Mobile Operators, Adopt RCS before more of your customers figure out how to download an app

Today we were talking to a very large professional services firm who works with mobile operators about our RCS-e product.  Like always within a few minutes, the inevitable question was asked about the business case for RCS on the part of the mobile operators. Every service launch has to be carefully considered and the potential revenue balanced against the potential costs. Of course, this is logical and the kind of thought process we go through in our own business.

RCS has come under considerable scrutiny for exactly this reason. The bottom line has been: can I make money from RCS? Is it viable as a stand-alone application? I’ve been wondering if this question isn’t really the wrong way of looking at things. Sometimes, a straight business analysis doesn’t give you the insight you need and I tend to think this is one of these situations.

Sure, messaging is a considerable revenue generator for carriers and mobile network operators, but the rise of alternative messaging and IM platforms from Over-the-Top (so called OTT) providers has cast a big stone on the pond, rippled the water and is now threatening to undermine these revenues. There are plenty of alternative messaging platforms available to smartphone users, which are easy to download and install – and, with iOS5, users may not even be aware that they are using an alternative messaging platform.

That means that carriers and MNOs have to do something to ensure they offer a rich experience to their customers so that those customers aren’t motivated to seek out alternatives. RCS is a key element of this strategy, as it’s the only cross-platform solution that can be delivered to the broadest range of customers. Once it is ubiquitous, like SMS, users will have no reason to choose an alternative. It adds value to messaging, making it more attractive to users – and more likely to use an operator-branded service than an OTT solution.

Significantly, RCS offers a rich, more intuitive messaging environment and the kinds of capabilities that users clearly want, but it has the added advantage of being delivered by companies with which customers have a trusted relationship: their carriers and mobile service providers.

The jury is still out on whether it can generate new revenue, but it can be a key tool to help build a better relationship and retain customers. And that’s where the other perspective comes in. We need to consider some intangible values as well as intangible ones.

On the tangible side, I’ve been thinking about how much it costs to attract customers as opposed to recruiting them. Everyone we’ve spoken too agrees that customer recruitment is much more expensive than customer retention. We believe RCS should be seen as a key tool to help carriers and mobile service providers add differentiation to their messaging platforms, encouraging customers to maintain activity levels and provide a solution that rivals or exceeds those from OTT providers.

On the intangible side, we should consider the ubiquitous nature of RCS. Users want to be able to send messages to anyone in their contact list, not just a closed group of users with the same OTT application. With RCS, they can do just that, which makes it more likely that RCS will remain the default messaging client, which will continue to evolve with more features and functionality. So we definitely think RCS adoption is viable for European carriers – and carriers all over the world. Just not for the conventional reasons. What do you think?

--Brent