Telcos explore network API business models

“The most exciting project I have worked on in my entire career” is how one IT architect at a major European telco describes his experience of developing APIs as part of the GSMA’s Open Gateway and TM Forum’s Operate API initiatives.

His enthusiasm stems from his conviction that telcos are finally putting in place the right business models and technology to monetize network assets.

Certainly, there are signs of appetite for network APIs from developers.

A recent report by Kearney focused on developers found that 60% of developers who are interested in APIs would implement 5G APIs within a year if they had the option, and 63% believe 5G connectivity would bring significant value to their projects.

The question is how quickly developers will be able to access network APIs at scale. According to the Kearney report potential players such as hyperscalers, operating system (OS) providers, and technology platforms “see 5G APIs’ tremendous promise and are eager to get started. It’s CSPs that seem to be in the way because they have not completed one or more prerequisites for readiness.”

These requirements include the deployment of a 5G SA core, network virtualization via an abstraction layer, and enablement of and organization with the developer, notes the report

5G SA network roll out is unquestionably slow. As of March this year the GSA had identified 49 operators as having deployed, launched or soft-launched standalone 5G in public networks.

CSPs’ previous API monetization initiatives such as CPaaS, which made available SMS and voice APIs on a wholesale basis, and Mobile Connect, which was designed to offer a secure universal identity service, were not helped by the network, according to Peter Arbitter, Senior vice president of MagentaBusiness API (MACE), Deutsche Telekom.

“We always ended at the network layer. The network layer to a certain extent was a platform to manage end to-end, stack-wise,” explains Arbitter. “Now we are entering the third phase [with Open Gateway] and it is different to what you've seen before.”

One of the key differences is investment by large operator groups in software-based networks and platform models.

Otilia Anton, Network APIs Program Director, Orange, believes support for “the Open Gateway and CAMARA initiatives comes at a moment in time that is quite unique for the telco ecosystem in terms of software-based networks which is very different from the context of past initiatives focused on APIs.”

The other major shift is telcos’ recognition that they need to tap into existing international developer ecosystems, established by hyperscalers, aggregators, and independent software developers, rather than expect developers to pass principally via national operator channels.

“More than ever, we are working in a continuous innovation approach with all the key players of the value chain – from peer operators, marketplaces, aggregators to integrators and enterprises – on illustrating how network APIs will become enablers for new services leveraging personalized, adaptable connectivity and network intelligence,” according to Orange’s Anton in emailed answers to questions from Inform.

However, speed matters, points out Jesper Larsson, Partner, Kearney. “Largely, these concepts resonate really well with telcos, yet at the same time, telcos are notoriously risk averse. We encourage telcos to start experimenting with the exposure models immediately, which also gives them an opportunity to drive the development of commercial models and ecosystem structure. We can also learn from how the open banking concept has played out in various markets around the world – an important reminder that we may not be on the telcos' timeline, but rather on the timeline of the ecosystem.”

Recognizing the need for speed, Orange’s Anton advocates for operators investing in new APIs while use cases are under development.

“The GSMA has been working through initiatives like Open Gateway local champion projects with operators to accelerate the availability of the first CAMARA APIs," according to Anton.

During the last year, 48 mobile operator groups have joined the GSMA Open Gateway, accounting for 240 mobile networks and 66% of global connections, according to the GSMA. Local operator initiatives include the recent commercial launch by China Mobile, China Telecom and China Unicom of a One Time Password API to help tackle online fraud.

In addition to developing network APIs, telcos are beginning to explore different business models.

Jesus Iglesias Maqueda, GCTIO IT Architecture, APIfication program leader, Telefonica, explains that the GSMA has defined two principal commercial models for Open Gateway. One is a straightforward wholesale reseller model in which a channel partner provides developers with a telco’s services and APIs and the telco invoices the channel partner based on usage. The channel partner is responsible for billing the developer.

The second is a marketplace aggregator model in which the telco exposes its API products on a channel partner’s marketplace. Operators determine the pricing and generate an invoice for the channel partner, which uses this information to create an invoice for developers on behalf of the telco.

But telcos are also going further and looking at how systems integrators (SIs) and independent software vendors (ISVs), or even their own enterprise service units, could incorporate network APIs into wider enterprise solutions.

“What is really interesting is where … you enable someone else to build a bigger thing. And your API is no longer recognized … as your API [by] … the customer. And this comes …[with] a different pricing model which also might not be transaction based, you could license things,” says Peter Arbitter, during the TM Forum webinar 'Hard Talk: Will telcos ever be able to attract developers?'. “We are having these discussions with the ISVs. We have started to engage where we add functionality to the solution and then it's the discussion we are having with the SIs.”

Saad Syed, CEO of Chenosis, which is MTN's API marketplace, also sees an opportunity to package APIs as a component of a larger enterprise service.

“One of the things that we're looking at is if we've got these different APIs, why don't we put them together, and then there's a subscription cost associated with a packaged set of components of a solution,” says Syed. Although he admits that it is still early days. “If I'm honest, whether that works out … I don't know, and we probably will need to play with different models.”

How to drive growth from connectivity will be one of the topics under discussion between industry leaders at DTW24 – Ignite, which runs from 18-20 June in Copenhagen. View the agenda.