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The August 2018 launch of the long-awaited WhatsApp Business API heralds the dawning of a new age in business-to-consumer (B2C) messaging. WhatsApp is not the first communications app to enable B2C messaging, but it has the biggest footprint globally, with 1.5 billion monthly active users. Its entry into the B2C communications market will have significantly more impact over the long term than those of WeChat, Line and KakaoTalk, and perhaps even Facebook Messenger and Instagram, even though all these apps are substantially further along the path toward monetization than WhatsApp.

WhatsApp has a greater chance of supplanting application-to-person (A2P) SMS as a B2C communications channel, not only because of its huge global footprint, but also because it is partnering with some of the same companies that enable A2P SMS, such as Twilio, Nexmo, MessageBird, Infobip, and Smooch. These partnerships will help WhatsApp to gain access to the key enterprises and brands that are already using the companies' platforms to enable B2C communications via SMS and other channels. Perhaps more importantly, the partnerships are vital to WhatsApp's monetization of its Business API – WhatsApp has already agreed a two-tier pricing structure with Twilio and, for consistency, will likely use the same structure with its other partners; it will probably take a share of revenues.

But WhatsApp and other communications apps will not have it all their own way. Spurred on by the desire to protect their A2P SMS revenues, telcos are also moving toward enabling enhanced B2C messaging, using Rich Communication Services (RCS). The telcos still have a window of opportunity open to them: according to Ovum's Digital Consumer Insights 2018: Communications and Media, more respondents typically interact with their service provider using SMS than via a chat app (see Figure 1).

Figure 1: Consumers typically use SMS, email, and voice to interact with their service providers

Consumers typically use SMS, email, and voice to interact with their service providers

Source: Ovum

RCS is being positioned as the upgrade to SMS, and telco launches of RCS are accelerating, with 20 telcos deploying RCS in the first nine months of 2018 compared to just 12 in 2017. While many telcos will launch P2P RCS first, the aim for most – especially those that earn substantial revenue from A2P SMS – is to add A2P RCS (or RCS Business Messaging) soon afterward. A small number of brands in the UK and the US are already using or trialing RCS Business Messaging, including Virgin Trains and ITV in the UK and 1-800-Flowers.com and Four Seasons in the US.

With the global communications apps still bedding down their B2C messaging offerings, telcos are in their best-ever position to make RCS a viable service. But the telcos still have work to do. Unlike WhatsApp, telcos and aggregators have not yet settled on pricing or a global system for authenticating brands, nor is there universal interconnection between RCS networks. This work needs to be done quickly now, to ensure telcos take full advantage of the brief window of opportunity while it remains open to them.

Regardless, consumers will soon have even more compelling options by which to interact with their service providers and brands, even though it's almost certain that for some time to come, they will also still use traditional utilitarian messaging communications channels such as SMS and email.

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