SmartMS - The new standard for Operator-driven Mobile Messaging
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The document outlines the challenges that mobile operators face from over-the-top (OTT) messaging services, which have resulted in significant revenue losses from traditional SMS and MMS. It introduces Smart Messages Service (SmartMSTM) as a solution that enables operators to offer both legacy and IP-based messaging services while maintaining control over subscriber data. The paper discusses strategies for operators to adapt to the changing landscape, including partnerships with OTT providers and investment in new messaging technologies.
SmartMS - The new standard for Operator-driven Mobile Messaging
- 1. Mobile Messaging White Paper Introducing Smart Messages Service (SmartMS™) For more information about SmartMS™, please visit http://www.SmartMS.com For more information about StreamWIDE, please visit http://www.streamwide.com © 2013 StreamWIDE
- 2. Legacy Mobile Messaging Models under Over-the-Top (OTT) Pressure After twenty years of SMS existence, telecom industry now widely understands that legacy mobile messaging models are being actively challenged by OTT players: manufacturers, pure mobile startups, or Internet giants investing massively to seize control over mobile services. As a matter of fact, OVUM estimated that Operators lost $8.7 billion in mobile messaging revenues in 2010 (6% of overall market), and up to $13.9B in 2011 (9% total revenues). First victims are operators providing services in countries where large proportion of the population use prepaid subscriptions, as SMS/MMS is consumed through prepaid recharges which include limited number of units. Western countries’ operators providing flat rates for unlimited texting feel less concerned so far, we’ll see later in the paper why they should do so. Several factors will accelerate this trend, forcing operators to react: emergence of cheap smartphones leading to an overall penetration growth, development of urban WIFI networks enabling consumers to use Instant Messaging (IM) systems even without paying for mobile data packages, drilling explosion of social networks offering their own IM services. LTE Forces Operators to Prepare for the Future of SMS Long-Term-Evolution (LTE), a norm for 4th Generation Mobile Networks, has been specified by 3GPP in its release 8. Designed as a pure packet switched system, the intention behind LTE is two-fold: carry data faster on mobile networks in order to cope with the booming user demand for connected mobile services and implement Voice over LTE (VoLTE) so as to fully replace the circuit-switched domain. Two different methods exist to ensure continuity of SMS service in LTE networks: • SMS over SGs: a mechanism to transmit circuit-switched SMS over the LTE radio network • SMS over IP in IMS networks, requiring IP-Short-Messages-Gateway using SIP messages protocols ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 2/11
- 3. When first method is currently convenient but probably not durable in the long-term, IMS- based option is built to be future-proof but will take time to become a worldwide standard. Even if SMS is poised to keep on living for many more years, one can feel carriers are slowly but steadily forced to create long-term strategies to migrate a larger part of mobile text and multimedia communications towards IP. Operators Face Key Strategic Decisions Facing both business and technological challenges, Operators face different options suiting different strategies represented in the high-level graph below (Fig 1). Fig 1. Possible Operators strategies to face OTT threat and SMS market decline • “Dodging” Strategy What we define as “dodging strategy” includes several types of actions such as preventing end-users from accessing OTT services (through APNs blocking for example), or adapting the price grid and offer discounts on legacy services hoping that the user changes their mind and finally prefer using SMS plans instead of using Whatsapp (for example). One can easily guess that once the virus of OTT has begun to spread, there is no easy work-around and it’s likely that blocking users or offering them discounts will, at best, damage the remaining margins, at wort create massive churn and destroy even more value. ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 3/11
- 4. • Services Strategy According to StreamWIDE, Operators have no choice but to be proactive, take back the lead and select a strategy oriented at providing the best services to the different segments of subscribers. This will be done either by investing, or by partnering with existing service providers. a) Investing a. Value-Added-Services (VAS) vendor: selecting a mobile messaging application provider that does not necessarily belong to the RCS ecosystem. Operators will find many advantages in selecting a VAS vendor, such as a good integration level with their existing core network, a guarantee to keep control of the subscriber’s data, security to work with independent durable company not tied to VCs money pipe that could suddenly dry out. b. In-House App: As we are writing those lines, very few operators have selected this strategy but the largest ones, the most relevant example being Telefonica with their application “Tu Me” (“You Me” in English). With the creation, support and evolution of such a service involving large teams and dedicated skills that do not align with operators’ core businesses; we consider this path limited to very few players in the industry and likely not to become the favorite move. c. Rich Communication Services (RCS): Promoted as the obvious choice in operator’s combat against OTT, RCS and notably RCS-e and the “Joyn” initiative brings the promise of a new cross-operator standard providing presence-based mobile IM features on top of innovative service such as In-Call multimedia sharing. Nevertheless, four years after its creation, RCS still sees little adoption by operators, cautious about the amount of CAPEX involved to enter the project, as well as by the time needed to get a large set of RCS-capable handsets. b) Partnering a. Partnering with an existing OTT service provider is a short-term seducing option as it involves no CAPEX, gives Operator access to an existing user base and existing brand. However, it is necessary to point out that selecting such option leads to key strategic questions that might question the model in a long-term perspective: Who holds the user data? How ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 4/11
- 5. Operators can align their own branding strategy with OTT strategy? Which level of security is guaranteed by OTT? How durable the OTT will be (what happens with customer data the day Facebook purchases Whatsapp?)? Going Dumb Pipe? Understanding the Subscriber Value in Messaging Services Contrary to online content-based services ruled by OTT and Internet giants (YouTube for instance), interpersonal mobile messaging is a natural carrier service. Mobile operators are capable of connecting two mobile users anywhere in the world through a call or a text and make it with respect for communications privacy. Customers trust them for that, and understand perfectly that this is something no OTT will ever accomplish. Nevertheless, according to Coleman Parkes Research, “70 % of mobile operators believe that over-the-top service providers present an opportunity for partnership, rather than a threat” (research conducted in 2012 for Amdocs). As a matter of fact, considering the increasing proportion of data among carriers’ revenues (US Carriers data revenues accounted for up to 40% of overall revenues in 2012), some players might then be tempted to follow a low-cost approach to data services and choose to let handle the OTT provide the advanced services to their subscribers. However, interestingly enough, still according to Coleman Parkes Research, “66 % of service providers said that they must “own the customer” in any partnering agreement, while only 13% of device manufacturers and 14 % of OTT players are prepared to envision a future in which they cede ownership of the customer experience.”. What this statement proves is that even if both sides seem to have interest in cooperating together, each of them has totally opposite points of views when it comes to strategic notions such as ownership of the end- user knowledge and user experience. Ownership of subscriber data is the key battlefield in this new eco-system. Subscriber is the real valuable asset OTT and Operator are fighting for. Giving away this value jeopardizes future ability for Operators to pay back their network investments and monetize their own brands. ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 5/11
- 6. Introducing SmartMS™ Technology 1. Solution Overview SmartMS™ Technology is an Application Server and a suite of white-label Mobile Messaging Applications designed to enable Mobile Operators to play an active part in the combat against OTT and prepare the evolution of SMS/MMS towards IP-based messaging. 2. Go Beyond OTT by Bridging the Best of Both Worlds Carrier-Grade Mobile Messaging Application Server • SIP-based Mobile Messaging technology compatible with IMS (IMS not mandatory) • Software runs on standard or virtual servers • 3G and LTE compatible • Robust, scalable Core Network components • Seamless Integration with OCS/Prepaid Systems • Server-side security: Denial of Service Protection, Firewalling, end-to-end messages encryption White-Label Mobile Applications SmartMS™ gives Operators a unique possibility to put back their brands at the center of everyday User Experience by providing white-label applications. • Android Application for Android 2.3 and higher • iPhone Application for iPhone 5.0 and higher • Blackberry Application (roadmap) • Certified Apps Ecosystem (through SmartMS™ open API policy) • Easy branding and localization capabilities for Service Providers • Client-side security: Secured User Identification, Anti-spam policies, Messages Filtering, Encryption Conversations List 1 to 1 Conversation ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 6/11
- 7. Transparent & Unified SMS/MMS and IP Messaging Experience SmartMS™ preserves Operators’ SMSC/MMSC investments by bundling legacy and IP-based services into one single seamless experience, offering key differentiator against OTT players. • SMS and MMS Integration • SIP-based Mobile Messaging • One-to-one, One-to-Many and Group Messaging • Multimedia File Transfers: Image, Video, Sound, Map Location, Contact Card, Calendar Event • Mobile address book integration Phone Number Based Registration SmartMS™ adopts successful OTT key recipe for success: phone-number based registration. Thanks to a secure exchange of unique and temporary security codes sent by SMS, users register to the app immediately after download without filling a long and painful form, and can start using the app right away. No more login/password to remember, no more “I lost my password”….. Guaranteed Messages Delivery SmartMS™ guarantees all IP messages are delivered by falling back to SMS, either on sending failure, or reception failure. This feature provides a significant advantage no other OTT or concurrent vendor application offer today. • Rich Fallback mechanisms (on sending & receiving) • Mobile Notifications (Push mechanisms) • Management of data connectivity losses • Rich user settings capabilities One-to-One and Group Push to Talk Application includes a Push-to-Talk tab enabling operators to provide fancy IP-based voice communication functionality without cannibalizing their legacy circuit- switched voice business. Group Conversation + Messages delivery confirmation Push-to-Talk ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 7/11
- 8. 3. RCS-Compatible Technology SmartMS™ is not a RCS-compliant solution since the system doesn’t follow the RCS detailed requirements and doesn’t involve investing in IMS core network neither in RCS-specific equipments. Nevertheless, StreamWIDE mastering of the RCS API and protocols SIP (Signaling), MSRP (Transmitting Communications) and XDMS (Contact Management and Presence) will enable SmartMS™ users to exchange text and multimedia with RCS users. A dedicated gateway is installed besides SmartMS™ servers for Operators wishing to activate this option. 4. Clearing House Services to Ensure Interoperability Leveraging the Cloud, SmartMS™ provides Clearing House services to Operators wishing to provide seamless interoperability between their own SmartMS™ users and competitor (or foreign) off-net application users. Clearing House services ensure each Operator keeps ownership of their own subscribers while taking away the hassle of setting up interoperability agreements with their peers. ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 8/11
- 9. Show me the Money! Like any other VAS investment decision, launch of a mobile messaging application is valued by operators according to its capability to Pay Back the Investment and secure a fast Return On Investment. In prepaid environments, an application such as SmartMS™ could be monetized through various strategies: • Free IP Messaging when Topping Up account with SMS and/or Voice credits o Operators will bind the access to their Mobile Messaging Application to the usage of legacy services. Users will be granted unlimited IP Messaging and Walkie-Talkie usage as long as they keep a minimum amount of credits on their accounts, or until their recharge reach expiration date. SmartMS™ application is billed on a dedicated APN so that Prepaid/IN system makes it free to use for those filling the conditions. • Free Advertisement-Funded Application o Operators will offer a free SmartMS™ application on the markets and fund it through advertisement banners. Users willing to pay will access a second premium application, billed at download or monthly. • Flat Monthly Fee for Unlimited IP Messaging and SMS o Operators could be tempted to put a stop on massive leak of SMS money towards OTT by offering a flat fee including unlimited Instant Messaging on their Application + SMS usage. By doing this, users will feel they are given the same value proposal than OTT players, with SMS on top. Painless low monthly fees will be deducted automatically from their prepaid accounts. Operators will see a slower Return On Investment but at the same time will heavily slow down Churn and secure monthly revenues. In postpaid environments where operators might have already introduced flat fee plans for SMS/MMS, and sometimes for voice and data, SmartMS™ will help carriers: • Promote higher Services Bundles o SmartMS™ application download and data usage on the app could be given away for free for subscribers selecting highest services bundles ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 9/11
- 10. • Justify 4G/LTE Investments and Stimulate Data Consumption o Providing an innovative Mobile Messaging application will help carriers turn the promise of 4G and LTE more concrete and differentiate by communicating on something else than just speed of access Selecting the Right Strategy Market is evolving too fast and OTT providers are winning mindshare too quickly for Mobile Operators to afford waiting for RCS and RCS-e massive adoption. SmartMS™ provides a unique opportunity to take back the lead on mobile messaging, provide added value to mobile subscribers and prepare for a future shift to IP-based messaging while preserving legacy investments and revenues. Fig 2. Operators strategies on Mobile Messaging Pros and Cons Initial Reach: capability to address a large number of users and devices at service launch Alignment with Network: capability of the solution to seamlessly integrate with existing core network and VAS Interoperability: Capability to run the service seamlessly between different operators nationally or internationally ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 10/11
- 11. An established leader for value-added telephony services, StreamWIDE assists worldwide operators and service providers in shaping their telephony multimedia services innovation. From core network solutions to mobile and web apps, StreamWIDE delivers on-premise or cloud- based, end-to-end, carrier-grade, IP-based VAS solutions in the areas of mobile messaging, voice messaging, virtual numbers and telephony for social networks, convergent charging, conferencing, call center services, ringback tones and IVR. Operating from France, the USA, China, Romania, Tunisia, Austria, Russia, Argentina, Singapore, Indonesia, Australia and South Africa, StreamWIDE is listed on Alternext Paris (NYSE Euronext) - FR0010528059 – ALSTW. For more information about StreamWIDE, visit www.streamwide.com or visit our Facebook , Twitter or LinkedIn pages ©StreamWIDE 2013 Mobile Messaging White Paper - Introducing SmartMS™ 11/11