With the rapid growth of chatbots and artificial intelligence (AI), one of the biggest challenges facing mobile operators is how to shape the business models for these new IP-based messaging services. As business communications evolve from one-off messages to chat sessions, Rich Communications Services (RCS) provides the ability to embed large graphics and video files in messages. As OTT messaging application providers explore entering the business messaging space, operators need to define their charging principles and business models that will enable Messaging as a Platform (MaaP) to be the communication method of choice for companies and their customers.
MaaP utilises the advanced messaging capabilities defined in the GSMA’s Universal Profile specification. These capabilities open up a range of services that enhance the user experience of artificial intelligence, chatbots and plugins, as well ‘conversational commerce’, allowing brands to use the rich content and functionality of RCS for A2P messaging. This will allow customers to complete transactions such as making restaurant reservations, booking train tickets or making retail purchases, entirely via messaging.
Many OTT applications often start with a “freemium” based model, in which they initially offer the service for free in order to grow, and then when established, identify where the commercial opportunities lie and apply suitable models, which are often tiered or subscription-based. The challenge for operators is that they already have an incredibly successful A2P SMS business in place which continues to grow at 5% CAGR (Sources: GSMAi, Portio research, company press releases). However, with the emergence of MaaP or RCS A2P, operators face the risk of cannibalising their existing revenues if they offer similar models. In addition, similarly to how operator P2P SMS revenues decreased due the free services offered by OTTs, these revenues are at risk as the OTTs pivot towards A2P messaging with the emergence of Facebook’s Messenger for Business, WhatsApp Business and others.
In order to secure the success of RCS, new commercial models must be developed that are clear and easy-to-understand and lessons must also be learned from the failings of MMS, for example, fragmentation of content adaptation and complex charging models.
To tackle this issue, the GSMA began by analysing different commercial models and examining key use cases and the wider messaging ecosystem to determine a series of models to test in trials and proof of concepts. It then expanded the working assumptions to our RCS A2P Future Messaging Lab group to gain perspectives from the wider ecosystem. From this, three primary models have emerged, which are: ‘Event-based’, ‘Session-based’ or ‘Conversation-based’ and ‘Hybrid Active User’. Other supplementary models such as ‘Revenue Share’ and ‘Search-based’ models have also emerged.
There are currently a number of trials and proof of concepts underway with operators and Messaging as a Platform (MaaP) providers. The GSMA defined models provide a starting position for charging during these pilots and, as MaaP pilots develop, we can further refine them based on brand, end user and operator feedback.
RCS Monetisation Models
Event-Based Model: The ‘event-based’ model replicates the existing A2P SMS model, by charging per message sent. This model is easily understood by the existing ecosystem and allows a quick conversion of the existing A2P SMS business to RCS. This model may be more suitable for transactional or advertising based messages which are generally unidirectional in nature, however, a daily cap on the number of messages has been considered. With SMS, the limitations are well understood, such as the 160 character limit, however, with the enriched messaging of RCS, this is less clear. Too small a file size runs the risk of limiting the richness of campaigns and the channel, too large and it may become uneconomical for operators. Consequently, we’ve looked at a 20MB payload limit to test throughout.
Session-Based Model: The ‘session-based’ model, or what has now been coined as the ‘conversation-based’ model, was one of the more challenging models to define. The key question that needs to be answered is: What is a ‘session’? In the ecosystem, we see a mixture of time-based and the number of messages models; the challenge is what the thresholds are. How long should a session be? 1 hour, 12 hours, 24 hours? Is a session a series of messages? If so what is this? One of the key outputs from the Commercial Models Workshop, which the GSMA hosted in London, was a working definition of a conversation. A fair use policy has been adopted to ensure lengthy conversations are not costly to the operator. The models seen here are more suited towards the conversational demonstrations and proof of concepts that we have seen at our recent MWC events.
Hybrid Active User Model: The Hybrid Active User model recognises that operators have made a significant investment in the networks and in building a large user base and therefore rewards operators for provided access. This is an access charge up front for each unique MSISDN for each bot in a 30-day period, which then reverts to the event-based or conversation-based model above, or a combination of the two. For example, the first message is sent as an event and any subsequent messages are treated as a session.
The revenue share and search based commercial models are seen as secondary and supplementary to the three primary models above. These are likely to be subject to arrangements made directly between the MNO, brand or MaaP solution provider and are likely to be outside of interconnect. Consequently, these secondary models have not been focussed on in the short-term, however, are likely to be revisited in the future as the service scales.
With trials and proof of concepts underway, the expectation is that those who are conducting trials will utilise these models, with event-based charging as the default. Data drives decisions and as the ecosystem and service offering changes, we need to ensure flexibility and agility to adapt to the changing environment. RCS A2P is at a nascent stage; over the next quarter, the ecosystem has a short window of opportunity to gather insights which can further refine the models to ensure the success of Messaging as a Platform.
Next Steps
- The next RCS A2P Future Messaging Labs will take place in Atlanta (31 Jan) and Barcelona (25 Feb). Register your interest to attend here and be part of the important discussions that are shaping the future of messaging.
- For more information about the RCS Universal Profile or to download Universal Profile 2.0 click here.
- For more information on the GSMA Future Networks programme, please visit here.