Can telcos disrupt themselves, part II?
The previous article was about the possibility to use RCS compared to the number of estimated subscribers. In the second article will we look at competing eco-systems.
Competing eco-system from others
We start our analysis with competing eco-systems from others. The major players are:
- Microsoft
- Apple
- Amazon
You probably have a user account for at least one of these five companies.
The question now is how many users have the competing voice and messaging platforms today and what growth did they have.
We start with Android w GooglePlay, a platform that today have more than 1 billion users. We compare number of Android activations with number of RCS users. The figures we have for Android are from 2008 and forward. The same year telcos started working with a new standard for Rich Communication Services and in 2013 are there 15 M users.
Diagram from asymco.com - http://www.asymco.com/2013/09/06/third-to-a-billion/ with addition of datapoint for RCS / Joyn
If we the compare the growth to a billion users for the competing platforms do we see a clear trend in the growth for all of them, except for RCS. The adoption rate for Wii and Windows Phone are rather similar compared for the estimates for RCS / Joyn.
Diagram from asymco.com - http://www.asymco.com/2013/09/06/third-to-a-billion/ with addition of datapoints for RCS / Joyn
Telefonica offered Joyn in mid 2012 and the starting time is therefore set to this date. We then have the estimates of 15 M users in december 2013 (6 quarters) and 78 M in end of 2016 (18 quarters).
The challenge is for RCS is that they are only an installable app on your phone, as all other apps.
If you get a smartphone with Android with GooglePlay, Android with Microsoft Services, iOS or Windows Mobile will you have a default messaging platform. This is how Internet Explorer became the dominant browser on the desktop. The difference is that you as a customer have several different alternatives of platforms, thus limiting the possibility for regulators to step in as they did in the case with IE.
Joyn therefore need be a cheaper product and/or better product than the default apps on each platform, or that the operator could limit competing services i their networks.
Revenue stream for Rich Communication Services
The cost for competing messaging services is often limited to the cost data-traffic. Skype or iMessage are good examples of these business models. If you are on wi-fi or have an unlimited dataplan is the cost zero. Otherwise, the cost is it very low compared to traditional cost for SMS, MMS or videocalls.
Today SMS is a $100 Billion business per year. If you use WhatsApp, (recently bought by Facebook), their fee is $1 per user and year. With 5 B subscribers, that would be $5 Billion. So the new cost for sending SMS is less than 5% of the cost today, and that is directly hurting the revenue for traditional telcos.
The consequence of this is that Joyn have to be free or offered at a near-zero cost.
Can operators limit competing platforms for Rich Communication Services?
In the past yes, but after the entrance of Apple in mobile market have it not been possible for operators to limit functionality or put their own software of the phones.
iPhone is a desirable product for many customers. If the carrier doesn’t sell iPhone will the customer often leave, and go to another carrier instead. Even DoCoMo have surrendered to Apple´s requirements to sell their phones.
What about Google then? Samsung tried to limit the Google part, but was persuaded to follow Google´s rules for Google Play just a few weeks ago. Handset-operators are not allowed to cherry-pick applications from Google. The are limited by their legal contracts with Google and it’s all or nothing.
So, unless the operators make their own fork of Android and develop their own mobile operating system, they can´t effectively limit voice-calls and messages over the network.
Microsoft has very stringent rules for Windows phones, and limits what the operator can do, so this is neither an alternative.
But what about the possibilities for operators to develop their own operating system based on some open source. The challenge here is the missing features given as a part of the eco-system.
The missing features
Let start with the description of what RCS is all about.
Enhanced Phonebook: service capabilities and enhanced contacts information such as presence and service discovery.
Enhanced Messaging: enables a large variety of messaging options including chat, emoticons, location share and file sharing.
Enriched Calls: enables multimedia content sharing during a voice call, video call and video sharing (see what I see)
Google’s power is their services, and especially in maps. Microsoft didn’t buy Nokias maps, but they have an agreement of their usage so they are fine from this perspective. Facebook is using maps from Nokia via Microsoft and they where an eraly investor in Facebook. Amazon have a maps API for developers, so if or when they offer a communication service, will they have this functionality.
Presence is very important and telcos only have a limited functionality in this area. Without access to maps is the usefulness of a mobile phone limited. This is one of the reasons why yet another operating system not is the solution for operators.
Conclusion
In the realm of the deal when Facebook bought WhatsApp, its very clear that the future for RCS and Joyn is anything but bright. My opinion is that operators have two choices, either option 1 and 2 or only option 2.
1. Offer an excellent version of RCS / Joyn at a very low cost to compete with the other players.
2. Concentrate on be very good at shuffling data-traffic in mobile and fixed-line networks. Simple and low-cost products. Nothing else.