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RCS (Rich Communication Services): Market Overview and Services Development in the World

April 2013

Analytical Report (full version)

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Analytical Report (full version)

RCS (Rich Communication Services): Market Overview and Services Development in the World
RCS (Rich Communication Services): Market Overview and Services Development in the World
April 2013

RCS (Rich Communication Services): Market Overview and Services Development in the World

April 2013

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J’son & Partners Consulting presents the results of the research “Voice over 4G networks. LTE: from Tests to Implementation”.

 

RCS Definition and Status

The main goal of RCS (Rich Communication Services) concept, forwarded by GSMA association, is SIP-based multimedia services market launch by mobile network operators. Inter-operator RCS services are developed under JOYN trade name as an option to IP-communications services, which are offered by the third party companies (ОТТ) and “take” the significant part of revenues from basic services (voice and massaging) from standard operators. Thus, according to Informa Telecoms & Media estimation, mobile network operators’ total revenue reduce from their subscribers’ use of third party IP services in Western and Eastern Europe in 2012 amounted to 3.9 and 1.6% respectively.

RCS concept appeared in 2008, the first pilot projects were tested in 2010, but commercial launch of services was held only in the end of 2012. By March 2013 JOYN project was launched by 9 operators in 5 countries.

AT&T, Bell Mobility, Bharti Airtel, Deutsche Telekom, KPN, KT Corporation, LG Uplus (LGU+), Orange, Orascom Telecom, Rogers Communications, SFR, SK Telecom, Telecom Italia, Telefónica, TeliaSonera, Telus, Verizon and Vodafone are the operators which take part in RCS creation. Operators shall obtain an accreditation from GSMA to start RCS service provisioning under the JOYN trade mark.

 

In Russia the services of RCS-like class (“MultiFon” project) are provided by “MegaFon” Company for private and corporate clients. MTS Company tests RCS on the basis of partner-company’s platform Vodafone and plans commercial launch in 2013

 

Set of Services

As it is planned, the following set of RCS services will be available to the subscribers (The list of possible services is not mandatory for all networks):

 

       Rich Address Book with detailed information on the contact;
       Rich Messaging includes IM (instant messaging), simultaneous chat with multiple users,
           correspondence history, document, photo and video content interchange possibility;
       Rich Voice Calls enabling to share multimedia content during voice call. It includes “see
           what I see” option allowing sharing what caller sees, conference call;
       Presence status;
       SNS Services (Social Network Services) is an aggregation of information coming from
           social networks;
       Capability to see conversation partner’s network properties (which exactly options may be
           supported, for example, video transfer capability shall be available only when working in
           3G or 4G networks).

 

Devices supporting RCS

There is RCS in HTC, Huawei, LG, Nokia, Samsung, Sony phones as a pre-set application. Also, such companies as RIM (Blackberry), Motorola, Panasonic and ZTE have announced their intention to start production of mobile devices supporting RCS. Furthermore, downloadable RCS applications are supported by iPhone smartphones (starting with the 4th version) and iPad tablet PCs.

 

JOYN application may be downloaded from Android Market or Apple Store. 6 companies are the application vendors: all of them develop RCS applications for Android OS, and a half of them also develop applications for iOS.

At present, the range of devices with in-built (pre-installed) RCS client is limited by several models. This is one of the main constraints for the services spread in the mass market. 

RCS and IMS

GSMA association actively cooperates with the mobile network operators by explaining the advantages of IMS network availability for deploying of RCS and VoLTE services. Latter may be offered both separately (RCS may be implemented on any networks, regardless of LTE network availability/unavailability) and jointly. RCS is an inter-operator service; company-service providers provide seamless connection on the networks of different operators.

 

Despite the fact that RCS specifications require IMS network deployment (which is a complex and expensive process), there are operator’s solutions for RCS services provisioning regardless of whether the IMS platform is featured by the operator or not. These offers have already occurred on the market in 2010, the first pilot RCS service was started in the same year. Due to such solutions the operator may have an opportunity to bring the service to the market quickly approximately during 10 weeks after purchasing the appropriate equipment.

 

RCS (JOYN) Spread in the World

RCS services are started in 5 countries, they are the most widespread in Spain and South Korea and in each of these countries operators in threes provide inter-operator RCS service. According to the company’s data, number of JOYN.T subscribers of the South Korean operator SK Telecom accounted to 1 million by mid-February 2013 (50 days in operation). During the test period, up to the end of May 2013, RCS services use is free of charge. The announced service cost in the long term: cost of messaging is 0.02 dollars and video call is 0.03 dollars per minute. At that, the operators note that initially the service will not be profitable. The main RCS competitor in Korea is Kakao Talk the mobile application that is used by at least 50 mln Korean subscribers.

 

 

MetroPCS the American operator offers Voice over Wi-Fi and Video calling apart from standard service packet. To provide subscriber base growth the operator plans to enable the possibility of inviting into the net the contacts from the subscriber’s address book which are serviced in the networks of another operators of Canada, Mexico and the USA through special applications.

 

Up to August 2013 JOYN is available free of charge for all subscribers of Deutsche Telekom in Germany which use prepaid system or a contract with fixed conditions.

As of the date of report writing, almost all operators that started RCS provided the service in free of charge mode or in conditionally free of charge mode. The answer to the question on how successful the JOYN project from the economic point of view may be known after occurring of the first conclusions of its implementation. As of the current date, SK Telecom the South Korean operator achieved the biggest success in attaining subscribers (about 1 mln).

Business model and advantages of RCS

Several sources of operators’ new revenue generation and reduction of expenses may be defined:

 

       The expenses for marketing services are significantly reduced due to the fact that RCS
           service is an inter-operators service (in fact, GSMA association operates it).
       RCS services allow operator’s networks to evolve, IMS platform implementation is not
           mandatory for RCS services provisioning, but the transition to these services may be the
           first step in IMS network development.
       The possibility of new RCS-based services creation. The examples are applications for
           joint picture editing, conference calls (up to 10 users simultaneously) and etc.

 

It is obvious that not many users are ready to pay for RCS service. Freemium model is a somewhat an "intermediate" option on the basis of which there is a free of charge offer of the service itself and its options for money; the example may be the free of charge product with displaying of advertisements.

The increase of operator’s revenues and/or reduction of expenses within JOYN project are long-termed. Most likely, RCS service will be unprofitable in the short term. It is affected by technological complexity and duration of IMS network implementation as a core of a platform for RCS services provisioning, and also by a competition from OTT.

As compared to ОТТ services, the main advantages of JOYN project are:

 

      1. Services provisioning within single standard and interconnected networks

 

RCS allows to work in different networks and with different devices. Such interoperability is not available to ОТТ services: for example, it is impossible to send message from Skype to Windows Messenger.

 

      2. MSISDN (Mobile Subscriber Integrated Services Digital Number) Availability

 

The subscriber unique number is built according to E.164 standard which is a single standard for operators worldwide. Therefore, RCS standard allows user to create a personal community using his/her global user ID, i.e. phone number.

 

      3. Difficulties with model development of OTT services monetization

 

In spite of the fact that, according to some forecasts, number of mobile OTT users will get around 1 bln people by 2017, such services still remain low monetized. Many OTT services subscribers (Skype and etc.) initially do not plan to pay for them.

 

The basic possibility within RCS model is a development of inter-operators approach, exactly which allows increasing the number of service users. The main threats are absence of RCS demand and subscriber churn to the segment of free of charge OTT services, the absence of tested business model of RCS monetization and native RCS-like services development.

 

The main factors hampering the RCS implementation are:

 

       solution technological complexity;
       the range of mobile devices supporting RCS is insufficiently wide;
       dependence on an expensive core of IMS network;
       user preferences: not many free of charge OTT services users are ready to pay for RCS.

 

 

Basic trends and prospects of RCS development and spread

The following factors of possible success of RCS implementation may be distinguished, which will help to spread this service in the mass market and provide high service quality:

 

       tight integration of services in the address book and ease of use;
       inter-operator approach;
       technical conditions standardization divided by all players of the industry;
       video calls increasing popularity;
       demand transfer to the communications in social networks;
       speed of IMS networks deployment;
       cloud solutions spread, which enable to develop RCS services with IMS network unavailability;
       market development of the mobile devices supporting LTE networks.

 

Markets, where RCS service has been already introduced, are characterized with high speed of LTE networks implementation and with good operators’ talk-back capability, the service occurs in several providers at the same time that allows implementing of inter-operator approach. According to this trend, RCS start is quite probable by operators of three countries where the service has just appeared (the USA, Germany) with the spread of its coverage to all presence countries of operator that started it.

 

RCS prospects are less obvious on the developing markets. Main constraints are low penetration of smartphones and low LTE networks coverage.

 

According to Infonetics forecasts, mobile network operators throughout the world will receive 1.6 bln dollars in total for RCS services provisioning over a period of 2012 – 2016. In 2013 about 15 mln people (Infonetics) will be service users, according to Juniper Research forecasts, this index will increase up to 74 mln, i.e. RCS penetration will account less than 1% from subscriber base of the mobile communication by 2016.

 

The main problem during making the decision of start (for those operators who doubt the demand for service) is a lack of information on number of users and revenues.


According to the forecasts of different analysis agencies, at least two years will be needed for RCS entrance to the market. Not competition (either by creation their own applications or by starting RCS services), but cooperation with popular ОТТ services and creation of model of their monetization may become an important line of operators’ activity. Prospects of RCS services development in Russia in short-term (2013 – 2014) are ambivalent. On the one hand, penetration of smartphones in the country grows rapidly. On the other hand, LTE networks develop at relatively slow rates. The unavailability of devices capable to work with JOYN services is a significant constraint for their spread. According to J’son & Partners Consulting forecasts, RCS mass market development in Russia is possible not earlier than 2014 – 2015, after the beginning of more active LTE penetration, and after smartphones spread comes up to “critical mass”. Though, even such scenario is possible only provided that the partnership between operators is successful due to RCS inter-operator market grouping.

List of contents of the Full Version of the Report “RCS (Rich Communication Services): Market Overview and Services Development in the World”

List of Contents of the Report

Vocabulary of Terms and Abbreviations
Executive Summary
Basic Trends and Prospects of RCS Spread and Development
1. Introduction to RCS
       1.1. Definition, set of services and basic RCS specifications
       1.2. Prerequisites for RCS occurance and development
       1.3. Development and Status of RCS
2. RCS Ecosystem
       2.1. Operators
              2.1.1. International operators
              2.1.2. Russian operators
       2.2. Models of mobile phones supporting RCS
       2.3. Program products
       2.4. IMS as basis forRCS
3. RCS (JOYN) spread in the world
       3.1. South Korea
       3.2. Spain
       3.3. The USA
       3.4. France
       3.5. Other countries
              3.1.1. Germany
              3.1.2. China
              3.1.3. Kuwait
              3.1.4. Great Britain
              3.1.5. Japan
              3.1.6. Portugal
              3.1.7. Singapore
4. Key elements of RCS business model
       4.1. Sources of generating operators’ new revenues
       4.2. Competitive advantages as compared to OTT services
       4.3. SWOT analysis
5. Basic trends and prospects of RCS development and spread
       5.1. Basic trends
       5.2. Factors impacting RCS market development
       5.3. Development prospects
              5.3.1. On the current markets
              5.3.2. Spread to the new markets
       5.4. Forecasts of RCS market development up to 2016
Conclusions
Annexes
Annex 1. Profiles of the Company-Developers Downloading RCS Applicatiopns for Android
              and iOS-based phones
Annex 2. Profiles of RCS systems Key Manufacturers and Developers
Annex 3. Technical Aspects of “MultiFon” Project Implementation

 

List of Figures

Figure 1. Trade name of JOYN project
Figure 2. Basic services available according to RCS 5.0 version
Figure 3. Annual losses of mobile networks operators due to messaging over ОТТ services, 2010 – 2016
Figure 4. Revenue share from messaging in West European operators’ total revenues, 2009 – 2017
Figure 5. Main reasons of using ОТТ services of instant massaging, in % from surveyed number
Figure 6. Viewing figures of video content on mobile devices (phones, tablet PC) in the USA,
              connected to the broadband Internet networks in 2010 and 2012, in % from the surveyed
Figure 7. Map of RSC-e/JOYN project spread in the world, March 2013
Figure 8. Advantages and diasdvantages of Multifon application from “MegaFon” company
Figure 9. General scheme of RCS services implementation as a layer of applications on IMS network
Figure 10. Trade mark of Kakao Talk project
Figure 11. RCS services spread in 2011 and 2013 by subscribers’ location, in %
Figure 12. World market of messages in 2012 and 2017, tln of messages per year

 

List of Tables

Table 1. Basic RCS specifications and a set of services
Table 2. Accredited RCS operators and equipment vendors
Table 3. List of phone models with pre-installed RCS Client
Table 4. List of company-developers downloading RCS applicatiopns for android and iOS-based phones
Table 5. SWOT analysis of RCS

 

 

This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.

 

 

J’son & Partners Consulting presents the results of the research “Voice over 4G networks. LTE: from Tests to Implementation”.