SMS isn’t rich enough for consumers and OTT chat apps aren’t ubiquitous enough for enterprises. Florian Steps, VP Business Development & Monetization at email and messaging company, Open-Xchange, thinks the answer is hiding in plain site – email.
Nobody needs to be told how omnipresent smartphone use has become. Chances are, if you aren’t actually reading this on your mobile, the device is just an arm’s stretch away. It’s unsurprising then that one of smartphones’ key functions, messaging, has been a key battleground for network and service providers throughout the 2010s. And there’s no indication that this is likely to end any time soon.
For mobile network operators (MNOs), messaging represents a key revenue stream. Yet as we enter 2020, a huge proportion of consumers are choosing cloud-based instant messaging applications over mobile network services like SMS. However, with 3 billion messaging users projected by 2022, the battle is far from over – but MNOs will need to re-think their offerings if they are to reclaim ground.
A (very) short history of messaging
Towards the beginning of the decade, in 2012, 7.7 trillion SMS messages were sent worldwide. However, within just a few years, MNOs were toppled by the rapid growth of Whatsapp – which began delivering 50% more messages each day than SMS in 2015.
Today, there are more instant messaging apps than you can count. From iMessage to Facebook Messenger, Telegram, Signal and Slack, “over-the-top” (OTT) services have seen SMS fall rapidly out of favour in many regions – ultimately leading to a massive loss of revenue for MNOs.
However, what instant messaging apps lack is ubiquity – i.e. the ability to function across devices without the user also downloading that specific app. Consequently, their business models are built around enticing new users and then making it incredibly difficult for them to leave.
Rich Communication Services (RCS)
When compared to the feature-rich experience of instant messaging clients, it’s easy to see why consumers have moved away from SMS – especially when you consider its imposed character limits and network charges.
When compared to the feature-rich experience of instant messaging clients, it’s easy to see why consumers have moved away from SMS – especially when you consider its imposed character limits and network charges. In order to combat this, MNOs looked to utilise and promote a new mobile network communication protocol called Rich Communication Services (RCS).
For a long time, RCS – which was recently rolled out by Google to its Android customers in the US – has been billed as a replacement for SMS. It offers the cross-device flexibility of SMS, but with a much richer user experience, supporting longer messages, read receipts, multimedia, e-ticketing and payments. On paper, it sounds like an excellent new tool in the battle against OTT services.
However, unlike services like iMessage and WhatsApp, RCS doesn’t support end-to-end encryption, which has drawn some criticism from cybersecurity experts. Furthermore, poorly implemented RCS has previously led to vulnerabilities that can compromise user data and privacy. Consequently, a lot of people are sceptical about RCS – and the speed at which it has been rolled out since 2010 has certainly done the protocol no favours.
What about email?
It might sound odd to bring up email in a discussion about aging messaging protocols, but email is far from obsolete. In fact, it’s thriving: there are 3.9 billion email users worldwide and 98% of UK consumers own an email account.
Email offers the same cross-platform functionality as SMS, with users able to contact anybody else with an email address, regardless of the specific provider. Furthermore, by extending the capabilities of gg – a protocol that defines communication between mail servers and email clients – it’s possible to offer feature rich, low-latency chat built on free, open and secure software.
For MNOs, this represents a new open standard for messaging, that could open up new revenue streams through monetisation.
Monetising email-based real-time chat
In practice, there are two major monetisation strategies whereby instant messaging could enable third party business models, with a combination of the two also possible.
The first option would be to integrate email-based instant messaging through a back-end monetisation strategy. Third parties could become part of servers enabled by the instant messaging application. This could then allow them to create a fully branded UI and establish their own monetisation flow. Ultimately, this enables users to be in multiple different branded environments but still able to contact each other.
Unfortunately for MNOs, SMS simply does not cut the mustard for consumers: the desire for free, feature-rich chat is simply too strong.
Another option would instead concern a front-end monetisation strategy. Examples of front-end integration with partners include real-time status updates from delivery services and airlines, restaurant bookings, and business process support. All of these would enable real-time, seamless communication between businesses and their end-users, with all the advantages of OTT messaging – timestamps, rich media, group messages.
Messaging in 2020 and beyond
Unfortunately for MNOs, SMS simply does not cut the mustard for consumers: the desire for free, feature-rich chat is simply too strong. At the same time, security risks could prove devastating for RCS – particularly at a time where consumers appear to care more about data privacy than user experience.
As we move into a new decade, instant messaging apps may be the flavour of the month, but the sheer number of competing services can be frustrating – and none can offer interoperability and cross-platform functionality.
MNOs would now be wise to turn their attention to real-time chat over email, which – with the right monetisation strategies – could prove a valuable tool in the ongoing battle for messaging supremacy.
Florian Steps, VP Business Development & Monetization, Open-Xchange