According to a recent study by research firm NPD, consumers are flocking to prepaid service rate plans that frequently offer the same devices and network speeds found on postpaid plans. This leaves wireless operators to compete for the same customers with rate plans that are squeezing the profit out of the industry. Combine this trend with declining messaging revenues, fueled by OTT players that offer free alternatives, and it becomes clear that the face of the wireless industry is changing.
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: