Sending the right message

Since the launch of Skype in 2003, over-the-top (OTT) service providers have been successful in convincing subscribers to opt for their perceived to be free offerings, at the expense of operators’ voice and SMS services.

Following the launch of Skype, group messaging platforms WhatsApp and Viber have risen in popularity. Today, both reportedly have more than 200 million users, more than micro-messaging site Twitter.

In the meantime, operators have seen revenue from voice and messaging service decline. Some in the industry perceive this trend as a threat to operators’ business models, and the industry’s association GSMA has led the charge for operators to strike back, by launching a rich communication service (RCS).

Joyn is now live in five countries with 10 operators having launched services. In total, 78 operators around the world have formally made a commitment to launch Joyn services in the coming years.

Keith Mumford, director at product marketing for the EMEA region at operator messaging solutions provider Kineto, explains that in the past, mobile operators have tried various methods to cope with the threat of OTT messaging platforms.

“You can try to block all of that traffic to your users, but that doesn’t endear you very much to your customers. Or you can play around with the tariffing on your services and bundle lots of voice and SMS into your packages so it looks much more attractive to your users to continue using your own services instead of OTT service, but that doesn’t address the gaps in your own services, such as group chat,” he says.

But now operators are going for one of two options, according to Mumford. Some operators have tried to develop their own OTT-style services. France Telecom has launched its Libon messaging service, and Telefónica has its Tu Me and Tu Go services group.

“You can choose to make that investment, but the risk you take is just becoming another island community of OTT message users. You have to belong to the France Telecom group of users; the Libon community or the Tu Me community to engage with other users,” says Mumford.

This trend lends credence to the GSMA’s prescribed approach. The GSMA has specified a particular set of functions that it has branded Joyn, which it wants to be available on all phones, from all operators and to be as simple to use as SMS is today.

But what exactly is the point of operators developing an OTT service to combat the erosion of the voice and SMS revenues if their own OTT solution does not generate any revenue itself? According to the GSMA’s senior director for commercial and technical mobile internet solutions Graham Trickey, “it’s really about providing the services their customers want. If operators don’t do that, they’re likely to lose relevance to their consumers.”

“It’s about convenience, security and privacy. Operator-provided services are not running over the top of the internet, they run through a private network,” he says.

Trickey also argues that operators have traditionally provided better service and support than OTT players have been able to. His sentiments are echoed by JF Sullivan, CMO of mobile messaging solutions provider Acision.

“Operators continue to stand in a far superior position than any other OTT provider as their networks offer the only ubiquitous messaging service, capable of reaching over six billion mobile devices.”

Acision’s research reveals that 78 per cent of consumers are interested in an operator-led cross platform messaging service which would allow them to send SMS, MMS and IP messages from one single consolidated messaging application, if it works across multiple devices and interworking across all messaging services and social network applications.

Yet the question remains, where is the return on investment for operators investing in OTT messaging apps, be it Joyn or their own branded offerings?

One route could be to offer premium functionality beyond anything else on the market, an approach that Kineto’s Mumford favours. He points out that Kineto offers solutions aimed to help operators enhance their messaging services to surpass what competitors offer. However, the GSMA advocates a uniform approach by operators in launching Joyn services.

“There’s been very little differentiation so far and I don’t think it’s a given that operators have to differentiate from each other,” says Trickey. “I don’t think the requirements change according to operator; we make sure that Joyn specifications meet all the requirements of customers, they are enough to fulfil the customer’s needs.”

But while the revenue model behind services such as Joyn remains unconvincing, it is now arguably much easier and cheaper to deploy messaging services than ever before.

”What we’ve seen over the past six months is that beforehand, operators were trying to justify RCS on its own business terms. But because LTE has become more prevalent in terms of introduction in networks across Europe and across the world, that necessitates an operator having an IMS network and because operators want to offer VoLTE services in the future, that also requires an IMS network. So what would have been a big part of the investment before to deliver RCS services, that is, putting the IMS network in – that’s now being justified by the need to introduce it just to support LTE networks and VoLTE.”

However, whatever efforts operators make in their messaging services in the short term, they must maintain momentum in order to stave off competition from OTT players in the future. According Bengt Nordström co-founder and CEO of consultancy firm Northstream: “The OTT players move much faster because they do things OTT,” he says “If Skype wants to introduce a new voice codec, it can develop it and make it downloadable for all users in the world. The lead time for service enhancements is very short. No new hardware is required.”

Therefore, mobile operators will need to rely to the GSMA updating and revising Joyn specifications speedily if they are to fulfil the service’s promise and make themselves relevant in the mobile messaging space once again. Yet whether even that is enough to eventually enable operators to generate revenues from the service remains in question.