RCS THE GLOBAL PERSPECTIVE

DAVID O’BYRNE, PROGRAMME DIRECTOR - GSMA RCS LAUNCH STATUS

60 RCS Launches 90 Announced

100% launched Multiple RCS launches Forecast to go from one to multiple launches in 2018 RCS launched

RCS launch forecast for 2018 The 3 Waves of Communications and Messaging

1000 WhatsApp

Millions 900 800

We Chat 700

600

500

iMessage 400 KIK 300 200 BBM 100 ! Tango 0 AIM 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Mobile Messaging Has Reach!

4500 Global SMS/MMS

Millions 4000

3500

3000

2500

2000

1500

1000 WhatsApp Facebook Messenger We Chat 500

0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 The US in Unique

Monthly active users as % of wireless phone users1, USA (%)

Text OTT Penetration of IM per country, 2017 82% 82% 82% 82%

89% 88% 84% 55% 50% 73% 44% 66% 58% 33% 55%

2014 2015 2016 2017 Number of SMS2 sent per month per wireless phone user1, USA (#)

229 211 191 177

2014 2015 2016 2017

Source: Ovum, Juniper, Statista, GSMA; Delta Partners analysis; Note (1): Unique subscribers; (2) Excludes A2P US Sees Higher Usage of SMS/MMS vs Other Countries

Number of SMS sent per month per subscriber, 2017

177

93

31 20 10 4 3

Source: Ovum, GSMA; Delta Partners analysis; Note (1): Unique subscribers; (2) Excludes A2P RCS BUSINESS MESSAGING REVENUE

To protect and grow messaging revenue: Operators need to deploy RCS and move from Messaging to Messaging as a Platform

60000

50000

40000 VOLUME Bn A2P Business Messaging OTT 7000 30000

6000 Bn 5000 20000 4000 SMS Volume. Volume. 3000 10000 2000

1000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

P2P SMS Messaging A2P SMS Messaging . A2P SMS is still growing (~5% CAGR) to reach $74bn by 2021 P2P OTT Messaging A2P OTT Messaging . OTT apps do not yet rival SMS for penetration or trust *Sources: GSMAi, Portio research, company press releases, industry estimates. No estimations for OTT A2P before 2016 EXPANSION OF OTT PLAYERS BUSINESS MESSAGING SOLUTIONS

. Aggressive expansion in Business Messaging (A2P) from OTT players

. Apple, WhatsApp and VOLUME Bn Facebook have all launched OTT business messaging, with 7000 forecasts indicating the volume of OTT business 6000 messages already exceeds 5000 that of business SMS (Portio 4000 Research). SMS 3000

. OTT messaging providers are 2000 aggressively targeting digital marketing revenue, 1000 monetising their scale and 0 reach, already surpassing 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 premium SMS Business messaging traffic volumes, capturing the attention of Brand investment. RCS BUSINESS MESSAGING VS OTT POSITIONING

RCS Business Messaging WhatsApp Facebook Apple Business Chat Messenger

. Evolution from SMS A2P . Allow businesses to reach . platform . Opens up iMessage for users with rich content opted-in users to engage brands . Primarily P2A initiated . Massive potential reach . Customer service and . Prime use case is Customer . & SMS fallback notifications Businesses can pay FB to Service market to FB users . Trusted MNO channel . WhatsApp Business app for . User always in control . SMEs Free to send messages . Business pays to send . Deep integration to iOS for to end users . WhatsApp Enterprise API for great UX larger businesses . P2A chatbot support . Pricing now published . Independent & open DIGITAL ADVERTISING REVENUE POTENTIAL FOR OPERATORS

Proxy size of the addressable digital advertising market for operators ($b)

399 346 88 329 87 Revenue operators 285 could capture in the 85 future through 248 advertising 86 Non-mobile digital ad spend 86 247 217 185 144 109 Mobile ad spending Revenue operators capture today from A2P Revenue 54 56 59 62 64 A2P

2016 2017 2018 2019 2020 Source: http://strathcom.com/wp-content/uploads/2016/11/eMarketer_Worldwide_Ad_Spending- eMarkerters_Updates_Estimates_and_Forecast_for_2015202/pdf Code of Conduct

David O’Byrne – GSMA October2018 Future Networks Programme RCS BUSINESS MESSAGING VS OTT POSITIONING

RCS Business Messaging WhatsApp Facebook Apple Business Chat Messenger

. Evolution from SMS A2P . Allow businesses to reach . Chatbot platform . Opens up iMessage for users with rich content opted-in users to engage brands . Primarily P2A initiated . Massive potential reach . Customer service and . Prime use case is Customer . & SMS fallback notifications Businesses can pay FB to Service market to FB users . Trusted MNO channel . WhatsApp Business app for . User always in control . SMEs Free to send messages . Business pays to send . Deep integration to iOS for to end users . WhatsApp Enterprise API for great UX larger businesses . P2A chatbot support . Pricing now published . Independent & open CHARGING MODELS

Per event . Replicating existing SMS model

Initial launches using this model – this emulates the current A2P SMS model

Session based Access based Other models may Revenue share . Time based (5m, 1d, 1w, etc) or series . Flat fee for unlimited be deployed . Outside scope of interconnect . of messages (i.e. 10 messages = 1 session) messages to the base or depending likely to be fulfilled through commercial . Discount scheme? . Access to base + charge on demand arrangements per unique user Based on feedback from initial launches session(s) will be defined RCS BUSINESS MESSAGING: RECOMMENDED GOOD PRACTICES

. The RCS Business Messaging: Recommended Good Practices (formerly known as MaaP Code of Conduct) is a key enabler for the scale up and adoption of RCS Business Messaging Services . Promotes the adoption of consistent RCS and RCS Business Messaging practices by all ecosystem participants . Details 9 Principles that clarify how RCS will handle issues such as: . Unsolicited A2P RCS messages . Combating spam, fraud and grey routes . Customer complaints . Data privacy . Publication on GSMA.com/future networks