RCS and Communication landscape

The RCS failed to differentiate itself from the existing OTT services since it appeared in the market for the first time in 2012. Its functions were disappointedly incomplete and it’s UX/UI was plain and unattractive compared with OTT services. It also took a long time to stabilize due to its technical complexities and operator’s slow decision making process. Without any proven best practice of RCS, many operators are still hesitating to invest their limited budgets in such a free service. No doubt, operator’s top priority would be LTE and then IMS network. The RCS lies only at the final step in operator’s roadmap as it is technically supposed to be deployed on top of IMS network and it is also one of reasons that slows down operator’s decision making process.

More and more users are tempted to subscribe to prevailing OTT services and OTT service providers also keep evolving their services in a way to provide richer user experiences on top of their own platform. Facebook purchased Whatsapp in Feb 2014 and put its name on the top of the list. WeChat from China is making a lot of buzz with affluent O2O services being incorporated into its own platform. With the help of strong supports from domestic market, WeChat is becoming another worldwide OTT communication service platform. LINE originated from Japan is step-by-step penetrating into South East Asian market. KakaoTalk which dominated Korean market but has been staggering outside Korean market has merged with the second biggest portal service provider in Korea, Daum, seeking out further growth by gaining more contents strength in this battle.

Figure 1. MAU of OTT services

I.    OTT War

Since Facebook purchased WhatsApp for $22 billion in 2014, the number of its Monthly Active Users (MAU) jumped up from 700 million in Jan 2015 to 900 million in Sep 2015. WhatsApp and Facebook partnered with the Reliance Communication in India to provide unlimited services access for prepaid GSM subscribers with only 16Rs a month.

Facebook’s another messenger service, Facebook Messenger, has 800 million MAU worldwide at the end of 2015 up from 300 million at the end of 2014. It supports money transfer service within the application since Mar 2015 which makes P2P payment easier. It has also launched a limited beta version of Artificial Intelligence-powered virtual assistant service ‘M’ in 2015, which can possibly compete with Apple Siri. Users can receive personalized services like restaurant reservation, weather forecasting based on a route, recommendations for weekend getaways, etc. Facebook partnered with Uber to provide in-app call for transportation with which users can request a ride from a car service without needing to download an extra app or leave a conversation.

WeChat has hit 650 million MAU in 3Q 2015, around 200 million up from 3Q 2014. It has recently announced that it supports WeChat Out VoIP service which enables users to make a call to mobile and landlines with much cheaper price. It has been putting a lot of service features and use cases in place on top of its own platform such as Lucky Money (money transfer), Taxi ride (car sharing), Bills and Payment (mobile payment), Shopping (mobile commerce), multi-party video chat, banking, fundraising, etc.

LINE has reached 200 million MAU in 3Q 2015, 30 million up from 3Q 2014. It has been providing service features like public accounts (for companies), sitckers, games, musics and TV contents. It has also been publishing many family applications on top of LINE platform such as fortune telling, cartoon, selfie camera, jobs seeking, news curation, restaurants, etc. LINE also started providing LineOut feature (same as WeChat Out) enabling users to making a call towards mobile and landlines based on phone numbers at much cheaper price. As of now, the revenue of LINE comes from game (41%), advertisement (30%) and stickers (24%) and they have markets mainly in Japan, Thailand and Indonesia.

Most OTT services already supports all the communication features that operators provide, like messaging and voice/video call. They provide even more affluent value added features. Users are provided with services useful in their everyday lives without necessarily leaving their applications such as banking, transportation, job seeking, news, search, etc. The silos between OTT service is also collapsing as they started providing reachability to non-subscribers using phone number based dialing function as is the case of WeChat Out and Line Out.

II.  RCS

Figure 2. Operators, Google and OTT CSPs

When many of RCS players were worrying about slow market growth of RCS, Google’s purchase of Jibe Mobile in Sep 2014 was an eye-popping event and it stirred the RCS industry. Jibe Mobile is one of the leading companies in RCS domain providing cloud-based RCS hosting service and RCS hub service as well. There has been a lot of speculations conjured up on Google’s intention of purchasing the company though, it seems obvious at least for one thing to me:

Google will come up with native RCS for Android and keep doing Jibe Mobile’s businesses, i.e., hosted RCS and RCS hub services.

§   The Android market share in 2Q 2015 is over 80% according to the IDC report. Even though there are already a bunch of people locked in OTT services around the world, the number of users using native messaging service is still not ignorable. Native RCS for Android will be able to appeal to those users as iMessage did.

§   Operators came to have one more option for building RCS, which is using hosted RCS service. Even though the concept of hosted RCS service model has already been existing and provided by many of RCS companies, the same service backed by Google would give quite a different impression in terms of stability and reliability. Small and middle sized operators in particular may prefer to use Google’s native RCS and hosted RCS service for a while before they make a decision on whether they need to have their own RCS platform or not. Google may provide open APIs for RCS enabling operators to customize their own RCS clients.

§   Solution vendors will suffer more from narrowed solution market at least in the short term. More operators will consider using Google’s hosted RCS service or they will just wait and see. Solution vedors will have to compete with Google.

§   Google will encourage operators to be engaged in their cloud based hosted RCS and RCS Hub services thereby they may want to gather more data around the globe. Google may leverage RCS service to penetrate into SNS markets, which is the area where Google has always been defeated by other SNS players.

III.  Operators

Even though RCS is lacking business cases and best practices for justification of ROI, there seems no other way around for operators but to adopt RCS anyway in the long term. It is the only way for operators to move forward to position themselves as Communication Service Providers (CSPs). Otherwise, they may have to step back as a dumb-pipe. Operators understand that, in the long term, controlling data channels, contents and 3^rd-party services on top of their communication platform envisages new revenue sources.

The competitiveness of RCS comes only when it is integrated with operator’s qualified services like VoLTE, ViLTE, VoWi-Fi. The integrated VoLTE/RCS service uses dedicated network resources. The QoS becomes the only differentiator for operators to compete with OTT service providers because data traffic from OTT services goes through the best-effort network and thus they are vulnerable in case network is congested.

Operators are taking baby steps in evolving their network and adopting high quality VoLTE service. According to GSA report published in Oct 2015, 443 operators commercially launched LTE or LTE-Advanced network across 147 countries and only 30 operators among them have launched VoLTE-HD voice across 21 countries. The rest of them may be using SRVCC or CSFB for voice service as an intermediary stage. Building LTE network and IMS Core takes quite a long time. RCS lies at the end of the roadmap of their network evolution. When operators are ready to deploy RCS service, it is highly possible that users are already locked in by OTT services. Even when there is no dominating OTT services yet, it will take long time again for operators to adopt and stabilize RCS.

The interoperability may not be the key differentiator for operators to compete with OTT services though, it is one of the most important functions to implement. As the interoperability of RCS leans on IMS network in principle, the technical complexities of operator’s network and business agreement among different operators shall be sorted out. Network integration and interoperability test among operators will also be time-consuming and costly.

Lastly, operators need to consider mitigating data traffic as RCS is known to cause heavy traffic. RCS client performs SIP OPTIONS based service capability discovery for each and every contact stored in user’s address book at its first invoke and the procedure repeats based on the configured polling period. As more and more contacts turn to be RCS subscribers, the list of RCS contacts will be created as an xml document and uploaded to the network to which Presence based service capability discovery is applied. The Presence based service capability discovery procedure causes increasing traffic of back-end subscriptions within the network.

Given these issues, operators need to figure out the simplest and fastest way to launch RCS service. The followings are several types of categories for RCS solution suggested by major solution providers like Jibe Moble (acquired by Google), InterOp, GenBand, Summit Technology, MiTel, Nable Communications, etc..

§   Turn key solution for self-implementation: easy for customization and deploying operator’s own differentiators but costly. No major issues to support integrated VoLTE/RCS service later.

§   Cloud based RCS hosting: best fit for operators who want to avoid complex integration and reduce the operational and finalcial risk, but operator specific customization won’t be easy . Not clear about how to technically support integrated VoLTE/RCS service when the operator already has or after it comes to have its own IMS core.

§   Cloud based RCS Hub: cost-effective to build interoperability with other operators and best fit for all the operators, but operator specific customization won’t be easy.

§   RCS in a box: RCS AS combined with simplified IMS Core and optimized in the same box, best fit for operators who do not have IMS core or want to offload RCS traffic at reduced cost.

IV.    Considerations for RCS deployment

The most important aspects to consider when building RCS are to meet the time-to-market requirement and to avoid technical complexities.

§   Minimization of RCS complexities

RCS specifications have been evolving from RCSe to RCS Blackbird and to RCS 5.3 as of now. As they evolve, there are lots of service features defined. However, operators do not have to bring full-fledged RCS functionalities from the beginning, which could be over specifications and inefficient way of spending limited resources. Just start with basic functions such as IP Chat + Legacy Interworking and take lean startup approach to roll out the functionalities.

§   Minimization of IMS complexities

It will take quite a long time to build full IMS functionalities. Rather than that, it would be better to consider simplified IMS core for a start. When there needs a full-fledged IMS core for VoLTE, some components of simplified IMS core can be reused as a part of full-fleged IMS Core or simply saying, can remain as it is to offload the RCS traffic from the VoLTE traffic.

§   Using Cloud solutions

Cloud based hosted RCS and RCS hub solutions can be good approaches to realizing the RCS service without putting much efforts. Operators will be able to mitigate the risk and reduce time and cost. Upon taking this approach, operators may need to consider functional flexibilities (for customization) and data availability (for user analysis) provided by cloud service providers.

The following would be one of possible network topologies where different types of RCS deployment are mixed up for each operator.

Figure 3. RCS deployment

V.  Conclusion

OTT CSPs are growing fast with rich communication service features and building their eco-system. In a sense, OTT services are becoming an operating platform that nurtures 3^rd-party service providers working on top of it. Operators are more focusing on evolving their network to provide All-IP communication platform, which is time and resource consuming. Even Operators already providing VoLTE service are also waiting to see Google’s next move for RCS.

As of now, leaning on Google’s RCS infrastructure (i.e., RCS hosting, RCS hub, Android RCS client) becomes another option for operators to take. Google may leverage its affluent contents and Google analytics tool for their own RCS being accepted by operators. Google will provide its own RCS service like iMessage sooner rather than later accelerating the replacement of legacy messaging to RCS. Given this option, operators may be able to turn on their RCS whenever they want. Users will still hold on to OTT services. Native RCS will be complementary to OTT services from user’s perspective.

Solution vendors need to compete with Google as to cloud based RCS solutions. They shall leverage tight business relationship with their local operators and provide extreme flexibility and more customizable options in their systems. RCS sales is not going to be only selling a product. It will become more likely selling a service. Not to mention the reliable and stable RCS solutions, solution vendors shall be able to provide consulting services including but not limited to operator’s network optimization, traffic optimization, user analysis, service rolling-out strategy, etc.

Red Mouse