Why RCS Might Soon Replace SMS

It's been both dismissed as a zombie technology and anticipated as the savior of SMS. But after 10 years of fits and starts, Rich Communication Services (RCS), the next-generation text messaging technology, might have finally found its champion.

At this year's Mobile World Congress in Barcelona, Google and key partners showcased how businesses can take advantage of RCS business messaging and offer the sort of modern messaging experiences that people have come to expect from popular over-the-top (OTT) chat apps like Facebook Messenger, WhatsApp, and iMessage. Think interactive features like GIFs, read receipts, and typing notifications.

Many see the campaign as part of Google's effort to challenge Facebook and Apple in the ongoing business-to-consumer messaging wars. For the telecoms, RCS business messaging is an opportunity to stave off insurgents like WhatsApp, which has already stolen a massive share of SMS in the lucrative battle for the application-to-person (A2P) messaging market. The A2P industry (which supports sending receipts, flight notifications, banking updates, and other alerts businesses send to subscribers) is worth roughly $55 billion and is expected to reach $70 billion by 2020.

At the moment, A2P messages are sent almost exclusively via SMS, with businesses footing the bill. This makes A2P one of the last fronts on which carriers are still beating the OTT channels and monetizing text messaging. But with the upcoming launch of WhatsApp's enterprise API and its early focus on ticketing applications, Facebook appears to be eyeing a slice of the A2P pie.

If it feels like you've been hearing about RCS for a decade, you're not wrong. Back in 2008, a group of 30 telecommunications carriers and device makers under the umbrella of the GSMA announced the Rich Communication Suite (RCS) initiative. Its mission was to enable "interoperable enriched communication, including in-call multimedia sharing, conversational messaging, and presence-enhanced contact management for mobile and fixed customers." This meant developing and adopting a new generation of text messaging standards—an SMS for the modern messaging age.

The timing was right. As industry analyst and RCS skeptic, Dean Bubley, has noted, this announcement came only a few months after the launch of the first iPhone and before Apple introduced the App Store. It was also the same month Facebook unveiled what would become Messenger. Despite its promising start, the industry consortium wasn't able to move nearly as quickly as Facebook or Apple, and "interoperability" proved difficult for a group of competitors more interested in distinguishing themselves than playing nicely together.

In the past 10 years, OTT services like Messenger, WhatsApp, WeChat, Line, Telegram, and others have won over billions of consumers by offering modern messaging experiences far superior to SMS at relatively little cost to users. WhatsApp and Facebook Messenger alone carry trillions of messages per year, far eclipsing the total P2P SMS market. Taking a cue from Research in Motion and the one-time popularity of its exclusive Blackberry Messenger (BBM), Apple made iMessage the de facto messaging service across its devices, helping to earn the loyalty of a generation of customers.

Then, in late 2015, Google entered the fray. It announced a commitment to RCS and acquired a startup called Jibe to help bring RCS to Android products and carriers worldwide. Last year, Google made RCS the default standard in its rebranded "Android Messages" app, which comes preloaded in most Android phones. The company also announced that carriers across the world had joined in its commitment to launch RCS messaging, powered by the Jibe RCS cloud from Google. This meant that messages sent between people using both RCS-compatible phones and RCS-enabled service providers would be sent using the richer standard, rather than SMS. However, if anyone in the conversation used a phone or carrier that hadn't adopted the new standard, the message would fall back to SMS or MMS. And the most important phone makers, Samsung and Apple, were conspicuously absent from the announcement, as were the leading U.S. carriers, Verizon, AT&T and T-Mobile.

Last year Google launched its Early Access Program for businesses to offer their customers an upgraded messaging experience, highlighting enterprise-friendly capabilities like branding and verification. Now businesses are starting to roll out messages to their customers with RCS in the United States, and Mexico will also be online this year. A growing list of device makers and global carriers have jumped on board as well, although key players like Samsung and Verizon remain elusive.

In April, The Verge reported that Google is rebranding RCS as Chat and giving up on its own OTT app, Allo. Mass adoption, however, might ultimately depend on Apple adopting RCS (instead of SMS) as the fallback for sending and receiving messages with non-iPhones, something it has little incentive to do. In fact, Apple could go in the opposite direction and make iMessage a cross-platform channel, challenging Google on its own Android playground.

Later this year, Apple will take Business Chat out of beta, enabling customers to message businesses through iMessage. Customers will be able to initiate conversations by clicking on links in Safari, Apple Maps, and through Siri-enabled devices. Given Google's search and map dominance (including on iPhone) and Android's 80-percent market penetration, it's not hard to imagine Google pursuing a similar strategy if it can overcome RCS's adoption and interoperability obstacles.

Perhaps the modern messaging ship has already sailed, leaving RCS in its wake. Or maybe the situation is finally desperate enough for parties to band together and make the great RCS hope into a reality. Either way, it's clear that the business messaging wars are heating up. And customer-centric businesses can't afford to choose sides. Whether it's RCS or WhatsApp, Messenger, or Business Chat, companies that care about being wherever their customers are need to be there.

Dan Levy is editorial director at Smooch.io.

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Posted July 20, 2018