RCS THE GLOBAL PERSPECTIVE

DAVID O’BYRNE, PROGRAMME DIRECTOR - GSMA

RCS LAUNCH STATUS

60 RCS Launches

90 Announced

Multiple RCS launches

RCS launched

RCS launch forecast for 2018

Forecast to go from one to multiple launches in 2018

100% launched

Facebook Messenger

The 3 Waves of Communications and Messaging

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100

200

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400

500

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800

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1000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Millions WhatsApp

We Chat

KIK

iMessage

Viber

LINE

SnapChat

BBMTelegram

AIM

Nimbuzz!

Tango

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Millions

Facebook Messenger

Mobile Messaging Has Reach!

WhatsApp

We Chat

Global SMS/MMS

The US in Unique

Source: Ovum, Juniper, Statista, GSMA; Delta Partners analysis; Note (1): Unique subscribers; (2) Excludes A2P

82% 82% 82% 82%

33%44%

50%55%

2014 2015 2016 2017

Text messages OTT Instant messaging

Monthly active users as % of wireless phone users1, USA(%)

Number of SMS2 sent per month per wireless phone user1, USA(#)

229 211

191 177

2014 2015 2016 2017

89% 88% 84%73%

66%58% 55%

Penetration of IM per country, 2017

US Sees Higher Usage of SMS/MMS vs Other Countries

Source: Ovum, GSMA; Delta Partners analysis; Note (1): Unique subscribers; (2) Excludes A2P

177

93

31 20

10 4 3

Number of SMS sent per month per subscriber, 2017

RCS BUSINESS MESSAGING REVENUE

To protect and grow messaging revenue: Operators need to deploy RCS and move from Messaging to Messaging as a Platform

*Sources: GSMAi, Portio research, company press releases,

industry estimates. No estimations for OTT A2P before 2016

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10000

20000

30000

40000

50000

60000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

P2P SMS Messaging A2P SMS Messaging

P2P OTT Messaging A2P OTT Messaging A2P SMS is still growing (~5% CAGR) to reach $74bn by 2021

OTT apps do not yet rival SMS for penetration or trust

Vo

lum

e. B

n

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

7000

6000

1000

0

3000

2000

5000

4000

OTT

SMS

VOLUME Bn

A2P Business Messaging

EXPANSION OF OTT PLAYERS BUSINESS MESSAGING SOLUTIONS

Aggressive expansion in Business Messaging (A2P) from OTT players

Apple, WhatsApp and Facebook have all launched business messaging, with forecasts indicating the volume of OTT business messages already exceeds that of business SMS (PortioResearch).

OTT messaging providers are aggressively targeting digital marketing revenue, monetising their scale and reach, already surpassing premium SMS Business messaging traffic volumes, capturing the attention of Brand investment.

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

7000

6000

1000

0

3000

2000

5000

4000

OTT

SMS

VOLUME Bn

RCS BUSINESS MESSAGING VS OTT POSITIONING

Evolution from SMS A2P with rich content

Massive potential reach & SMS fallback

Trusted MNO channel

Business pays to send to end users

P2A chatbot support

Independent & open

Allow businesses to reach opted-in users

Customer service and notifications

WhatsApp Business app for SMEs

WhatsApp Enterprise API for larger businesses

Pricing now published

Opens up iMessage for users to engage brands

Prime use case is Customer Service

User always in control

Deep integration to iOS for great UX

RCS Business Messaging WhatsApp Apple Business Chat

Chatbot platform

Primarily P2A initiated

Businesses can pay FB to market to FB users

Free to send messages

Facebook Messenger

6462595654

Revenue operators could capture in the

future through advertising

Revenue operators capture today from

A2P

86

86

85

109

144185

87

88

217

247

248

285

329

346

399

Non-mobile digital ad spend

Mobile ad spending

A2P Revenue

2016 2017 2018 2019 20202016Source: http://strathcom.com/wp-content/uploads/2016/11/eMarketer_Worldwide_Ad_Spending-eMarkerters_Updates_Estimates_and_Forecast_for_2015202/pdf

DIGITAL ADVERTISING REVENUE POTENTIAL FOR OPERATORS

Proxy size of the addressable digital advertising market for operators ($b)

Code of Conduct

David O’Byrne – GSMA October2018Future Networks Programme

RCS BUSINESS MESSAGING VS OTT POSITIONING

Evolution from SMS A2P with rich content

Massive potential reach & SMS fallback

Trusted MNO channel

Business pays to send to end users

P2A chatbot support

Independent & open

Allow businesses to reach opted-in users

Customer service and notifications

WhatsApp Business app for SMEs

WhatsApp Enterprise API for larger businesses

Pricing now published

Opens up iMessage for users to engage brands

Prime use case is Customer Service

User always in control

Deep integration to iOS for great UX

RCS Business Messaging WhatsApp Apple Business Chat

Chatbot platform

Primarily P2A initiated

Businesses can pay FB to market to FB users

Free to send messages

Facebook Messenger

CHARGING MODELS

Per event Replicating existing SMS model

Initial launches using this model – this emulates the current A2P SMS model

Session based Time based (5m, 1d, 1w, etc) or series of messages (i.e. 10 messages = 1 session) Discount scheme?

Based on feedback from initial launches session(s) will be defined

Access based Flat fee for unlimited

messages to the base or Access to base + charge

per unique user

Revenue share Outside scope of interconnect

likely to be fulfilled through commercial arrangements

Other models may be deployed depending on demand

RCS BUSINESS MESSAGING: RECOMMENDED GOOD PRACTICES

The RCS Business Messaging: Recommended Good Practices (formerly known as MaaP Code of Conduct) is a key enabler for the scale up and adoption of RCS Business Messaging Services

Promotes the adoption of consistent RCS and RCS Business Messaging practices by all ecosystem participants

Details 9 Principles that clarify how RCS will handle issues such as: Unsolicited A2P RCS

messages Combating spam, fraud

and grey routes Customer complaints Data privacy

Publication on GSMA.com/future networks