acision seizing the opportunity in messaging - us consumer research may 2012

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Seizing the Opportunity in Messaging US Consumer Research on Messaging Habits in the Smartphone Era May 2012

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Pesquisa da Acision nos EUA mostra o SMS dominando o mercado de mensagens sobre os serviços alternativos OTT. Alcance, velocidade e confiabilidade são as principais razões para a preferência, gerando oportunidades para as operadoras introduzirem novos serviços de mensagens de SMS, mas com recursos avançados para assegurar a relevância continuada de mensagens e as receitas • 91% dos norte-americanos proprietários de smartphone pesquisados ativamente usam o SMS, volume quase 2,5 vezes maior do que o aplicativo de mídia social mais popular e mais de 8 vezes maior do que o aplicativo OTT para smartphone mais popular • Dois terços dos proprietários de smartphones dos EUA (65%) declararam que precisam do serviço SMS, dos quais 45% se sentiriam perdidos sem ele • 62% dos usuários americanos de smartphones têm pacotes ilimitados de SMS, concluindo que o preço justo é o fator principal que influencia popularidade do SMS vs serviços OTT / IM • SMS &Serviço de Mensagens Instantâneas / OTT podem co-existir com os consumidores comprovem que usem canais de mensagens múltiplas depende do tipo de mensagem eo destinatário

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Page 1: Acision Seizing the Opportunity in Messaging - US Consumer Research May 2012

Seizing the Opportunity in Messaging

US Consumer Research on Messaging Habits in the Smartphone Era

May 2012

Page 2: Acision Seizing the Opportunity in Messaging - US Consumer Research May 2012

Seizing the Opportunity in Messaging US Consumer Research on messaging habits in the Smartphone era

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1. Introduction: Acision’s Consumer Research on Messaging .......................................... 2

2. Messaging Realities ................................................................................................... 2

3. Messaging in the Smartphone Era .............................................................................. 3

4. US Consumer Research on Messaging Habits ............................................................. 4

Characteristics of consumers likely to use SMS alternatives .......................................................... 4

SMS vs. OTT app uptake and usage ................................................................................................ 5

SMS vs. OTT app user experience ................................................................................................... 6

The value of SMS in US consumer’s every day life ......................................................................... 8

Seizing the opportunity in Smartphone messaging ........................................................................ 8

Seizing the opportunity in SMS messaging ..................................................................................... 9

5. Conclusions and Recommendations for Operators ................................................... 10

Conclusions ................................................................................................................................... 10

Recommendations for operators .................................................................................................. 10

6. About Acision .......................................................................................................... 11

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1. Introduction: Acision’s Consumer Research on Messaging

In January 2012, Acision commissioned independent research agency Vanson Bourne to undertake a detailed survey in the US and the UK to understand the consumer habits of, and usage patterns in messaging. The research covered all aspects associated to messaging today, including the devices, type of subscription, messaging services, usage, user experience and preferences. The research was conducted using a panel based methodology, using a representative sample of 1000 consumers per market, aged 18 years and up.

Motivation for this research was to understand the usage of SMS messaging versus SMS alternatives like iMessage, WhatsApp and Facebook, particularly in light of continuous media hype around the impact of these alternatives on operator SMS traffic and revenues. Acision also wanted to assess and understand the consumer drivers behind alternative messaging services. The objective is to provide operators with guidance on how to deal with messaging in a Smartphone dominated world and secure SMS revenues now and in the future.

This research paper applies the following structure: Chapter 2. examines the messaging realities by presenting analyst data and predictions on SMS usage, SMS alternatives usage and operator revenues. Chapter 3. provides a theoretical framework on messaging in the Smartphone era, including a high level view of what drives the uptake of different messaging services. Chapter 4. presents a deep dive into the US consumer research, detailing the consumer data on uptake, usage and user experience, as well as defining the opportunities in messaging for operators. Finally, chapter 6 summarises the conclusions of the research and provides recommendations for operators.

2. Messaging Realities

Over the past year, the media has been flooded with articles about how SMS revenues are being impacted by its OTT (over the top) counterparts. Many times, these articles are accompanied by very strong and unambiguous one liners heralding the death of SMS (picture on the right). Even though it is without a doubt that SMS alternatives can count on increasing popularity, the conclusion that they are actually ‘killing’ SMS is premature. It is understandable of course that a 20 year established power house like SMS is a well suited target for a media bonanza, however this has to be taken lightly because if you put it into perspective, it has been and still is the single most successful and profitable data service for operators around globe today. Person to person (P2P) SMS or text messaging represents a $100+ billion operator revenue stream and will continue to grow for years to come

1. The

number of SMS users will grow from around 7 billion in 2011 to over 10 billion in 2016, generating over $120 billion in operator revenues. SMS traffic shows an ever bigger growth, from 5.9 trillion messages in 2011 to 9.4 trillion in 2016.

However, this doesn’t mean that the recent media hype is based on fiction. Take WhatsApp for example, this Smartphone OTT app is platform independent and available for iPhone, Android, Symbian, Windows and Blackberry. It is the top-selling iPhone app in 61 countries and among the top 10 highest revenue-grossing iPhone apps in 47 countries

2. A recently published report from Informa

predicts that the number of mobile instant messaging users will grow from around 1 billion in 2011 to almost 4 billion in 2016, with consumer spend growing from over $5 billion in 2011 to over $15 billion in 2016. Traffic is expected to grow from around 1.5 trillion messages in 2011 to over 7 trillion messages in 2016. While these OTT messaging services will continue to grow in popularity, they still have a long way to go to catch up with the revenues generation from SMS.

1 Informa March 2012, Portio Research February 2012

2 Financial Times, November 2011

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Taking the analyst viewpoints into consideration, these are the messaging realities:

SMS remains a key driver of operator revenues and profitability for years to come;

Pressure on SMS traffic and revenues might be a reality in some markets, but not to the extent as implicated by some of the media;

SMS remains the only unambiguous and dominant messaging service available for all mobile phones globally, with 2.5 times the reach of the OTT apps in 2016;

Both SMS and OTT apps show significant growth in users, usage and revenues, indicating that OTT apps provide an alternative for, as well as an additional service next to SMS, not a pure substitute.

SMS unmatched reach provides opportunities for additional traffic and revenue growth through enterprise services and enhanced services

The next chapter provides a theoretical framework on messaging in the Smartphone era including a high level view of what drives the uptake of different messaging services.

3. Messaging in the Smartphone Era

The SMS service is still fundamentally the same service today as when it was introduced 20 years ago and more popular than ever. This popularity is based on five key fundamentals:

Reach: SMS is available on virtually any handset and can be used across operator networks globally. It has unparalleled connectivity;

Reliability: SMS has unmatched service uptime and delivery success rates;

Speed: SMS delivery is instant and 90% of SMS messages are read within 3 minutes3

Open rate: 98% of SMS messages are opened4

Ease of use: SMS messages can be composed and replied to in seconds

Even with a track record of 20 years, there is one major development responsible for compromising the untouchable status of SMS: Smartphone adoption. This has created the opportunity for practically anyone to design and market messaging apps targeted at Smartphone owners. Even though these services lack the reach and reliability of SMS, they compensate this with an enhanced user experience, offering new messaging features like delivery notification, content sharing, see a response written, status updates and so on. But most important, these services are virtually free of charge – if not on a free WiFi network, all the consumer has to pay for is their mobile broadband package to utilise these services. For some operators, like in Taiwan, the Netherlands and Saudi Arabia, the popularity of SMS alternatives have come as a surprise and they are now facing pressures on their SMS traffic and revenues. This becomes clear when taken a closer look at the Smartphone adoption cycle (graph on the right).

Critical mass of Smartphone penetration is the prerequisite for alternative to SMS

Where feature phone owners can only use the SMS service, Smartphone owners can connect to the internet via mobile networks or WiFi and download SMS alternatives. Once critical mass of Smartphone penetration is reached, OTT app communities provide sufficient reach to become a viable alternative for SMS.

3 Mashable, 2010

4 Frost & Sullivan, 2010

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Pricing is the trigger

Without any competing service, pricing of SMS has seen little or modest erosion over the past 20 years. Even today, out of bundle prices for SMS can easily exceed $0.10 to $0.20 per message. Unless Smartphone owners are on unlimited bundles, they have a very strong cost incentive to look for alternatives, especially when sending media files such as photos, and they are willing to compromise on the reliability of the service. If operators hold on to their traditional pricing models, SMS traffic and revenues will be seriously impacted.

Enhanced messaging features will be the next battleground

Where the major driver for OTT messaging adoption is price, they also provide an enhanced user experience with all types messaging features. There is a great opportunity for operators to introduce a service on top of SMS that matches or exceeds the user experience offered by the OTT apps today and leverages SMS reach and reliability. If operators fail to launch enhanced services that can compete with the OTT applications today, P2P SMS traffic and revenues will come under increasing pressure as Smartphone adaption increases. Even though operators are planning to launch RCS, a mobile enhanced messaging services that offers features like instant messaging, video sharing and buddy lists, they cannot ignore the urgency as the alternative services mature and Smartphone adoption increases – in some countries this already exceeds the critical mass of 20%.

The next chapter presents a deep dive into the US consumer research, adding consumer insight to the generic market data and theoretical framework outlined in the previous two chapters.

4. US Consumer Research on Messaging Habits

In January 2012, Acision commissioned independent research agency Vanson Bourne to undertake a detailed survey in the US to understand the consumer perception of and usage patterns in messaging. The research was conducted using a panel based methodology of 1000 consumers, aged 18 years and up and split in 4 age groups of 250 respondents (see graph below). The research showed that Smartphone ARPU significantly outweighs feature phone ARPU and that Smartphone users also represent the most excessive messaging users. The research therefore focuses on the Smartphone segment, which is represented by 612 respondents.

Acision has chosen to investigate the US as this is the most developed country in terms of Smartphone uptake and high speed network deployments like LTE. This chapter takes a closer look at the consumer characteristics that are likely to use SMS alternatives, uptake, usage and user experience of SMS vs. OTT apps, the role of SMS in consumers’ every day life and how operators can seize the opportunity in Smartphone messaging and SMS.

Characteristics of consumers likely to use SMS alternatives

The first step of the research consisted of identifying which part of the subscriber base has access to the SMS alternatives and is likely to use them.

Smartphone owners. As indicated in the previous chapter, Smartphone ownership is a prerequisite of usage of SMS alternatives. In our research, 61% of respondents own a Smartphone, with the majority of owners aged between18-34. But penetration is also well above 50% in the 35-54 age category (graph on the right).

Mobile internet subscription. It might be expected that a mobile internet subscription is required to gain access to the OTT apps but with WiFi access widely available, 19% of US Smartphone owners stated that they are not subscribed to a mobile internet service. This segment of Smartphone owners does not have 24x7 access to the OTT apps, which means that when they are not on a WiFi connection they only have access to the SMS service.

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Pricing models. The US was one of the first to introduce unlimited SMS packages. On average 62% of US Smartphone owners questioned have unlimited SMS pricing packages. Even though this takes away the cost incentive for the majority of the subscriber base to use SMS alternatives, this also means that 38% have a cost incentive to look for alternatives to save on their SMS bundle. Users at high risk of moving to SMS alternatives are the 24% of US Smartphone users that stated they have purchased additional SMS bundles, as well as the 5% of Smartphone owners that state they are using SMS alternatives to prevent purchasing additional bundles. Looking in more detail at the age groups (graph on the right), there is a clear correlation between penetration of unlimited SMS bundles and age, with 74% in the age category 18-25 subscribed to unlimited SMS bundles. At 42%, the penetration of unlimited SMS within the 55+ age group is relatively low for the US, but still significantly higher compared to the rest of the world.

SMS vs. OTT app uptake and usage

US consumers have little cost incentive to use alternative messaging services due to the high uptake of unlimited SMS bundles. This paragraph provides more insight on how this affects the actual uptake and usage of SMS versus OTT apps.

Before going into more detail, a closer look at the different types of OTT apps is required. First there are the social media / traditional desktop apps that have extended to the Smartphone, like Facebook,

Skype and Twitter. A main characteristic is that these apps use names and aliases and are not linked to the user’s phonebook. In addition to these, there are OTT apps specifically designed for Smartphones and that mimic the traditional SMS service, like iMessage, Blackberry Messenger and WhatsApp.

Looking at OTT app uptake, over half of US Smartphone owners state they are using SMS alternatives to send messages (pie chart on the left). Uptake is especially high at 70% amongst the 18-25 age group and at 59% amongst 26-34 age group, indicating they are especially popular with the younger population of US Smartphone owners, who build communities with friends.

THE PRIMARY INCENTIVE TO USE SMS ALTERNATIVES, COST, IS LIMITED IN THE US

The majority of US consumers have access to OTT apps, with around 3 out of 4 consumers within the age groups 18-25 and 26-34 owning a Smartphone. This high penetration of Smartphones would have a major impact on SMS traffic and revenues if combined with restricted SMS bundles. US operators have acted appropriately as the majority of US Smartphone owners are subscribed to unlimited SMS bundles, eliminating the cost incentive for using alternatives.

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SMS vs. OTT app uptake. The graph below not only shows the high uptake of SMS and MMS despite the availability of OTT alternatives, but also demonstrates that the market for OTT apps is highly fragmented, consisting of a variety of relatively small, closed communities. OTT app uptake in the US is driven by social media, with Facebook penetration peaking at 48% for the ages 18-25 and at 44% for 26-34. Smartphone OTT app uptake is driven by device specific apps (iPhone and Blackberry), which are restricted in nature to the number of devices they are able to sell. WhatsApp has, as the only platform independent solution in this research, an uptake of only 5%.

SMS on the other hand is actively used by 91% of US Smartphone owners. This is almost 2.5x the reach of Facebook, by far the most popular of the social media / traditional desktop apps and over 8x the reach of iMessage, the most popular Smartphone OTT app. Also MMS has significant higher reach, with over 1.7x the reach of Facebook and almost 5.6x the reach of iMessage.

SMS vs. OTT app usage. Next to service uptake, the actual usage of the service is another key performance indicator when comparing messaging services. With 107 messages, SMS scores significantly higher on average messages sent per week compared to any of the alternatives.

The most populare Smartphone OTT app iMessage generates 78 messages per week and the most popular social media / traditional desktop app Facebook generates 67 messages (graph on the left). Looking at the age categories, respondents aged 18-25 sent, by far, the most messages per week, averaging 809 across all channels, with SMS (176) and Blackberry (165) being most used service. Respondents aged 26-34 sent 519 messages per week, with SMS (103) and iMessage (83) most used. Respondents aged 35-54 (243) and 55+ (152) sent significantly less messages.

SMS vs. OTT app user experience

As SMS and OTT apps are different in the features they offer, the research investigated how this

influences the user experience. Respondents were asked why they are using SMS instead of the OTT

apps and OTT apps instead of SMS. Also respondents were asked how they rate the core service

performance in terms of reliability and speed.

THE PRESENCE OF OTT APPS FUELS OVERALL MESSAGING TRAFFIC

Interesting enough, the data shows that OTT app uptake and usage actually is fuelling messaging traffic and does not, as often implied in the media, function as a pure substitute for SMS. This goes especially for the traditional desktop / social media apps where of the 55% that use SMS alternatives, two thirds are using Facebook. This shows that consumers use multiple messaging channels simultaneously based on the type of message they want to send and to what audience. The data also shows that SMS remains dominant, both in reach and usage.

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Reasons to use SMS instead of OTT apps. According to the graph below, the most important

reason for consumers to use SMS is they are assured the message will arrive in secs (47%).

Reach is the second reason (43%) as SMS is

available on every phone and Reliability the

third (38%). Price is number four (31%), which

indicates that users with unlimited SMS

bundles do not see price as an inhibiting factor

and are probably reluctant to address their

mobile internet bundle by using OTT apps.

Fifth is send to group (29%), which is also

related to the unparalleled reach of SMS. This

shows that besides cost, all the key drivers to

use SMS are related to the core service KPI’s

speed, reach and reliability.

Reasons to use OTT apps instead of SMS. As the graph below shows, the main reason to

use OTT apps is the ability to share content (28%), with social media apps designed to share

content with the user’s community, while the Smartphone OTT apps are designed to share

content with specific users. Second and third are the instant characteristic of OTT app

messaging (27%) and the ability to use the app across devices, so Smartphone, Tablet and

Laptop (25%). The fourth, no phone number

available (23%), specifically refers to the

social media OTT apps, where there is no

link between a contact and the user’s phone

book. The fifth reason is the ability to share

the user’s status or mood (21%). With the

key trigger for OTT app usage, cost, being

eliminated by US operators through unlimited

SMS bundles, there is a clear view on the

secondary drivers for OTT app uptake and

usage, which can all be classified as

enhanced messaging features.

Service reliability and speed. When asked about reliability of the service, almost half of the

respondents state SMS is more reliable, against 7% stating OTT is more reliable (graph below).

Of the most excessive messaging users, aged

18-25, even 60% rate SMS as more reliable.

This probably has to do with the fact that

mobile internet connections are less stable and

reliable compared to SMS connections and

service interuption can occur anytime. When

asked about the speed of the service, 40%

state SMS is faster, against 12% stating OTT

is faster. Further analysis shows that 33% of

respondents find ‘SMS is the most reliable and

fastest’ against 4% finding ‘OTT is the most

reliable and fastest’.

CORE SERVICE PERFORMANCE REPRESENTS THE HIGHEST CONSUMER VALUE

Both services have their own specific competitive advantage. Smartphone OTT apps offer enhanced messaging features, while SMS offers unmatched core service performance in speed, reach and reliability. There’s a significant difference in value that consumers attribute to them. The most important reason to use OTT apps, content sharing, shows 28% support. Significantly lower than the most important reason to use SMS, arrive in secs, which shows 47% support.

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The value of SMS in US consumer’s every day life

When asked about the importance of SMS, 65% of US Smartphone owners state they cannot do without SMS, with almost half of them (45%) stating they’d be lost without SMS. Most encouraging is that the biggest users of OTT apps, aged between 18 and 34, are also the ones that show the highest dependency on SMS (graph on the right). Together with the data on OTT app uptake and usage it shows that SMS and OTT apps can live harmoniously together, with SMS remaining to be the preferred messaging channel for consumers. It needs to be noted that this situation can only be preserved if market conditions remain the same and therefore OTT apps lack reach, reliability and speed. This can change with the deployment of LTE networks and competition will shift from core service performance to enhanced features.

Seizing the opportunity in Smartphone messaging

As concluded in the previous paragraph, it is key for operators to launch enhanced messaging features that can compete with the smartphone OTT apps. When asked about the attractiveness of an operator service that includes the capabilities of SMS / MMS / IM / file transfer / group chat and video sharing, over half the consumers (52%) stated they will certainly or likely use this operator service (pie chart on the left). Encouraging is that only 5% of US Smartphone owners stated not being interested in such a service. When taking a closer look at the age categories, it shows that especially consumers aged between 18-34 are highly interested in these type of service (60%), which is encouraging as they also represent the most excessive users of OTT apps.

When asked about what such a service should look like, the provided top six service requirements are all related to cost and core service performance and not to the enhanced features itself (graph on the right). As explained in chapter 3, pricing is the trigger for OTT app uptake as consumers start looking for alternatives to save on SMS expenses. This is clearly reflected in the new service requirements, with cost related elements stated as number one, two and four, namely a lower price compared to the existing service (63%), included in package (57%) and the service price (47%). The other three reasons complementing the top six are all elements related to the core service performance and that build on the competitive strengths of SMS over the OTT apps, namely reliability (50%), instant delivery (45%) and reach all (42%).

HIGH SMS DEPENDENCY TODAY PROVIDES NO GUARANTEES FOR THE FUTURE

The research data indicates that the next battleground of competition will take place on enhanced features. Are operators able to launch enhanced messaging features and eliminate the smartphone OTT app competitive advantage? Or are the smartphone OTT apps able to improve the core service performance and increase their reach and reliability? It is without a doubt that the operators are the ones with the most to loose. They run a multi billion dollar and highly profitable business, so if they are not able to successfully launch a service that can compete with the smartphone OTT enhanced features, part of their SMS business will be at risk. On the positive side, SMS will remain the primary service for years to come as there will not be a service that can challenge the reach and reliability of SMS.

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Even though core service performance is valued as most important by consumers when selecting a new service, there is a clear demand for enhanced messaging features (graph below). Most popular

would be a service that can be used across different devices (35%) and allows consumers to share content (32%). Other specific Smartphone OTT app like features ‘See a reply written’ and ‘Message string’ are stated as a key requirement by almost a quarter of the respondents (24%). Group chat and share status are named as enhanced feature number 5 and 6 by respectively 18% and 14% of consumers. The most prominent in this list of service requirements is the relatively high demand for content sharing, which indicates that operators are not fully utilizing the potential of MMS. This can provide a quick win for operators if they improve the reach, package it differently with unlimited bundles and invest marketing dollars to improve consumer perception and stimulate usage.

Seizing the opportunity in SMS messaging

Even with a track record of 20 years, the SMS service is fundamentally the same service as it was when introduced. As this is quite unique for a consumer service in a technology driven market, the research polled consumers if they are interested in features that enrich the SMS service. Based on a five point scale, 1 being not attractive and 5 being very attractive, consumers provided the following top 5: Notifications are valued as most attractive (3.6), followed by Black/White listing and Message search (3.5). Group messaging is also perceived as an attractive service, with group one-to-many and group many-to-many both valued at 3.4. This shows clear demand for services that enrich the SMS experience and facilitates group messaging with different communities or friends. The demand is further validated by the fact that 28% of US Smartphone owners are willing to pay a small fee for these type of services. So even in a cost centric world, there exist consumer segments that are willing to pay for an enhanced user experience.

THERE’S HIGH CONSUMER DEMAND FOR AN OPERATOR LIKE OTT SERVICE

The research confirms high consumer demand for a service that leverages SMS core service performance strengths reliability, speed and reach and provides the OTT app enhanced features. This is not a revolutionary idea, especially in the light of the planned launch of RCS. There exists the impression that such a type of operator service will replace SMS but this not feasible as RCS will not be able to match the reach of SMS, at least for many years to come. So it needs to be emphasized that such a service has to be provided on top of SMS and that native SMS continuity needs to be secured, also in full IP networks like LTE. If not, one of the key fundamentals of SMS success, reach, will be lost.

THERE’S HIGH CONSUMER DEMAND FOR ENHANCED SMS FEATURES

The research confirms high consumer demand for enhanced features on the SMS service. Even though many have been available for years, few of them have actually been implemented. This is partly due to the high cost and complexity of deploying such a service, making it hard to create a positive business case as these services address relatively small market segments. With cloud delivery models maturing, these types of features can be launched without complex deployments using shared revenue models, eliminating risk for operators.

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5. Conclusions and Recommendations for Operators

With any new service challenging the establishment, the popularity of OTT apps has been a common topic in the media, with many predicting the ‘death’ of SMS. Even though the research shows that this ‘death’ is highly exaggerated, it is well documented that some operators around the globe are feeling pressure from these OTT apps. So where the media draw conclusions based on OTT app uptake and the revenue warnings from a handful of operators, this research also analyses the actual uptake, usage and experience of consumers. By combining both, Acision is able to provide clear guidance on how operators can successfully compete and co-exist with the OTT apps.

Conclusions

The Acision consumer research combined with market analysis has led to the following 6 conclusions:

1. Critical mass of Smartphone penetration is the key pre-requisite for OTT adoption, not mobile internet penetration. As 1 in 5 Smartphone owners do not have a mobile internet subscription, there are many consumers that only have access to the OTT apps via WiFi.

2. Price is the key consumer requirement that determines choice of messaging channel. Consumers will always look for the lowest price per message when they can choose from alternative services.

3. Core service performance is the most important driver to use a messaging service and is the key consumer driver to use SMS instead of the OTT apps. The latter services represent fragmented communities with restricted reach and best effort delivery via less stable mobile internet connections. Currently, they are not able to match SMS’ core service performance

strengths in reach, reliability & speed.

4. Enhanced messaging features are the most important drivers to use SMS alternatives. Consumers are clearly looking for an enhanced user experience in messaging. Content sharing and cross device availability are named as key drivers to use OTT apps instead of SMS.

5. SMS and OTT apps can co-exist as consumers use multiple messaging channels depending on the type of message they want sent and with what audience. Also, the popularity of the OTT apps is fuelling the number of messages consumers send, especially within the 18-25 and 26-34 age groups.

6. Enriched messaging features are the next competitive battleground. It is contradiction, but operators are spending billions of dollars that actually improve the lagging core service performance of OTT apps. By subsidising / stimulating Smartphone sales (reach) and deploying next gen / LTE networks (reliability), they are reducing SMS’ key competitive edge. So operators should look to compete on enhanced features, the OTT apps current competitive edge.

Recommendations for operators

Based on the research and Acision’s experience as the global market leader in messaging, Acision has developed the following 6 recommendations for operators:

1. Eliminate the cost incentive for Smartphone owners to use alternative messaging services. By offering unlimited SMS and MMS with mobile internet subscriptions, the US market has shown that OTT app impact on SMS uptake and traffic can be contained.

2. Launch an enriched messaging service. Many operators may look at RCS as the Holy Grail of an enriched messaging service, but in many markets it will take years before all operators launch RCS and adoption of RCS enabled handsets has reached critical mass. In the meantime, operators can partner with the Smartphone OTT apps. By offering an integrated messaging service that combines best of both worlds operators can profit from the increase in messaging usage and, most important, understand what drives consumer messaging behaviour and needs.

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3. Utilize the full potential of MMS. With content sharing stated as the most important feature that

drives OTT app usage, optimising MMS utilisation should be a key operator objective. MMS

network infrastructure is readily available, but still lacks in reach and the positive consumer

perception required to drive traffic growth.

4. Secure native SMS in LTE. The reason is straightforward as there will not be any messaging

service available that comes close to SMS’ reach. Also, native SMS should be an integrated

service within the RCS offering. It is a misconception that RCS will function as SMS 2.0, as even

RCS will not be able to match SMS’ reach within the next 5 years. A converged platform that

enables delivery of all messaging services from SMS, MMS to RCS and OTT, is the answer.

5. Enrich the SMS service. There are still many opportunities to extend the SMS service with new

features like notifications, black/white listing and group messaging. These types of features can

drive additional revenue streams and increase service stickiness. By using cloud delivery models,

operators can keep complex deployments at a distance and significantly decrease time to market.

6. Utilize the full potential of enterprise messaging. The high consumer dependency on SMS

provides opportunities in enterprises messaging as this market has not yet matured. In order to

fully utilise the revenue potential of Application to Person (A2P) messaging, operators need to

unlock the messaging infrastructure and meet enterprise requirements that will drive exponential

growth. This is even more relevant for MMS.

6. About Acision

As the global leader in mobile messaging, Acision connects the world by powering relevant, seamless

messaging services, which enrich the mobile communications experience and create new

opportunities for carriers and enterprises across the world.

Acision's proven innovation and expertise extends across our comprehensive portfolio of real-time

messaging and charging solutions and services, which have been designed to support our customers’

requirements across 2G, 3G and LTE networks, while enabling the monetisation of messaging

services and maximising total revenue capture.

Acision's messaging portfolio helps our customers unlock and protect the full potential of their existing

mobile communication channels, while supporting the evolution to IP/LTE services and increasing

return on investment. As a leading messaging provider, Acision is uniquely equipped to deliver the

future of mobile messaging services, powering innovation and profitable growth for operators and

service providers across the globe.

Acision’s charging solutions address a range of critical charging challenges being faced by operators

in today’s competitive environments to ensure differentiated pricing models and continued revenue

capture.