Telcos launching own messaging platforms face uphill task

Summary:Initiative by Singapore mobile operators' to battle OTT players with their own messaging apps is a good move, but they will need to overcome user resistance in shifting to new service.

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StarHub will launch an interoperable platform for users to exchange content, while SingTel is developing own apps, as they attempt to regain lost ground against popular OTT services such as WhatsApp and Viber.

New messaging platforms by Singapore telcos may offer users better communication experiences and will may be a good move against over-the-top (OTT) service providers, but consumers may hesitate migrating due to their attachment to messaging apps and potential charges.

On Monday, it was reported StarHub and SingTel were going heads on against popular messaging over-the-top (OTT) services such as WhatsApp and Viber. StarHub will launch an interoperable platform for users to exchange content, while SingTel is developing its own apps.

After European and North American operators launched Rich Communications Services (RCS) more than a year back, it was only a "matter of time" local operators will follow suit to meet consumers' rising expectations, Serene Chan, ICT Practice industry analyst at Frost & Sullivan Asia-Pacific, observed.

This move enables operators to enhance consumer experience and reduce churn rates, Chan pointed out. RCS offers a better user experience because it is able to offer an integrated messaging system, support multimedia file transfers, route calls between devices and offer social networks, she explained.

Being the first few operators in Asia to launch them is also a good way to stand out, and a strong countermeasure against the increasing threats to SMS revenue coming from OTT services, the Frost & Sullivan analyst added.

Telcos should collaborate, not compete with messaging apps

Mobile messaging service provider Nimbuzz however disagreed. Telcos should extend and complement the capabilities of existing large messaging platforms by bringing their strength to the mix, such as their billing relationships with users and their large retail network, Vikas Saxena, CEO of Nimbuzz said.

"It's about time telcos take an active role in augmenting the ecosystem, through the strengths that they bring to the table. Launching a feature replica of a Nimbuzz-like product does not solve the continuing decline in SMS and voice revenue."
-- Vikas Saxena
CEO of Nimbuzz

At this point, users would have already formed their own groups and history on existing big communications platforms, establish their "own comfort levels and memorable moments" through such products, Saxena explained. There is no reason for them to move to another platform offering the same thing, he added.

If telcos collaborate with popular messaging apps , many business models can emerge through the "symbiotic partnerships", he advised.

"It's about time telcos take an active role in augmenting the ecosystem, through the strengths that they bring to the table," Saxena said. "Launching a feature replica of a Nimbuzz-like product does not solve the continuing decline in SMS and voice revenue."

Consumers currently use messaging apps who spoke with ZDNet Asia echoed Saxena's views and were hesitant about switching to platforms launched by the local telcos.

Broadcast reporter Peace Chiu said she was not keen on the upcoming services by StarHub and SingTel, as they may eventually charge for usage and it might become trickier to send messages to people across different platforms or abroad, she explained.

"I can't really think of any functions I need which WhatsApp does not offer me," she added.

Lin Surong, a civil servant, said she would only use the platforms if she was able to message or videocall her friend who is not subscribed to the same telco as her. "If this is not made basic, I don't see why consumers would consider switching platforms," she said.

Marketing executive Olivia Chu also agreed, adding a lot of her friends were on different telcos so she was not sure if she would use messaging apps and services if they were not interoperable.

Acquiring messaging apps not "straightforward" decision
If telcos decide to acquire "highly popular" apps such as WhatsApp, it is not a "straightforward strategy" and they would have to consider certain factors, Chan advised.

For example, with a range of messaging services available to smartphone users and more coming up, telcos need to consider what the attachment rate of a messaging app is among smartphone users, she noted.

Other areas of consideration include the purpose behind acquiring an messaging app; which mobile app is highly popular among the target segment; and whether that segment is willing to pay for premium games or streaming ones.

"Operators have to assess the monetization potential of a mobile app before undertaking an acquisition," Chan said.

Even if telcos acquire these companies, the returns on investment (ROI) are "questionable", Foong King Yew, research vice president at Gartner, noted. Newer service providers offering messaging services would continue to spring up so the issue of competition and ROI would not be solved, he explained.

Consumers such as Lin, expressed "worry" if telcos acquired messaging apps.

"I'm afraid they would impose certain monetary fees on us for using them," the civil servant said, adding if that was the case, she would switch to using other free messaging apps found on the market and made popular by mass market.

Chiu however was indifferent about the acquisition. However, she noted if the acquisition meant greater technical assistance and more localized emoticons and spell checks , it would be "useful and interesting".

Topics: Telcos, Apps, Singapore

About

Elly grew up on the adrenaline of crime fiction and it spurred her interest in cybercrime, privacy and the terror on the dark side of IT. At ZDNet Asia, she has made it her mission to warn readers of upcoming security threats, while also covering other tech issues.

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