Everyone, Derek Johnson with tatango.com.
It is Sunday and tomorrow is a special Monday.
It is the start of Mobile World Congress.
And at Mobile World Congress, if you're in text message marketing, you're most likely
aware that there's going to be a lot of pilots, a lot of demos, a lot of talk and hype and
buzz about RCS business messaging.
And RCS business messaging is essentially Android's solution to a better SMS experience,
especially business-to-consumer.
So this includes high-definition images, videos, buttons, carousels, so you can swipe through
images in an RCS message.
Really cool stuff that's happening.
The big question, I think, that is going to be presented during Mobile World Congress,
which there is currently no answer for, is going to be, how much does RCS business messaging
cost?
And while the demos and the pilots are really cool and the functionality is amazing, I think,
it's gonna take SMS from here to definitely over here.
It is the future.
One thing that needs to be answered and I'll explain why it's currently not answered is,
how much is it going to cost?
And the reason this needs to be known because if it's too expensive, then the ROI just will
not make sense.
If you're paying per message and you're paying 3, 5, 10 times more than an SMS, you have
to have the same type of ROI, return on investment.
So why have we not got yet a price for business RCS messaging?
I'm gonna explain.
So currently what has happened in the last couple years, there's a organization called
the GSMA.
Really good people, they represent all the wireless carriers.
And they have been reaching out to people like Tatango, aggregators, wireless carriers,
brands.
And they've been discussing what pricing models make the most sense for this new type of,
let's say, text message or message.
And a bunch of brands, a bunch of carriers, a bunch of companies like Tatango, we've all
got together and given our feedback and suggestions.
And just recently, they've kind of solidified that and said, "Okay, there's three different
models that we would recommend the carriers adopt.
And those three models are, one, is a per-message model," which is essentially what SMS or MMS
currently bills on.
You have an outbound message.
You have an inbound message, and you get charged per message.
Now, the second model is a per session model.
And that is more interesting because...and especially for brands that are having RCS
messaging for chatbots and/or customer service, those kind of brands or those kind of experiences,
it would be very hard to charge per message because they would rack up a big bill at the
end of any conversation with just one customer because they'd be charged inbound, outbound,
inbound, outbound and you could see it could get pretty expensive.
So this conversational model is more of opening a certain window, maybe an hour, a couple
hours, maybe 24 hours.
Again, it's still kind of being decided, but it's opening up a window that allows, during
that window, to send as many messages as you want back and forth to the consumer.
So those are the two models and there's a lot of specifics on each model, but it's really
not worth getting into right now, and there's information online that you can see or you
can always ask a question to us.
So there's those two models.
Then there's a hybrid which is kind of like a conversational, but maybe once you get past
a certain amount of time, then you get charged per message or maybe the first message is
charged and then it opens up a conversational window.
So there's all these different kinds of models, but essentially, it's the per message, the
per session, and then the hybrid model which is kind of essentially a hybrid of those two.
So that's where we're currently at.
And the GSMA, they've come up with these models, but what's missing is the actual price per
message or the price per session.
So to get the price per message or the price per session, they have to send those models
over to the wireless carriers.
And, again, the GSMA represents all wireless carriers in the United States and across the
world.
So I'm gonna speak mostly to the United States because that's what I'm familiar with here
at Tatango.
So they send it over to the wireless carriers and the wireless carriers have a lot of decisions.
One, they can decide just, "No, we're not gonna do this."
Two, they can say, "Great, this is the perfect model.
We're gonna plug in our pricing, and we'll send it to the SMS aggregators."
And what's interesting about this is the carriers cannot communicate with each other in regards
to pricing because of antitrust laws.
So they can't all get together in a room or back of a steakhouse and...or they shouldn't
get back of a steakhouse, and they shouldn't get together and say, "Okay, this is what
we think an RCS business message should be."
Or, "This is what we think, it only should be this pricing model and this is what we're
gonna charge."
That would be illegal under antitrust laws.
So they have to do it on their own.
And you think, there's a lot of carriers: Verizon, AT&T, Sprint, T-Mobile.
They all have to figure out their own pricing for RCS business messaging.
So, let's say, the first models, they just decide not to do RCS which is their right.
Number two is they get the pricing models and they go, "This looks perfect.
This is exactly what we are thinking."
And then they send it to the SMS aggregators.
Now, in between that, they also have to build the billing system to be able to track and
then bill the SMS aggregators for this new type of messaging.
Now, it's gonna be much easier if they choose just the per-message model because that's
the similar pricing model as SMS and MMS currently.
You get charged inbound and outbound messages.
But if we start going into the conversational model or even the hybrid model, that means
they're gonna build out completely brand-new systems which is gonna take a lot of time.
So that's, I guess, the second option.
Third option is the carriers all go rogue and they do whatever they want.
Maybe AT&T adopts the conversational model but not the per-message model.
Maybe T-Mobile comes up with their own pricing model that has nothing to do with the GSMA.
So, as you can see, I think, that's going to take a long time for them to all get their
pricing together.
Now, interesting point here is because they all can't communicate and nobody can force
them into giving pricing, that means that the SMS aggregators, they're gonna get pricing
when the carriers want to give pricing.
So you may see AT&T give pricing next month.
You may see T-Mobile give it next year.
There's no kind of deadline.
It's essentially whenever they're ready.
So once each carrier sends in their pricing model and how they're going to bill for RCS
to the SMS aggregator, then the aggregator, I think, essentially has to sit there and
wait until they have enough carrier pricing to really kind of normalize the pricing and
figure out how they're gonna charge companies like Tatango for RCS business messaging.
So even if AT&T submits their pricing tomorrow, if they're the only ones, I don't think the
aggregators are gonna go, "Okay, now it's time to release the pricing and let people
start using it."
I think they're gonna wait until they get a majority of the major wireless carriers
to submit their pricing because they want to normalize the pricing and make sure they're
making their margin between what the carrier charges and what they're gonna charge companies
like Tatango.
Tatango is an SMS or MMS software provider.
So we're providing the software that allows the brand to send messages.
Now, currently, it's SMS and MMS.
Eventually, it could be RCS.
So once that happens, the aggregators will have to kind of consolidate all price and
normalize it, and then figure out what their margin needs to be on that RCS messaging model.
Now, once they get that, then they also have to build out the pricing mechanisms and the
tracking mechanisms to track all this because if they're coming up with per session or hybrid
type models, that's something that aggregators currently don't bill for.
So they're going to have to build out that type of tracking and pricing and billing solution.
Now, once that has all been resolved at the aggregator level, then that's when they'll
pass the information to software providers like Tatango.
We then have to look at that.
We have to normalize what they've given us.
We have to add in our margin.
And then we have to pass that on to the customer, the brand, the brand that's interacting with
the consumer via RCS messaging.
So, as you can see, there's a lot of steps.
Currently, we're right here with the GSMA establishing kind of the pricing guidelines
which, again, are not guidelines.
They're more kind of suggestions because they're not held to it, the carriers.
And then they have to toss it over to the wireless carriers.
All the wireless carriers or a good amount of them have to send it back to the SMS aggregators
with their pricing.
In addition, the carriers also have to build out the billing system and the tracking, same
with the SMS aggregators.
They have to build the billing and the tracking and normalize everything, and then they have
to pass it off.
Now, as I'm pretty sure you're aware, the wireless carriers are big, big companies.
It takes a long time to do anything, especially important things like RCS and billing.
Aggregators are big companies as well.
They're not as big as the carriers, but they take a lot of time.
Usually, the software providers are a little more nimble.
They're start-ups.
So it's a little quicker.
But if you add up all of the companies and organizations and all the decisions and important
decisions they need to make, I think, it's going to be a while before the brand which
is at the very, very end of this gets the pricing for RCS business messaging.
So all the trials, all the demos, the pilots you're seeing currently, the people talking
about RCS messaging, they might have an idea of maybe what they think the aggregator and
the carriers are gonna come out with the pricing, but they really have no clue at this point.
So that's, I think, gonna be one of the biggest questions during Mobile World Congress 2018,
is, "Great.
I'm interested in RCS messaging.
It looks awesome.
The demos are awesome, but how much is it gonna cost?
Is it going to give me the ROI that I currently get or even better than SMS or MMS messaging
or other things like email marketing or chatbots on Facebook?"
That needs to be answered, I think, before you see mass adoption by brands or even brands
moving from just interest to starting to build pilots.
So hopefully everybody has a great time at Mobile World Congress 2018, and hopefully,
we see a lot of innovation in mobile messaging, especially RCS messaging.
And we're excited to eventually get the pricing for RCS messaging, so we can evaluate it across
kind of the whole mobile messaging ecosystem and then against all of the current different
channels because RCS, while it's great, the pricing has to match that as well.