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Straight Talk Consumer and Entertainment Services

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If the only constant in the world is change, then the continued use of voice, email, and SMS as tools for businesses to interact with consumers is bucking the trend. Ovum's Digital Consumer Insights 2019 survey found that, even though a higher proportion of consumers overall are using messaging (chat) apps and social media to interact with businesses than in 2018, a significant number are also still using the legacy communications channels of voice, email, and SMS (see Figure 1). For SMS, the trend is more pronounced in some markets than others, for instance, in China SMS is the second-least used of the services surveyed across all use cases (behind MMS). Having said that, application-to-person (A2P) SMS still generates a significant amount of traffic in China, at around 700 billion messages a year. In Brazil, where WhatsApp is almost as highly penetrated as WeChat in China, A2P SMS continues to benefit from delays in onboarding businesses to the WhatsApp Business application programming interface (API) – delays that Ovum understands are linked to WhatsApp's rigorous approval process.

Data from other sources confirms the continued trend toward business use of SMS, alongside email and voice. For example, at Twilio's SIGNAL customer and developer conference in San Francisco in early August, KPIs shared by the company suggest that over 90% of the 750 billion interactions with its cloud communications platform in the last year are email, voice calls, and SMS. Much of that traffic is email, courtesy of Twilio's recent acquisition of email API platform provider SendGrid. However, Twilio also generated an estimated 73 billion SMS API calls (i.e., messages) on its platform and an estimated 17 billion Voice API calls.

The significance of the Twilio data cannot be understated. Twilio is a communications-platform-as-a-service (CPaaS) provider that has very successfully built its business through marrying the new – coding, cloud communications, pay-as-you-go pricing – with the old, (i.e., SMS, voice, and, more recently, email). The company has understood that SMS, voice, and email remain the default communications capabilities for most (if not all) consumers and so it has concentrated its efforts on making them accessible, and valuable, customer interaction channels for businesses. But it's not the only company to do this: there are other cloud communications "start-ups" – Nexmo (now owned by Vonage), Bandwidth, and Plivo – who have more recently been joined by companies previously known for providing SMS connectivity and aggregation services, such as SAP Digital Interconnect, Sinch, TeleSign, and Infobip. Nothing validates a new technology platform more than the pivots of companies in adjacent markets.

That's not to say that Twilio and other CPaaS providers are not embracing the newer communications services – most have added APIs for video, chat apps, social, and RCS, among others. Make no mistake, consumers are transitioning their personal communications behaviors to these new channels and a steadily increasing number of consumers are already interacting with businesses using most of these channels. In some cases, consumers are using multiple channels to reach a business. This behavior will reach the mainstream globally; CPaaS companies recognize this and are preparing for it. But right now, for most businesses, achieving maximum reach with minimum effort and minimum cost, is a higher priority. SMS, email, and voice (in most markets) delivers the reach and CPaaS providers have played a significant role in democratizing access to these services for businesses. That's a role they will continue to play as more consumers move up the value chain of business-to-consumer communications to use the newer types of communications services.

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