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Future of communication services

23 May 2017 | Research

Stephen Sale

Video and podcast | Mobile Services| Future Comms

Analysys Mason offers insights into next-generation service innovation and how that affects telecoms operators' core propositions in communication services. 

Our Future Comms research programme focuses on technological and market disruption, together with end-user trends, and translates these into industry best practice. We assess various technical and business approaches, including IMS-based, WebRTC, cloud and over-the-top (OTT) partnerships.

Video interview

Stephen Sale, Research Director and Head of Consumer Services at Analysys Mason, shares his views on the future of communication services.


Video transcript

What are the major trends in communication services?

On the operator's side, the main area of activity is voice-over-LTE (VoLTE) and Wi-Fi calling deployments.
The main driver of voice over LTE is reuse of valuable spectrum for data services, and there are also some longer-term cost-saving considerations.

There are some purported benefits for end users, but these are basically 'nice-to-haves' rather than drivers of deployment.

For Wi-Fi calling, there is a very clear concrete benefit, and that's improving indoor coverage, and that's well-understood by CFOs and CMOs alike.

It isn't just about the operators? What other players are in this market?

Absolutely, it's the app providers that are providing most of the impetus in the market, and operators are chasing them largely.

WhatsApp is the biggest player, and dominant in many, many markets. The voice service has been available for quite a long time and is really starting to be established now.

In November, WhatsApp added the feature set with video calling, so that's an important move.

Google has long underperformed in this market. Google released two new apps in September 2016. The Allo app is the messaging app, and the innovation now is pretty interesting. It adds machine intelligence to the user experience, as well as a voice assistant, so that shifts the game a little bit.

The other app that it launched in September was Duo, which is a video-calling app, a bit like FaceTime, only across platform.

But apps aside, probably the biggest trend, or development rather, is on the operating system side, and Android N and iOS 10 both allow developers of third-party apps to integrate much more closely with the OS.

For example, if you receive a WhatsApp message you can respond directly from within the Android notification screen, or you could use the Siri voice assistant on the iApple platforms.

Basically, this erodes difference between the native experience and the experience of using a third-party app.

Where does this leave rich communication services (RCS)?

Google has been active in RCS. Google joined the operator initiative at the beginning of last year. The RCS client is now available on the Play Store, so that's a big development. And that client is being rolled out in partnership with carriers.

The first announcements have come from the USA – Sprint announced it in November – but we expect to see many more deployments and announcements in the run up to Mobile World Congress.

The challenge, however, is as I mentioned, the default messaging client is eroding in value, so those that are rather late in the day – Google and the telcos – have little choice but to try to maximise the value from that platform, but it's a contested market.

It's a proposition that's already well developed by WeChat and LINE in Asia, but also Facebook and WhatsApp elsewhere.

What other major trends should we look out for in communication services?

A related trend, and there's been a lot of excitement around it, is application-to-person messaging, in contrast to person-to-person messaging. This mainly is used by enterprises to communicate with customers either as marketing outreach or as customer service.

So an example would be being notified when a taxi's arrived or being sent a message with a link to a ticket, that kind of thing.

This is a growth industry. Use cases are emerging, new verticals are being targeted, and there's a lot of excitement there.

Traffic is growing and revenue is growing, so of course there's interest.

A big question here is: how will the value split across the platforms? Whether that be legacy SMS, which is a big established business, but also alternative platforms whether they be from the operators or from the established providers like Facebook.

So that's something that we're going to be looking at a lot in 2017 in Analysys Mason's Future Comms research programme.