Telcos debate their place in platform business models

As telcos explore platform business models, such as offering network API services, it is becoming clear that they cannot go it alone and will need to work together in new ways. But it is not going to be easy. 

In a wide-ranging discussion on the opportunities and challenges of delivering telco-as-a-platform services at TelecomTV’s annual Great Telco Debate, common ground was found in the need for more collaboration. 

“If we really want to move forward and be successful with creating a platform and creating new services, we actually need to stop competing and start collaborating, at least in those areas. We need to ensure that we can create common products across our networks to be able to offer developers and others the same things with APIs,” said Nathan Rader, VP of Service and Capability Exposure at Deutsche Telekom. 

Deutsche Telekom is an enthusiastic proponent of network APIs and is supporting them with resource investments in its own business as well as in industry initiatives. The operator established a dedicated business unit last year, called MagentaBusiness API, in partnership with Vonage. 

It is also one of the founding members of the network API venture announced in September, which will be 50% owned by Ericsson with the remaining shared among the current 11 telcos. The new company’s purpose is to combine and sell network APIs on a global scale. 

Rader said there are more than 60 additional operators in discussion about joining the company. 

“That's the kind of collaboration we need to get to if we want to be able to build new technologies, new ways of monetizing our network, and ensuring that we have a means to deliver this platform to all of the operators, customers and developers out there,” he said. 

But he acknowledged that building this kind of collaborative environment has been a “difficult challenge”.

Beyond the cooperation issues, perhaps more importantly, he said there are “huge gaps” in this platform play for the telecoms industry. Chief among them is how to build the platform. 

“There are no off the shelf solutions to help operators create these platforms. There are a few groups working on things. There are a few places [for] being tested. But ultimately, we do not have a great solution for creating a platform for [the] monetization of capabilities of our network outside of connectivity,” he said and called on the industry to focus efforts here. 

Also, telco platforms are not attractive to developers if they are not large-scale. Rader explained that when Deutsche Telekom talks to developers about what its network APIs can do, their response is positive but they lose interest when they learn that they’re not available yet on other networks.

“If we want this to succeed, it does come back to collaboration where we need to make sure everybody wins,” he said.

Fahim Sabir, Director of Digital Solutions at Colt Technology Services, expressed doubt that telcos could succeed with platform models if they are not able to make the mindset shift from competitive to collaborative. 

To make telco platform capabilities available at scale, he sees collaboration taking the form of federations or alliances. He pointed to the airline industry as an example of how it could work for telcos. 

“The [airline] alliances work together. I don’t know which airline I’m going to end up flying with, but I can go to one place to buy a ticket. We don’t have that same sort of thinking in the telco world, and that's something that needs to change,” he said. 

TM Forum CEO Nik Willets joined the debate and agreed that collaboration is essential for telcos right now but warned that “the notion of being a platform business is ultimately misguided”.

“We as an industry will struggle if we go into this thinking about us owning or controlling a platform being ours, because the platform economy already exists. It has existed for over a decade, and we are trying to find our relevance and way in that world,” he said. 

Rather, telcos should step back from the talk about platforms and APIs and understand what customers really need, he said. 

According to TM Forum’s surveys, Willets said enterprise customers want three basic things from the telecom industry: “connectivity on demand to their terms at their price point when they need it”; security and resilience; and “opening up the ability to deliver new services, as I think we’re starting to do with the industry and API initiatives”.

“Each of those can solve the pathway to growth for this industry, but they have to be anchored in a reset [of] going greenfield in our minds around how we as an industry actually deliver that solution,” he said. 

The industry can find ways to achieve this growth but it must address the legacy technology in networks, IT and data that hinders progress, he explained.

“The importance of collaboration at this moment I don’t think has ever been greater,” said Willets.