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RCS Business Messaging and the Monetisation Problem
Based on the Rich Communications Services standard, RCS Business Messaging (RBM) it is set to be the global standard for consumers to interact with brands via their mobile devices.
Whilst apps like iMessage, Whatsapp and Wechat have taken a large market share and set a standard for rich messaging, SMS is still the channel used by businesses because it is built on a standard supported by all carriers and devices. If you have the phone number you can send an SMS. That level of ubiquity is the goal for RCS.
RCS could soon be reaching a tipping point with Google no longer waiting for carriers to provide support, they are rolling out support for RCS by hosting the service themselves, in the same way that Apple support iMessage. The difference being Google does not want to remain the message service provider and is encouraging carriers to adopt the standard.
Google in the USA is now supporting RCS to any Android user but the big four carriers there are also working on building RCS support into their networks. Carriers are increasingly seeing the need to do this otherwise they are potentially missing out on business messaging revenue if this takes off.
Anyone with an Android device in the UK, France and Germany can also access RCS, although the experience across Android devices is not yet iMessage quality. For instance Samsung phones will have RCS support built in, but only if the carrier supports it, otherwise the user will have to download Google’s messaging app to run on Google’s interim platform.
Other business messaging platforms are available eg. Apple Business Chat and Whatsapp Business and these can co-exist but brands need to be able to handle communication from their customers regardless of their phones operating system or carrier and this fragmented market complicates the service for brands, developers and the messaging service providers.
As it’s a heavily regulated business, consumers trust the carrier more than providers of communication platforms such as Whatsapp or Facebook . With rich messaging user can also see that they are interacting with a verified organisation thus reducing the smishing risk.
Brands can also engage with their customers with apps, and this has been the default method for years now, but supporting apps across all operating systems and devices is expensive and inconvenient for users having to install, register and learn an app for each brand.
With RCS being the only global and open standard for rich mobile messaging and chatbots being the new norm for communications, the dominance of RCS Business Messaging is assured. Or is it?
The Monetisation Problem
There are a number of problems with RCS, with perhaps the best known being Apple’s reluctance to support the standard in iMessage which means even if all carriers support RCS the brands still need to use at least two channels to their customers, RCS Business Messaging and Apple Business Messaging.
However, a lesser known problem is that of exactly how the operators monetise the service provided by RCS and the models for this are still being debated by parties across the value chain.
Person to person messaging (P2P) is effectively free for the user and does not present opportunities for new revenue but business messaging could potentially see growth like application to person (A2P) SMS and with far greater value.
Carriers need to be able to monetise business messaging and if it is achieved only via over-the-top (OTT) services such as Whatsapp they will miss out on this opportunity (seeing only data on their network). For this reason the carriers will also be putting pressure on Apple to adopt the RCS standard.
With RCS being touted as the new SMS it is natural to think of the value of RCS business messaging being like A2P SMS, eg. informational messages from your bank or dentist. Although RBM may be used in that way, with some benefit over SMS, the real value of RBM will come from conversational commerce and that is much more complex.
- Normally initiated by the consumer not brand (P2A rather than A2P).
- Is a richer customer experience (a user session would consist of many messages and may include images, files, geolocation etc.)
- Often directly results in sales. (directly via carrier billing or link to brand’s web page)
- Fulfills a customer service role. (complementing call centres and web chat bots)
The value to the brand could be enormous but it’s largely uncharted territory and so far there is no simple, universal model like the n cents per SMS with A2P.
A ‘tokens’ system has been discussed which may help understanding of value related to SMS. eg. 1 message = 1 token , 1 image = 2 tokens etc. Tokens helps with the concept of how much more rich content is worth over a text message and abstracts from currency but does not tackle the real problems.
It is looking like RBM will be simply charged per message but at a higher rate than A2P SMS to reflect an increased perceived value of RBM. However the value is not in individual messages, it is in the asynchronous conversational nature of RBM, or the context of the message. There may be a conflict where brands want to build engaging conversations with their customers but if each response to the customer is charged then costs will mount up.
Additionally we do not know how much the various types of rich content are worth. How much they are worth depends on the use case but an operator can not charge by how RBM is used only by properties they can measure, ie. content type, volume and size.
It’s a new business model for brands and the MNO and the charging model needs to be simple, fair and allow for full benefits of RBM to be realised.
- All content charged according to size. (eg. 1 token per KB)
- 1 token minimum per session (Session as defined by GSMA)
Such an approach is consistent with the existing A2P SMS model and also the concept of charging for data. It should also encourage brands to optimise the customer experience to provide the service with minimal message overheads, eg. not asking questions or requiring downloads that are unnecessary for the customer experience.
A drawback would be that it does not give the brands a definite known cost for their RBM as it would depend on the customer’s level if interaction but it would be possible for bot developers to design to a cost specification and estimate charges according to the various outcomes. It also does not necessarily reflect the value of certain features like geo-location. However, the advantages of simplification could mean it is a compromise worth making.
Whatever model is adopted by the operators there needs to be an understanding that RBM will evolve and billing may grow in complexity but unless a simple universal model is adopted now, this complexity could remain another hindrance to its widespread adoption.
By Paul Haworth, Managing Director, Ryder Systems.
Ryder Systems powering Invoice Automation and Settlement for B2B RCS.1