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RCS ready to deliver on the promise for mobile operators

February 24, 2021

Jonathan Kriegel

CEO

By embedding the rich communication service (RCS) protocol into its default messaging app for all Android devices last November, Google may have quietly laid the foundation for a revolution in mobile marketing techniques. And this may have profound implications for digital advertisers and merchants as well as for mobile network operators (MNOs).

Most mobile phone users may not even notice the difference. When they send an SMS using the Google Messages app, it will automatically use RCS as long as it has a data connection (and revert to SMS if not). But what they will notice is the ability to send and receive pictures and images, engage in group chats and start a video call from within the conversation interface, much like the features available on over the top (OTT) apps such as WhatsApp, Facebook Messenger and WeChat.

The Universal Profile designed to ensure RCS interoperability between different mobile networks, handsets and software clients has gained wide support. The GSMA reported there had been 90 launches of RCS services in 60 countries worldwide, including the four US carriers under the Cross Carrier Messaging Initiative (CCMI) designed to be compatible with the Universal Profile.

Elsewhere Microsoft introduced RCS support into its Microsoft Your Phone app in early 2020, allowing users to send and receive RCS messages on their Windows 10 desktop or laptop PC. And Google has also inked a deal with Samsung that allows RCS features to work seamlessly between the Google Messages and the equivalent Samsung Messages app provided by default with the Korean manufacturer’s smartphones.

That collective momentum is expected to drive rapid growth in the volume of RCS messages being sent. A study from Juniper Research published in January predicts the global number of people using RCS messaging will reach 3.9bn by 2025, up from 1.2bn in 2020. In its RCS Messaging: Emerging Opportunities, Monetisation Strategies & Market Forecasts 2020-2025 report Juniper also calculates that over 40% of mobile subscribers will operate on networks supporting RCS 2025, up from 15% in 2020.

Operator support crucial to B2C engagement

With RCS onboard, MNOs now have next-generation IP-enabled multimedia message platforms which will supersede legacy SMS and compete on a more even footing with OTT messaging apps. At the same time, Android devices get something akin to Apple’s iMessage for a device to device communication.

But operator-led (rather than app to app) RCS services offer additional capabilities which are much more useful for online merchants and advertisers looking to improve their engagement with customers using smartphones. Validation features provided through MSISDN (Mobile Station International Subscriber Directory Number) can authenticate users and route traffic, which helps operators and merchants deploy user tracking to combat fraud and better support secure customer communication mobile payments for digital goods and services.

The GSMA has highlighted RCS Business Messaging as a significant opportunity for MNOs now able to offer new capabilities such as AI, chatbots and in-chat searches and establish revenue shares with brands and merchants. Juniper also estimates that RCS business messaging will grow from 160m messages in 2020 to 415bn messages by 2025, expanding by around 2,500% in the process. And one driver for that growth will come from communications platform as a service (CPaaS) services that allow any organisation to add voice, video, and messaging into their apps without building a real-time communications stack.

Live Nation boosts AR/VR streaming capabilities

Virtual concerts have almost certainly benefitted from the confinement of millions of young people to their houses during the COVID-19 pandemic. Existing events have been cancelled, and physical venues are likely to remain closed and limited to reduced capacity as long as social distancing measures remain in place.

That has led music and events management companies to advance their AR/VR capabilities during the lockdown. Live Nation Entertainment (formed from the US$400m merger of Live Nation and Ticketmaster in 2018) teamed with Citi and VR specialist NextVR to broadcast dozens of VR concerts last year, including sets by Slash and Little Steven. The company is also estimated to have live-streamed more than 600 concerts online, an experience that stood it in good stead to fill in for the absence of live music events in the first half of 2020.

Live Nation built on that capability with the launch of an AR/VR enhanced live streaming product which allows participants to participate interactively rather than simply watch and listen to the performance. Fans can change camera locations and angles, for example, and rotate their views to see social media friends in the virtual audience. In some cases, they even have exclusive access to backstage footage.

VR/AR was developed initially as a way to supplement the live concert experience or accommodate fans that could not physically fit into sold-out venues – but it could increasingly take centre stage itself. Live Nation recently cancelled all drive-in concerts due to ongoing local coronavirus lockdown fears and opportunities to put on other forms of live venue performances could be similarly restricted well into the future.

A recent poll by theUS Consumer Technology Associationfound that consumers’ most popular suggestions for VR content alongside sports and exercise were for concerts. The heightened interest has prompted large tech companies to sit up and take notice of the opportunity too, with Apple reportedly paying US$100m to snap up NextVR in April, despite there being another year left on its five-year partnership deal with Live Nation. The addition of NextVR technology gives Apple the option to convert its Apple TV+ content into VR format but also presents a ready-made route into live VR broadcasting that aligns well with its Apple Music streaming service.

Elsewhere specialist company’s like MelodyVR (owned by EVR Holdings) have emerged to begin offering live streaming via paid-for virtual tickets. The company has designed specific camera and special effects solutions for the task and signed VR distribution licenses with major labels like Universal Music Group, Sony Music Entertainment, Warner Music Group and Beggars Group. Having recently seen an estimated 132k fans from 34 countries attend its virtual Wireless Connect event, MelodyVR is now working with Live Nation UK to launch a new 360-degree VR gig experience called Live From the O2 Academy Brixton. Each individual concert will be accessible by anyone with a smartphone or Oculus VR device, with Ticketmaster taking the role of exclusive ticketing agent for online sales.

Horizontal integration of online ticketing is potentially big business for Live Nation’s Ticketmaster subsidiary, particularly if the company can make it easy for concert-goers and music fans to quickly purchase tickets using the devices they use to attend them. That includes extending payment methods to younger people more open to digital VR experiences. This demographic is less likely to own credit or debit cards, with direct carrier billing (DCB) integration offering a simple way to pay by adding fees to the buyer’s mobile phone bill for example. For musicians and events companies without the requisite billing expertise or infrastructure, third-party payment providers like us can help with the necessary integration and global reach via existing relationships with multiple mobile operators, while handling local data protection and compliance with the regulation governing the use of consumer data in different countries.

Advertising offers early revenue opportunity for operators

The RCS journey is likely to start with advertising before moving into more complex engagements with customers’ smartphone-based messaging apps. A recent report – – RCS: The game-changer the industry has been waiting for – published by Mobilesquared in association with Out There Media calculates how RCS based advertising will deliver much better returns for brands compared with digital banners typically embedded in search engines and social media.

Indeed, the protocol offers multiple advantages over SMS, which smart advertisers can exploit. That includes merchants’ potential to consolidate various digital advertising channels into one supercharged smartphone content delivery stream. Whereas now they might use separate email, social media, instant messaging and automated agents and voice systems to engage with customers, RCS can integrate most of the same functions within a single interface.

RCS also allows customisable branding within the interface, the opportunity for merchants to add their own logos and colour schemes and track user engagements such as video exit rates and button clicks.

Conversational commerce takes over

As RCS message volumes increase and companies become more familiar with the protocol’s capabilities, they will rely increasingly on “conversational commerce” – the intersection of messaging apps and shopping that allows businesses to interact with their customers via human agents chatbots or a mixture of both. RCS can support automated customer service platforms which allow buyers to make purchases without leaving the messaging interface, with embedded file transfer capabilities enabling order confirmations, shipping and delivery details sent using the same medium.

DOCOMO Digital CEO Jonathan Kriegel has also outlined the potential to embed mobile payment capabilities directly into the RCS interface via direct carrier billing in a blog last year. Integration with electronic wallets (eWallets) and card on file tools offer alternative mechanisms which make embedded mobile payments for goods and services fast and easy.
RCS-enabled location and presence offer great potential for transportation companies, much like Facebook Messenger, which allows its users to order an Uber driver without leaving the app. Other examples could include the purchase and issue of tickets and boarding pass within the RCS messaging interface, plus the ability to send live updates about upcoming trips, airline boarding passes and seat/meal selections.

Mobilesquared estimates that global spend on RCS could generate US$1.5bn for operators in 2022, initially as brands switch advertising from SMS. That will grow to US$11bn by 2024 as companies being to incorporate person-to-application (P2A) customer care into their RCS delivery and eventually replace call centre voice solutions with RCA chatbots. Overall, estimates Mobilesquared, RCS revenue for mobile operators will exceed US$52bn by 2028.

A lot has to happen before those sort of numbers can be realised, but the current momentum behind RCS messaging suggests the opportunity is finally there for progressive mobile carriers.


[1]Helping you connect around the world with Messages, Google, 19th November 2020