The future of Instant Messaging

Our society is increasingly dependent on Information and Communication Technologies (ICT) such as mobile communication platforms and applications. Currently, the two dominant trends in the way that users consume communication services are the Telco model favored by telecommunication network operators (Telcos) and the Over-The-Top model (OTT model) promoted by companies offering web services (Webcos). Over-The-Top applications (OTTAs) are applications that provide communication services over the Internet (e.g. messaging, voice, etc.), bypassing traditional distribution. The OTT model uptake is now visible on the global level and has gained considerable momentum, seriously threatening revenues from the legacy Short Message Service (SMS). SMS service revolutionized person-to-person communication, reaching 7.8tn messages globally in 2011 . In 2012, OTTAs like WhatsApp, Viber and LINE transmitted an estimated 19bn messages per day, and thus had surpassed the 17.6bn benchmark of SMS messages sent

Driven by the rise in smartphone usage and the decreasing cost and convenience of mobile broadband plans, it’s been forecasted that OTTAs will continue to grow unabatedly and ultimately lead to a significant decrease in SMS and MMS traffic. In order to function properly, OTTAs require a mobile Internet connection and both parties must have the corresponding proprietary software application installed on their mobile phones. The OTT model is playing a key role in the new phase of the mobile voice market. By 2013, the penetration of VoIP services on smartphones was approximately 10%, dominated by Skype, and major alternatives such as Viber and Google Hangouts. A rapidly growing number of smartphone owners are beginning to use VoIP applications as their primary voice service, and it is expected that by 2017 one out of three smartphone owners will be active users of VoIP applications, generating 14% of voice traffic . It is estimated that the Telco industry will lose $386bn between 2012 and 2018 to voice OTTAs.

Most of the Instant Messaging (IM) and Voice over IP (VoIP) apps introduced in late twentieth and early twentieth century were based on open standards like XMMP/Jabber , which enabled them to interoperate (e.g. an AOL IM user could communicate with an ICQ or a Yahoo! Messenger user). In 2009, WhatsApp turned the tables and began its global conquest through the iPhone, with a custom version of Jabber that no other IM applications could talk to. Skype, and later iMessage stepped in, cementing the so-called walled garden approach for IM and OTTAs. In general, OTTAs are divided to two categories: (a) the many-to-many group OTTAs (Facebook, Twitter, etc.), and (b) the one-to-one or one-to-many OTTAs (WhatsApp, Viber, etc.). Most of the OTTAs follow the walled garden approach. They are closed ecosystems/communication areas where users cannot communicate with users of other OTTAs or Telcos.

Another challenge for Telco, beyond OTT, is the Direct (Peer-to-Peer) Communications such as WebRTC and Object RTC, which shall be enabled via LTE and 5G. WebRTC provides browsers, mobile applications and Internet of Things (IoT) devices with Real-Time Communications (RTC) capabilities via simple APIs and common set of protocols. WebRTC initiative is mainly supported by Google, Mozilla and Opera, amongst others. The Object RTC enables mobile endpoints to talk to servers and web browsers with Real-Time Communications (RTC) capabilities via native and simple Javascript APIs its components are being optimized to best serve this purpose. The Object RTC initiative is a project supported by Hookflash, Microsoft and Google.

In order to stand the competition and the rising threat from OTTAs, Telcos introduced Rich Communication Services (RCS), which offer rich, and interoperable communication services, beyond voice and messaging, like IM, content/ file sharing, group chat and video conferencing across multiple devices. However, the RCS has operator local reach (in the specific operator market) and directly interconnections are needed to connected to other operators.

The fragmented communication market poses inter and intra challenges to all stakeholders including consumers. App. Developers’ intra challenge concerns the risk-free technology selection for their applications (RCS or webRTC). Their inter challenge is related to which technology will be more interoperable in order to reach more consumers. Telco’s intra challenge is the RCS interconnection since the interconnect process has to be repeated each time an operator want to interconnect with another operator. Each interconnection is time consuming to achieve (approximately six months each according to GSMA), mainly because of its level of complexity. Their inter challenge is the interoperability with other messaging applications with webRTC (eg through a webRTC getaway) and with OTTAs. Although OTTAs follow the walled garden paradigm in order to monetize through advertising or subscription. They face an intra challenge of overcoming the fierce competition from new entrants with new innovative features (e.g. Snapchat with ephemeral messaging) and new business models (e.g. Telegram) taking a share of their market. OTTAs inter challenge concerns the continuous growth of their subscriber base especially in countries with low Internet penetration through other channels (e.g Facebook 0 in Africa). Finally consumers’ main challenge is the communication with any other consumer irrespectively of the app they are using.