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Expect to hear a lot of talk at this year’s MWC about how telecom operators plan to monetize network APIs, including through new channel partnerships with hyperscalers.
Why DT’s Peter Arbitter is bullish about network APIs
When Peter Arbitter announced in January on LinkedIn that Deutsche Telekom had established a new business unit for network APIs, he described it as “as important to the telco industry as the introduction of cloud computing has been for the IT industry.”
His enthusiasm has not dimmed.
“We are talking about the future of the industry,” says Arbitter, who is senior vice president of MagentaBusiness API (MACE), Deutsche Telekom. “It really is a game changer because the entire industry has understood it cannot continue … putting billions of investments into 5G and 6G network standards without monetization.”
Arbitter knows a thing or two about the evolution of cloud computing. He was part of early public-cloud discussions at T-Systems, where he worked in 2009 and 2010, before leaving a year later to join Microsoft as Director of its Enterprise Cloud business unit.
Arbitter returned to Deutsche Telekom in 2016 and to a telecoms industry looking for new ways to monetize network infrastructure amid fast growth in revenues from over-the-top (OTT) players. Yet despite efforts 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 – telcos never struck gold. Indeed, one of the sticking points was the black box that is the network.
“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.”
Indeed, Arbitter sees MACE as one of Deutsche Telekom’s future growth areas. In addition to exposing existing CPaaS APIs, since its launch in January MACE has already started exposing new APIs that enable its enterprise customers to use network information and functionality to digitize their core processes.
Arbitter is not alone in his belief that network APIs may finally unlock new doors to monetization and partnership for the industry. Verizon, for example, recently announced it will partner with communications-platform-as-a-service (CPaaS) provider Vonage to expose its network to developers.
“Working with global partners to make network capabilities available on a wider scale will provide exceptional value for enterprises and consumers,” claimed Srini Kalapala, Senior Vice President of Technology and Product Development at Verizon in a statement.
Telcos are aiming initial services at banks and other fintech organizations. In Spain, for example, Orange, Telefónica and Vodafone announced the launch of two network API services focused on improving digital security: Number Verification and SIM Swap. And Telefónica’s Vivo operating company is participating in a similar partnership in Brazil with Claro and TIM, where the operators are launching three new security-related network API services: The Number Verify API service confirms a subscriber’s location and identity, while another called SIM Swap can be used to verify whether a phone number recently changed SIM cards. A third service, Device Location, confirms the location of specified devices.
All these communications service providers (CSPs) are among the 39 signatories to GSMA Open Gateway, which aims to drive universal adoption of APIs that make network capabilities easy for developers to incorporate into applications and services.
Part of the difference lies in the breadth of Open Gateway’s ambitions, explains Arbitter. “It's not two APIs, one for SMS and one for voice. CAMARA has a huge list,” he adds referring to the Linux Foundation’s CAMARA Project. (In addition, TM Forum members are developing new “Operate APIs” to complement CAMARA network APIs in providing a standardized way to make the interfaces commercially available to aggregators and developers.)
This ambition in turn reflects telcos’ need to learn from the past and pull out the stops as never before, so they can make more money from their networks.
“We as an industry have made some mistakes. So, this is an all-around effort to learn the lessons,” explains Arbitter. And he accepts that past industry disappointments may result in skepticism about CSPs’ ability to monetize network APIs. Not only have initiatives such as IoT and 5G mobile private networks failed to live up to the industry’s revenue expectations, telcos were also caught out by the emergence of Vonage and Twilio.
“They came to market and honestly without too much value-add they created an entirely new business,” says Arbitter, adding that “80% or 90% of their revenues were generated by telco assets. So, it's actually our assets, which were brought to market in a much better way.”
Now, however, telcos are taking a different view of competition and collaborating so that third-party developers can create network-reliant services and applications that work equally well across competing networks, even within the same country.
“Or course we have aligned ourselves because we have fully understood [network APIs] … is not a competition,” Arbitter says. “Vying for a share of the installed base of SIM cards is where competition happens. This is about building a new market.”
The network API business looks set to unfold largely as a wholesale model for telcos, although not solely. Deutsche Telekom, for example, has identified four wholesale channels to market, explains Arbitter: aggregators, hyperscalers, systems integrators and ISVs (independent software vendors).
The choice is informed in part by access to developer ecosystems.
“You need hyperscalers to get access to the developer ecosystem. We believe that getting access to these millions of developers is crucial, and this is why we are in very good discussions with all of them,” says Arbitter.
Deutsche Telekom is also entering the retail side of the network API market. “This is where the Vonage partnership also comes into play with Vonage as a retail partner. And this is why we picked Vonage … because otherwise building the model by ourselves means you start with a non-existent developer community.”
Vonage fully expects to see Amazon, Microsoft and Google be part of an open ecosystem, according to Savinay Berry, EVP, Product and Engineering at Vonage, who adds that “this is a massive change for operators.”
Indeed, Ericsson, which owns Vonage, has partnered with Amazon Web Services (AWS) to combine Vonage’s API platform with Ericsson’s 5G network capabilities and AWS services, with the aim of accelerating "the availability of new solutions to millions of AWS developers through AWS Marketplace," according to Ericsson in a statement.
Despite Arbitter’s belief that network APIs will create new ways to serve enterprise customers and partner, he is cautious about talking up the global value of the market in the immediate term.
Although Open Gateway is designed to expose capabilities from fixed, 4G, and 5G networks, he believes some of the most interesting capabilities, such as quality on demand, will require 5G standalone, which is still not widespread in Europe, for example. In addition, enterprise sales cycles are slow.
“If you take these two things into consideration, we are already in 2026/27, revenue-wise,” says Arbitter. “And if it really picks up over two or three years, you might get to a market value of 8 to 10 billion USD. But we think that is still quite aggressive.”
