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The US search giant is pushing an alternate mobile phone messaging system in the country that could disrupt the growing use of WhatsApp by enterprises for communicating with customers.
That has the potential to upend the broader messaging-based communication ecosystem in the country, experts said.
Vodafone Idea (Vi) has become the first Indian telecom operator to partner with Google for offering rich communication service (RCS) messaging to enterprise customers in India, with bigger telco rivals Reliance Jio and Bharti Airtel expected to join the bandwagon soon, industry executives said.
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The potential adoption by enterprises of Google’s RCS—priced at almost twice traditional enterprise SMSes but 70-75% lower than WhatsApp’s charges—is expected to net operators a substantial revenue share.
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Telcos have previously sought regulatory intervention to prevent the move of enterprise messaging onto platforms such as WhatsApp, highlighting threats ranging from cybersecurity and fraud risk to loss of revenue not only for the carriers but also for the national exchequer to the tune of Rs 3,000 crore.
To be sure, there are challenges to wider adoption of Google's RCS with India still having nearly 300 million feature phone users and a smaller but key number of people with iPhones. These, as of now, don't support RCS.
At stake is the enterprise messaging market, which was just shy of Rs 2,500 crore on March 31, 2023, according to a Frost and Sulivan report.
But the pie is expanding, as it becomes increasingly relevant for businesses with digital payments and ecommerce scaling up, experts said.
“Vi has started onboarding enterprises for RCS messaging at a 70:30 revenue share model with Google,” a top telecom executive told ET. “The current pricing (for Google RCS) is at 20-25 paise per message, of which 70% goes to the telecom service provider. Google is also in aggressive talks with Airtel and Jio and we expect both operators to join the RCS channel soon.”
Vi, Airtel, Jio and Google did not respond to ET’s queries.
Google’s RCS messaging travels over WiFi or mobile data to terminate at the default Google messenger app on Android phones. It offers rich media capabilities such as read receipts, high-resolution photos and videos as well as group messaging features. Being a GSMA (or global telecom industry) standard, RCS messaging is an operator-controlled ecosystem and requires support of the mobile carrier. Thus, for RCS messaging, a regulatory intervention is possible unlike WhatsApp, which is end-to-end encrypted private channel messaging.
In India, the traditional SMS channel is currently still the powerhouse among all communication channels with a 95% market share, carrying over 1.5 billion messages per day, making up a bulk of the over Rs 2,500 crore market. However, WhatsApp Business messaging has also picked up lately with its India revenue disproportionately higher relative to its 5% share in such traffic. Other channels include Telegram, email, conversational chatbots, voice, IVR etc.
Between the SMS rate at 10-12 paise per message and the WhatsApp Business rate at 75 paise, RCS is strategically pegged at 20-25 paise, which has the potential to disrupt both segments, said industry executives.
“Google RCS clearly has several advantages and we are definitely seeing a shift among our enterprise customers, who are now adopting this channel over others,” said Deepak Goyal, chief business officer of Karix Mobile, which he said has become one of the largest contributors to Google RCS volumes globally.
RCS offers a more interactive and visually appealing experience compared with SMS, he said. Return on investment is greater than SMS because promotions through rich media bring more conversions and greater engagement, Goyal said.
The messaging system is poised for strong growth in 2024 because it brings the best of both worlds--WhatsApp-like, rich two-way communication at a pricing comparable to SMS, said Rajdipkumar Gupta, managing director of cloud communications company Route Mobile.
RCS is live in over 95 countries. In December 2023, it rolled out new features after crossing the milestone of 1 billion messages globally, Alphabet CEO Sundar Pichai had said in a post on X.
However, there are challenges, executives said. Apart from iPhones and feature phones not being currently compatible, OTPs, transactional and service messages still form the bulk of such communication, constituting 80% of daily traffic. These are mandated by the RBI to be sent only through SMS, Gupta said.
“Considering all factors, we believe, brands will endeavour to calibrate the best omnichannel strategy suited for different target groups across all channels to reap the best ROI,” said Goyal of Karix.