Mobile UC Launched in Europe

[This is an executive summary of a new article available from UC Insights: "IMS 3 - Rise of Rich Communications Services (?)"]

Over the last two years, I have considered the next steps for the mobile communications industry: particularly how "Over The Top" (OTT) services are likely to subsume current incumbent operator services. My general conclusion has been that the incumbent mobile service providers have no apparent interest in providing multimedia communications and that OTT apps (e.g. Facebook, Twitter, Skype, WhatsApp, Apple Facetime, etc.) have filled that gap. The corollary of this conclusion is that the IP Multimedia Subsystem (IMS) architecture is dead and that the mobile operators are going to rapidly transition to becoming mobile ISPs.

Well, I was wrong - or at least, wrong about the IMS part.

I was surprised to hear that the five European carriers have recently launched Rich Communications Services (RCS) in Spain and Germany. RCS is an implementation of IMS that enables consumer-oriented unified communications (UC) features such as directory services, presence sharing, text chat, VoIP, video, file transfer, etc. over an interoperable inter-carrier IP network. You can watch a Vodafone promotional video on YouTube here.

It turns out that the organization that has led the development of RCS standards is the GSM Association (GSMA) and the resulting services are marketed under the service mark "joyn." The GSMA web site is refreshingly candid and realistic about the threat to its member's business posed by OTT and has been promoting RCS as the way forward for several years.

The near simultaneous deployment of RCS by most operators in two separate countries speaks volumes about the power of "social network effect" (see the section on that topic in "The Economics of Interoperability"). Clearly, mobile operators are more worried about the competitive threat of OTT than they are about each other.

However, note that CDMA carriers have been slow to support RCS because their networks suffered from an inefficiency in the interaction between CDMA and LTE networks for voice calls. Although that issue appears to have been resolved by Ericsson, CDMA carriers are clearly several years behind the GSM carriers in this regard. As a result of this, "social network effect" is likely to pose a major challenge to RCS adoption in the U.S.

The pricing plans for "joyn" remain unclear, but since RCS is intended as a substitute for traditional services carried on wireless data plans, it would presumably be indefensible to charge customers additional fees for RCS. Note however, that large-scale uptake of RCS will require a price model change for wireless data, since wideband usage of wireless data under current pricing plans will make RCS prohibitively expensive. This will be an opportunity that will be available to OTT services as well as operator's services.

The mobile operators have billion dollar businesses to support, with billion dollar investments in infrastructure, and millions of shareholders holding them accountable for the outcome. To be fair to the mobile operators, it seems inequitable for them to be required to compete with OTT providers on their own networks without any financial contribution by the OTT providers. Yet, this is exactly the situation that the mobile operators are facing.

Will RCS succeed, or will we all be using OTT services in five years? It would seem that the OTT vendors' first mover advantage combined with the mobile operators' high capital costs will make RCS a tough sell. However, the mobile operators have cash, ingenuity, and an enviable market opportunity. The role of regulation and government intervention will also be a determining factor.

[For access to the full version of this and other UC Insights articles, please go to ucinsights.com.]