Thursday, October 18, 2012

OTT App Network Effects Might Decide RCS Success

Network effects might ultimately decide whether mobile service provider investments in “Rich Communications Suite” are successful in competing with over the top voice and messaging apps supplied by third parties.

The obvious example is Skype, which now has such a large community, and provides sufficient value, that it is doubtful RCS will damage Skype. RCS services might be more effective against smaller communities, but Skype simply has gotten to the point where scale issues are fairly minimal. Most users assume other users have Skype and know how to use it.

ARCchart expects that instant messages will exceed text messaging (short message service, or SMS) volumes by 2014 and continue growing rapidly thereafter, accounting for 65 percent of all message traffic pushed over mobile networks by 2016.

The issue is whether RCS can reach critical fast enough to stop that migration. Rational observers might say the answer is “no.” So the issue will then become whether RCS can take back share carrier messaging already has lost to other providers.

The hope is that a standards-based RCS service will provide the needed “everybody else can get a message using this app” problem.

ARCchart anticipates a strong uptake of RCS-e, with around 35 percent of mobile VoIP users going through an RCS-e solution by 2016 and 19 percent of mobile IM users choosing RCS-e.

“Nonetheless, several mobile OTT communications providers have critical mass and the evidence shows that even when SMS and voice are priced comparatively cheaper than IM and VoIP, many customers continue to use their OTT solutions because of the richer experience,” says ARCchart.

In other words, there is reason to question how much success RCS actually will obtain.

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