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Summary

Google has taken another step into the telco world with its acquisition of Jibe Mobile, a provider of clients, platforms, and services that are compliant with the GSMA’s Rich Communication Services (RCS) standard. Jibe Mobile gives Google the ability to play a key role in the evolution of telco communications services such as messaging, voice, and video calling, based on RCS. According to Mike Dodd, Google’s “Minister of Messaging,” Google is “excited to team up with mobile operators, device makers, and the rest of the Android ecosystem to support RCS standards and help accelerate their development in a more consistent way.” He claimed that the acquisition of Jibe Mobile will help Google “bring RCS to a global audience.”

Google is positioned to take native RCS a step further

Telcos are counting on the native availability of RCS in devices to increase the adoption of their RCS-based services. Although Google hasn’t stated what it intends to do with its Jibe assets, it now owns the technology to embed RCS into the Android OS and, in doing so, bring RCS to a global audience. Telcos and device vendors have made some headway already on the native availability of RCS in devices: Vodafone and Deutsche Telekom have made it a key requirement for their suppliers and are reportedly seeing encouraging results for usage of their RCS-based services. Earlier this year, Jibe Mobile told Ovum that when native RCS is enabled, more than 90% of subscribers who owned these devices engaged with the RCS capabilities in some way. More than 50 devices from multiple vendors have native RCS and most are based on Android (iOS devices are conspicuously absent). Android devices comprise more than 80% of the smartphone market in 2015, according to Ovum. However, a native capability on a device does not automatically mean that subscribers will use it, especially in markets where OTT communications apps already have significant penetration.

Jibe Mobile also provides cloud-based RCS, meaning that telcos do not necessarily have to deploy their own IMS networks to provide RCS. The company already has a number of telcos connected to its RCS hub, which enables interworking between RCS provided by telcos. Should Google take the approach of being an RCS enabler, it could play a pivotal role in facilitating RCS penetration in telco networks as well as on devices and derive revenues from providing hubbing/hosting services.

According to the GSMA, the progress of RCS has been slow, and only a few key operators have deployed the technology, namely Vodafone, Deutsche Telekom, Orange, Sprint, and T-Mobile USA (some of these are already Jibe Mobile customers). Google can help accelerate the penetration of RCS in terms of native availability on Android devices and in the interworking of RCS between telco networks. Telcos unconvinced by the viability of RCS – of which there are many – might reconsider their opinions of the technology now that Google has invested in it.

By entering the RCS market, Google is competing against other OTT communications app providers as well as telcos. Facebook owns three of the largest OTT communication, seeing almost two billion monthly active users (MAUs) across WhatsApp, Facebook Messenger, and Instagram. By contrast, Ovum has found that Google’s own Hangouts service has an estimated 500 million MAUs in 2015 (mostly via desktop). Integrating RCS capabilities into Android OS means that Google can provide its own communications service based on Hangouts which will be native to all Android devices. Given the high penetration of Android devices, this could have significant consequences for mobile operators’ role in the communications value chain. Furthermore, a hosted/cloud-based RCS platform such as the one that Jibe provides increases the possibility of a non-telco such as Google providing an end-to-end RCS-based communications service to compete with telco services.

Google initiated and is backing Web Real-Time Communications (WebRTC), which has been regarded in the telecoms industry as an RCS alternative. It is likely that Google views WebRTC and RCS as complementary technology enablers for communications services, particularly for telcos that have already deployed RCS. Alternatively, Google may simply have invested in Jibe Mobile to gain a better understanding of RCS and how it compares to WebRTC.

Ultimately, it appears that Google and the telco community both have an interest in seeing RCS succeed, but time will tell whether it is possible for a relatively fast-moving Internet company to cooperate with slower moving communications service providers to enable the next generation of communications services.

Appendix

Further reading

WebRTC: An Emerging Revenue Opportunity for Telcos, TE0003-000867 (August 2015)

OTT Communications Tracker: 4Q14, TE0003-000845 (March 2015)

OTT Communication Strategies: Vodafone Message +, TE0003-000793 (September 2014)

“T-Mobile launches video calling in the US,” TE0001-000987 (September 2015)

“MWC 2015: Consumer Services highlights,” TE0003-000843 (March 2015)

Author

Pamela Clark-Dickson, Principal Analyst, Consumer Services

pamela.clark-dickson@ovum.com

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