2016 – significant VoLTE progress, despite failing to impress
We can’t answer the latter question but we can certainly address the first two. Slowly and surely, both VoLTE and RCS have been rolled out, at scale and with increasing acceleration. Talking to one of our customers, a major provider of RCS / VoLTE test solutions, it’s clear that something fascinating has happened. They estimate that, in the aggregate, their customers (MNOs, in the main) have deployed more than 100 million RCS clients in their new VoLTE networks, which is a significant base and one which is expected to grow. Indeed, we ourselves may not consciously be using it, but in our own company, there has been a shift to Android, which means we are probably using RCS without necessarily knowing that we are doing so.
And that’s a significant point. It was never going to capture anyone’s attention, except for a few die-hard evangelists with careers to build. In truth, it seemed to offer little and to solve a problem that didn’t exist – or perhaps more pertinently, had been solved by others in more interesting ways. Notwithstanding which, it is impossible to deny that RCS is at last achieving some degree of success, although perhaps not at the levels that were optimistically forecast back in 2010. Recent research seems to support this case (see here) and suggests that, despite the gainsayers and the negativity, there is a strong argument for concluding that RCS and VoLTE are in more than rude health.
At the same time, the question of money must be addressed. We have repeatedly said that neither VoLTE nor RCS can generate incremental revenues. Happily, few would now disagree with that and we have been pleased to see that fewer conference sessions focus on a business case based on new income. However, there are areas where there is a different story and one that should be uppermost in the thinking of operators around the world. That’s because any MNO that offers enterprise voice services, such as classic VPN, needs to consider how they will bring these services (which generate significant amounts of revenue) into their newly enhanced VoLTE networks and integrate them with growing numbers of RCS-capable devices.
This is not a trivial issue, and one that cannot be overlooked. It’s not trivial because, while enterprise penetration of VoLTE- and RCS-capable devices is growing at a different rate from consumer adoption (largely due to different handset replacement cycles), the fact is that any MNO with, for example, a legacy voice VPN solution, cannot simply forget about this as users move to more advanced VoLTE devices. They must think about how they will protect and nurture this revenue by offering it to VoLTE users, at the same time as they continue to extend support to customers on legacy networks and with legacy devices. It’s a point we made at the Service Delivery and Innovation Summit last September, as we showed how it’s possible to support such services across all deployed networks. You can see our presentation, here.
In fact, this merely repeats a constant theme of our work from the last decade: Most initiatives directed towards service innovation for consumers either take far too long, or lose any advantage when other providers bring new services to market faster than traditional operators. Enterprise services, on the other hand, offer plenty of scope for innovation, largely because they serve different needs – more importantly, they also offer scope for revenue generation and creation, as their users (unlike enterprise customers) expect to pay for them. It comes down to this – for consumers, content is what matters, with subscribers happy to pay for football, movies or TV series, but for enterprise users even ‘basic’ services (such as voice VPN) attract premium prices and can generate profitable revenue.
So, while some can argue that VoLTE is pointless, has no revenue potential, and that RCS is a terrible distraction, we need to separate opinion from fact. Despite appallingly slow progress over the last few years, and despite the over-blown expectations, it’s unarguable that both RCS and VoLTE are now gaining significant traction and will grow dramatically in the coming years. Of course, the impact on revenues is uncertain, but it is equally clear that there is plenty of scope to generate money from enterprise customers who will need their services to function in any deployed network – and this demand creates a real and lasting opportunity. Content may be king for consumers (at least in our opinion), but enterprise customers have rather different priorities than the latest Premier League or Serie A games - so it is up to operators to provide differentiated business services in order to generate long-term value and growth for themselves.