By Keith Mumford -

Mobile Virtual Network Operators (MVNO’s) not considering the GSMAs Rich Communications Services (RCS) suite risk being left behind by their mobile operator partners and may be missing a trick or two to improve brand visibility in their customer base.

The UK market has more than 40 active MVNOs with an estimated combined total of over 10 million users, more than 12% of the total number of UK active mobile subscriptions.  In Germany, the percentage of MVNO subscribers is estimated at 25% of all mobile subs and Tracfone, the largest of over 100 MVNO’s in the U.S. market, had over 22 million subscribers at the end of 2012!

MVNOs can therefore account for a significant percentage of overall subscribers in a market yet there is little public discussion about how RCS-based services may be deployed by them.  There are several possible reasons: the GSMA is mainly focussed on enabling RCS for the primary mobile operators in each country first, the MVNOs themselves may currently have objectives and goals for their business that are not aligned with a need to deploy RCS and, as most MVNOs are small scale purchasers of mobile devices or even SIM-only providers, they may experience difficulty in attracting the attention of the bigger device OEMs for discussions around embedded RCS client support.

Generally, all MVNOs offer basic telephony, SMS and MMS services on a par with that of their MNO partner.  Therefore MVNO’s that compete for the same business with the established MNOs must differentiate to attract their subscribers, and most often this differentiation is based on price, factors surrounding brand recognition or loyalty, some other unique selling point or a combination of all three.

However, once RCS services become available from the primary MNOs in a market, the MVNO may suddenly find they are disadvantaged.  The MVNO’s customers will certainly wish to participate in conversations with their friends using richer communications methods such as the instant messaging, image and video sharing and location based services that RCS provides on other networks.  If this service is not available from their MVNO, the user may choose to move to a network provider that does support it.

For ‘thin’ MVNO’s in particular, this is a challenge as they are typically dependent upon the MNO almost entirely for their services portfolio.

Fortunately, RCS is a different breed of product compared to the MNO-centric, circuit-switched services of the past.  RCS operates purely in an IP environment, can be deployed independently of the mobile operator’s own core, and is accessible over both cellular data and Wi-Fi access networks.  What’s more, there are a number of specialist service providers now lining up to offer hosted, cloud-based RCS network services with business and pricing models that are similar to that within which MVNO’s already operate.  By contracting with a third party, MVNO’s can lessen the reliance upon their single MNO partner for the provision of new services and shop around for the best deal from a variety of competing RCS network providers.

Similarly, RCS support on the device can be realized using a downloadable model, with apps available from the app stores supported by the device OS vendors and updated as and when required to add features.  The downloadable model means that the device OEM is no longer a potential roadblock to RCS service deployment and that generic phone models such as those supplied by MVNOs can be simply enabled for RCS in the after-market.

As an RCS app provider, Kineto understands the importance of both making sure that RCS services work properly on the device and also that the user experience must be well integrated with the traditional communications services on the phone.  Kineto’s Smart Comms app blends these two worlds perfectly for the MVNO case: an integrated conversation-oriented user interface combines telephony, SMS, MMS and RCS services such that traditional voice calling and messaging (SMS/MMS) is routed transparently over the MNO network as normal, whereas new IP-based RCS services will route through the RCS network provider.  To the user, all interactions over both networks appear in a single conversational timeline for each of the contacts in their address book.   

Finally, the MVNO can use an RCS app on the phone to promote their brand more readily within their user base.  Kineto’s downloadable RCS app can be branded for a specific MVNO to reflect the values that the MVNO wishes to promote, and the user will see this brand messaging every time they place a regular phone call, send a message, share a photo or use any of the other services available within RCS.  This offers a whole new opportunity for the MVNO to increase the number of positive brand contacts within their user community and can become a vehicle for additional messaging, such as that in support of a current marketing campaign.

In summary, MVNOs should consider implementing an RCS-based service through combining services from a third-party RCS network provider with client support from a downloadable RCS application provider.  This lessens their reliance on the MNO and device manufacturer to provide the service, enables a competitive environment in which to negotiate the best deal and can provide a modern user interface for all communications services in the device in support of the MVNOs brand, image and message.

Given this, perhaps it is not too much of a stretch to state that an MVNO that implements their RCS services portfolio before the MNO’s in the same market have launched may gain a distinct, first-mover advantage on which they can capitalize.

The GSMA’s Rich Communications Services (RCS) platform provides mobile operators with a standardized architecture for enabling richer services, such as instant messaging and content sharing between two or more mobile subscribers, anywhere in the world. 

To date, the GSMA approach has been to encourage simultaneous adoption of the technology within each operator in a single market, although with somewhat limited success so far.  This methodology makes sense as a high percentage of inter-personal, mobile communications take place between participants that subscribe to one of the top three or four operators in the country and, therefore, the promise of RCS as a ubiquitous platform is more easily realized.  Similarly, the marketing impact from a combined, in-country launch will be much greater than that of any individual operator, leading to greater awareness of the service amongst the user community.  

However, the process of cooperation between multiple entities that at other times compete ferociously with each other may be a long one, the threat of business lost to competing OTT services in the meantime is growing rather than receding and, arguably, it is the smaller operators that will lose ground to their larger rivals during this time.  The third or fourth operator in a market may be less able to navigate their way through a process that demands significant investment, technical expertise and non-partisan collaboration where, even with the best will in the world, the larger operators are likely to be able to create an environment in which they will prosper at the expense of the smaller players. 

So, faced with this situation, what is a smaller operator that prides itself on differentiation through innovation to do?  

Perhaps they could follow the lead of MetroPCS, the fifth largest operator in the US market behind Verizon Wireless, AT&T, Sprint and T-Mobile (note that MetroPCS is in the process of acquisition by T-Mobile as of the date of this post).  

MetroPCS decided that it would lead the pack, rather than be led.  In a remarkably short time it was able to test and deploy an RCS core network infrastructure, qualify the use of downloadable RCS apps for smartphones in the field to accelerate adoption within their subscriber base and launch a suite of new services under the GSMA’s joyn^TM brand. 

To overcome the problem of inter-operator messaging services (as no other US operator had yet announced, let alone delivered an RCS-conformant service), the company partnered with Jibe Mobile to enable customers of any other North American mobile operator to communicate directly with MetroPCS RCS users by using a downloadable app and Jibe’s cloud-based communications services.  This no-nonsense approach to wider adoption of the technology outside of their own subscriber base is a classic example of the Telco-OTT approach, where MetroPCS successfully expands OTT service coverage to other operators customers, and not just their own.

In return, MetroPCS has attracted significant mainstream press and analyst attention, raised the visibility of its brand in the US and internationally and is perceived more readily as an innovator and a leader in next-gen IP communications services for the mobile industry.  Its joyn-branded RCS service provides clear differentiation from its competitors in both local and national markets, and the early launch has provided invaluable experience with, and expertise in, the new technology.

Perhaps most interesting is that by launching ahead of its rivals, and in not being tied to the ability, willingness and timeline of competing operators in the same market, MetroPCS has created its own success story such that they will surely command a disproportionately sized seat at the table when it comes to planning the rollout of RCS services across the remaining US operator’s networks.

While the GSMA’s official position continues to be that markets are best served by a simultaneous RCS deployment amongst the mobile operators in that market, their very visible praise for MetroPCS shows that those ‘going it alone’ will also receive tremendous support from and raised visibility within the industry body. 

MetroPCS has demonstrated that smaller operators can gain a first-mover advantage by rapidly prototyping and deploying an RCS-based product using downloadable applications with service availability extended outside of their own subscriber base.  Other operators in a similar position may do well to take note of just what can be achieved in a short timeframe and the positive impact this may have on the perception of their company as an innovator and technology leader both from within and outside of the industry.

Mobile operators often ask: “Why should we go with a downloadable app model for delivering RCS services rather than waiting for handset OEMs to provide us with a native, embedded RCS client?” Aside from the obvious point that there are not that many native implementations on the market at the time of writing, the question holds even for when they do start to become more generally available.

There are certainly reasons why it may make sense to wait for embedded solutions from smartphone manufacturers, but Kineto believes that there is a compelling case to be made for preferring the downloadable, or pre-loaded, app route. Here’s our list of the top 10 reasons to deliver RCS-based services using a downloadable, app store model.

1. Brand and Image

2. The Installed Base

3. Consistent User Experience

4. Extensibility

5. Responsiveness

6. Monetization

7. Phones Supplied Through Other Retail Channels

8. IOT

9. iPhones and Other Device Types

10. Addressing Subscribers on Other Networks

The downloadable RCS-based application model may prove to be more capable method of delivering a truly rounded, differentiated and competitive service offering compared to that of any handset OEMs own embedded client.

By Keith Mumford -

Mobile operators must be able to clearly delineate regulated telephony and unregulated VoIP communications services to their customers.

In the world of regulated communications, voice calling is generally considered to refer to the ‘telephony’ service. Telephony has been around for over 100 years, ample time for just about any interested government committee or other agency to have surrounded the service with numerous rules and regulations. And there are plenty of regulations, each of which must be taken into account when either launching a new telephony service or extending an existing service to keep pace with technology.

In itself, this is not intrinsically a bad thing. The objectives of regulation are to help uphold antitrust laws and to ensure that real competition is in place between providers, leading to an improved service at a price that at least reflects the notion of public interest under which such rules are created. As every service provider is aware, however, telephony as a product carries significant cost, although when applied equally to all competitors in a single market a degree of parity is assured.

As we move into 2013, mobile operators are now under pressure like never before from competitive, voice and messaging providers whose services are simply delivered over any IP connection to any smartphone, the cost of which may well have been originally subsidized by the operator. Worse, for the mobile companies, these Over-The-Top (OTT) service providers use the operator’s own radio access network to transport their data in addition to over the Wi-Fi radio, for which most mobile operators have not yet even embraced delivery of their own regulated services*.

Importantly, OTT players arrive with little or no regulatory baggage as they generally offer a peer-to-peer Voice over IP (VoIP) service rather than telephony. Think of telephony as the set of features that are associated with your primary mobile service (a telephone number that uniquely identifies your phone in the network, supplementary features such as call blocking or forwarding, emergency call handling, the ability to place or accept a call to or from any other phone in the global telecommunications network, and so on). VoIP, on the other hand, offers a reduced feature set that generally enables two parties using the same VoIP service provider to communicate directly (fewer additional services, no emergency calling, telephone numbers not required and, often but not always, a limited ability to communicate outside of a specific VoIP community).

OTT providers, therefore, are more able to turn innovation into product quickly, to deploy new services rapidly, grow their subscriber base without geographical bounds and price their products as they see fit (often ‘free’). They generally offer messaging or voice (VoIP) services or, in some cases, both.

In response to the OTT challenge, the mobile industry has introduced a new technology to mirror the IP-based services typically provided by the OTTs, and to build upon the strengths of the operator community to differentiate the operator’s product. This is the GSMA’s Rich Communications Suite, or RCS. The features provided under the RCS umbrella include instant messaging/chat, content and location sharing and, more recently, IP Voice.

For this latter feature, the conceptual difference between Voice over IP calling as provided by the OTT players and an IP Voice Call (as defined under RCS) is more than a little confusing. Ostensibly they sound very similar but, within RCS, the term ‘IP Voice Call’ has a slightly tortuous definition (paraphrased below) that is fundamentally a result of the GSMA’s focus on specifying core network services within a regulatory framework:

• If an RCS-capable device supports Voice over LTE (VoLTE) or HSPA (VoHSPA) and is currently registered in the IMS for VoLTE/VoHSPA service, then at that point in time an IP Voice Call can only transport the operator’s Telephony service over the LTE/HSPA access network, 

• If an RCS-capable device does not support VoLTE/VoHSPA, or does support it but is not currently registered for VoLTE/VoHSPA service in the IMS, then at that point in time an IP Voice Call is termed a Best Efforts IP Voice Call only. The RCS specifications state the user must be fully informed that a Best Efforts voice call is not a replacement for the Telephony service, but the full capabilities of such a call are left for the operator to define.

Attempting to translate these modes of operation into a satisfying user experience may not be easy. How is a user to understand the set of conditions under which he is allowed to use the Best Efforts IP Voice Call option, and when not?

When playing by the RCS rulebook, the Best Efforts IP Voice Call can legitimately be offered only when the user is not currently registered in the IMS for VoLTE or VoHSPA services. In other words, current RCS specifications do not generally provide for an always available, peer-to-peer VoIP calling service, equivalent to that provided by every single third-party OTT VoIP provider. It’s not really surprising that these oddities exist in RCS given its genesis; however the question on the table is whether such a constrained service definition can meet the needs of the mobile operator fighting to retain voice minutes against multiple, unregulated OTT competitors.

Faced with this problem, perhaps operators should consider a new approach to their telephony and VoIP products. If a firm line in the sand were to be drawn between regulated and non-regulated voice service delivery, does this make a difference to how operators might conceive of their IP-based voice services portfolio?

Interestingly, both the RCS VoLTE/VoHSPA IP Voice Call and Best Efforts IP Voice Call operate concurrently over a single core infrastructure (IMS/MMTel). The type of IP Voice Call required by the client is signalled in a SIP INVITE message, enabling the operator to differentiate between regulated (telephony) and non-regulated (Best Efforts) call attempts in the same core platforms.

Notwithstanding the prevailing RCS rules of engagement, there is technically, then, nothing to prevent an operator from utilizing the Best Efforts IP Voice Call as an always-available VoIP service for its customers (by ignoring the constraints imposed under a stricter RCS interpretation). Such a VoIP service might have a different name, brand or icon and would be accessible from the user interface separately from a ‘normal’ Telephone call, so that the user knows exactly what features are inherent in each different service option. For example, the ‘telephony’ icon will always deliver a regulated voice call whether over LTE, HSPA, 3G or even 2G access networks. The ‘VoIP’ icon will always deliver a non-regulated VoIP call over any suitable and available bearer, including Wi-Fi.

Once this separation is achieved, the operator can adapt and develop the VoIP service independently of the telephony service. Different innovations are possible here to provide a more interesting, richer set of features to the user (and hence to attract and retain subscribers). Features such as high-definition voice encoding (HD voice), on-demand call recording and others, based upon a mix of capabilities available both in the network and in the client device, might be utilized to enhance the set of VoIP services available to the user base, all achieved without having to consider any architectural impact on the telephony service.

With mobile service price plans likely to move further towards a point in time where the main component is monthly data capacity with SMS and telephony included for ‘free’, the appetite for operators to continually enhance the telephony side of the house (at high cost) for a business in revenue decline is not a hearty one.

Maybe it is time for mobile operators to begin to draw a line under future telephony service investments and, instead, begin innovating in non-regulated VoIP feature delivery to provide a more compelling reason for their users to prefer the operator’s voice calling services over that of numerous third-party VoIP alternatives.

After all, if the voice minutes used in the operator’s network are to eventually become subsumed as ‘no-cost’ line items within a data-centric service contract, should the operator care how those minutes might be split between their telephony and VoIP products?

_______________________________________________________

* Several mobile operators do use Kineto’s Smart Wi-Fi solution to successfully offer telephony and SMS over Wi-Fi for solving indoor coverage challenges.

“As OTT players continue to eat into traditional communications revenues, operators have a choice,” noted Peter Jarich, VP of Consumer and Infrastructure research at Current Analysis. “They can ignore the threat or fight back. Yet, as many have already learned, fighting back isn’t easy. Even though technologies like RCS provide a solid foundation, crafting a compelling user interface, building a brand around existing communications services and incorporating differentiating communications features are challenges that most operators simply haven’t had to grapple with in the past.”

The industry is quickly moving toward IP-based communications, and OTT service providers are starting to have a real impact on mobile operators near term revenues and longer term relevance as providers of communications services. It’s time for operators to fight back.

That’s why we’ve announced Smart Comms, a new application for mobile operators. Using standard RCS technology, it enhances current telephony and SMS/MMS services while giving the ability to introduce new IP-based communications capabilities, including chat, VoIP and video, all within a single, powerful, user-friendly interface.

With Smart Comms, mobile operators can generate brand recognition for their existing services, reach higher levels of customer satisfaction and loyalty with a suite of enriched services, and improve their ability to attract new users with value-added services that completely refresh the entire communications experience.

Read more about Smart Comms and its features and capabilities.

Read the full press release.

To better compete with OTT service providers, mobile operators should consider branding their mainstream voice and messaging services.

Take a stroll down the aisle of any major supermarket in the UK or US and you’ll find the same pattern: more expensive products from exclusive brands at the top of each rack, well-recognized brands in the medium price range in the middle tiers and, located on the very bottom shelf, you’ll come across the lower-priced options targeted at those shoppers on a tighter budget.

A decade or so ago, the cheaper goods would be from a variety of different manufacturers all hoping to attract the consumers that pro-actively shun more recognizable brand-name products, either through parsimony or by necessity. Step forward to today and, almost without exception, those same bottom shelves will be stacked with goods labelled and recognizably packaged under the retailer’s own ‘value’ brand. These are heavily marketed as a more affordable but just-as-good-as alternative to the more recognizable brands that are only an arm’s length above them. Today, the lower tiers at Sainsbury’s are stocked with their ‘Basics’ range, Tesco’s with their ‘Everyday Value’ range, Target has ‘Up and Up’ and so on.

These branding strategies have several key objectives:

(i) To protect the business from emerging cheaper, no-frills retailers (such as Aldi and Lidl in the UK), by providing a single location where both ‘cherished’ brands and lower-priced alternatives are available side by side, reducing the desire and need for consumers to visit multiple stores to shop,

(ii) To improve overall profitability, as often the retailer-branded goods are produced at very low cost and result in equivalent or better margin than higher- priced products, which must be purchased from the supplier at a correspondingly higher cost.

Interestingly, recent evidence seems to show that even when prices for the entry-level brands rise (due to higher production costs, for example) consumers that ‘shop-by-habit’ will continue to purchase them without comparing costs against either other supermarkets or other brands, as there is an implicit assumption that the value-branded products will always represent the best value for money.

There seems to be a parallel here between this recent example from the retail sector and the current problems facing the mobile network industry.

For several decades, mobile phone companies have prospered as the only game in town for messaging and telephony for consumers on the move (or just as commonly today for use in their homes or workplace). Higher margin voice and SMS services have contributed to an era of high profitability (even in the face of expensive network build-outs), but revenue growth from these traditional services in developed markets has peaked and in many cases is now in decline.

Aside from market saturation, the primary reason for this is the arrival of the smartphone. Prior to the spread of smartphone technology, the mobile phone was a fairly bland device. Yes, feature phones added some new capabilities with cameras, games and other niceties; however the number of actual communications options in the device was generally limited to those services the mobile operator provided. For the majority of users this meant easy access to any service they desired, just as long as it was either telephony, SMS and, if you were lucky, MMS for picture messaging.

Smartphones, and the developer-friendly, semi-open operating systems that run on them, have changed the game. Pick up any Android, iOS or Windows smartphone today and you are likely to find a plethora of applications devoted to communications tasks that are not provided by the mobile operator at all, but by one of dozens of new over-the-top (OTT) service providers such as Viber or WhatsApp, or by established Internet giants such as Google, Apple, Facebook or Microsoft (with Skype). It is most likely that these applications were not even installed on the phone at the factory, and were instead downloaded for free from the after-market stores available from each of the operating system providers.

The impact of the smartphone on the mobile operator is clear. Users are no longer tied to just those communications services provided by their mobile phone company but can instead choose any available third-party service, paid for or free. Each time a user sends a message using WhatsApp or iMessage, or makes a voice call using Viber or Skype, the operator chalks up an additional lost revenue opportunity. And with the wide availability of accessible private and public Wi-Fi services for OTT service delivery, there is small comfort for the mobile operator looking to make up service revenue shortfalls with a jump in data usage over the cellular network.

In some countries (typically those with higher regulated service tariffs and a larger percentage of smartphone users as customers) the OTT problem is so prevalent that service revenues for some mobile operators, in particular for messaging, have tumbled within just a few years.

Interestingly, what you will generally not find on any smartphone is a specific, operator-branded application for arguably the most important service of all: the regulated voice call, let alone for SMS. In fact, that it is Vodafone, AT&T or Telefonica or any other mobile operator that is providing these high-quality, always available and critical services is essentially hidden behind layers of interfaces provided by the device OEM or by the OS manufacturer, or both! Send a message with WhatsApp and the WhatsApp branded application is staring you in the face. Make a voice call using the standard Android dialler app and as far as the user is concerned it might just as well be Samsung or HTC making that call happen.

Okay, so in the real world most users do actually realize that it is their mobile service provider performing the hard work to handle the call, but it is likely that most rarely think about this fact at all. That is, until something goes wrong. It is not too strong a statement to say that the mobile operator’s own brand tends to be linked in our minds with the few times that problems occur, rather than the 99% of the time that everything works just fine (when was the last time a friend or colleague told you how happy they were with their mobile service?) Is there any other business sector that is apparently as contented to have their brand primarily associated with the failure case?

The result is that users begin to regard the providers of the communications services they are actually paying for with little respect; the majority of the contacts that they have with the brand itself are negative, occurring mostly when they are complaining about a problem.

With this in mind, we can perhaps discover an analogy with the retailers’ lesson in marketing.

The supermarkets took what they were recognisably good at doing, namely bulk buying and selling, and put their own brand on a range of goods, thereby making a statement to their customers that they were standing firmly behind providing a good quality product at a lower price to create value for the consumer. This broadened the range of products offered to the shopper to encompass a wider choice of quality and price, and provided many more occasions where the consumer could experience a positive contact with the retailer’s brand.

Mobile phone companies also plan to widen the choice of services available to their users by offering new, IP-based messaging and social features within new applications for their communities in competition with the OTT providers. The GSMA’s RCS-based Joyn approach, in addition to various home-grown operator service platforms such as Libon (Orange France) and Tu Me (Telefonica) are amongst the first of the so-called Telco-OTT apps: applications that operate over any access network including Wi-Fi and are not limited just to users in the mobile operator’s cellular network, and sometimes are available even to users who are not also mobile service subscribers. These apps certainly attempt to increase the choice of communications options available to the user, although the opportunity to generate incremental revenue is somewhat constrained by the availability of ‘free’ competing products and services.

Few of these applications, however, make a significant attempt to be inclusive of the high-quality voice and messaging services which the operator continues to rely upon for profit. These branded, Telco-OTT offerings are generally positioned as standalone apps for new services, rather than as a means of accessing existing voice and messaging capabilities too.

Maybe if the operator were to consider a Telco-OTT application that blended all of the existing, regulated services together with those new offerings into a single, operator-branded application and experience, then the user will naturally begin to associate the positive event of a successful phone call, text message or chat session directly with the brand, contributing to an overall improved perception of the operator’s brand image.

This simple approach to raising the visibility of the operator’s brand during positive user events may sound trivial, but consider that such experiences increase goodwill and customer loyalty and improve the image of the organization in question. The benefits of such a move then clearly lead to the reluctance of the consumer to step outside the brand for an alternate experience, making it harder for lower-cost competition to gain ground.

Shoppers who can purchase 95% of what they need at Tesco’s because that store met their expectation for price, quality and value with Tesco branded goods are more likely to purchase the remaining 5% in the same store at an elevated price, rather than make a second shopping trip to a lower-priced chain. Mobile phone users who can access 95% of the services they use regularly from a single, operator-branded app are more likely to use that one app exclusively for the additional 5% of their requirements as well, rather than choose a different app for just some types of communication.

Of course, the telco-OTT application has to offer the full set of high-quality features that the user needs at a price point that provides value and, in this respect, mobile operators can differentiate as third-party OTT service providers are generally unable to make clear guarantees to their customers regarding service availability or performance.

Operators also have the tools (or at least the raw data) to utilize many of the same techniques used by the supermarkets to target and promote their new telco-OTT services. They have access to a huge amount of data generated by millions of customers that can be used to detect changing patterns of usage for voice and messaging for certain segments. This targeted approach can work especially well in a pre-pay (pay-as-you-go) model where regular offers may be tailored even for individuals with a view to increasing their usage of and dependence upon the operator’s own telco-OTT suite.

While we don’t know if these branding exercises by the big supermarkets can deliver in the longer term, they have effectively stopped a significant loss of business to the new entrants and have therefore bought the big chains additional time to develop new strategies to compete more effectively.

In the very competitive world of communications services, that same result may well just be a good enough reason for the mobile phone operator to pursue a similar strategy: making their own brand a much more visible icon of quality and value to regular users of both existing and new services with the goal of slowing the current gradual slide towards an OTT dominated world.

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Kineto will be at Mobile World Congress. To schedule a meeting to discuss how our solutions may figure into your plans, please contact MWC2013@kineto.com.