This millennium, the ongoing story for communications service providers (CSPs) has been how to monetise the infrastructure they have invested so heavily in. A string of failures have dogged the sector, from entertainment to social media, but we’re now at the point where the next cellular generation – 6G – won’t be affordable without a radical rethink of how networks are monetised. CSPs are therefore engaging in B2B2X business models, targeting enterprises with new services and monetising capabilities, such as API exposure, writes George Malim.
Telecoms is approximately a trillion dollar industry so generating a significant uplift in consumer revenue in a time of inflationary pressure on consumers is an unlikely goal. Instead, CSPs must look to new services and the enterprise market if they’re going to encourage a positive impact on revenue generation. Fortunately, there are multiple levers for CSPs to pull. These include provision of high value, low latency 5G services, exposure of application programme interfaces (APIs) to partners and customers, offering of network slices so customers can select performance boosts or assure their service at a specific level for a certain activity.
This all seems vague because few concrete examples of these propositions exist in the market but it is clear that innovative CSPs have put the groundwork in place to make these offerings possible. They’re now ready to expose APIs, charge for that, support automated provisioning and enable self-service for customers and partners. That’s easy to say but complex, transformative and long-winded to achieve.
The effort looks to be worth the reward. Research firm STL Partners has scoped the value of the network APIs market and predicts it will grow from US$4bn in 2023 to US$34bn in 2030. That’s a CAGR of 34% over a seven-year timeframe.
Identify the opportunity
The firm sees network API value being distributed between revenues that can be realised through direct and indirect channels – through which aggregators take a margin, and the value that network APIs deliver in support of CSP edge computing and private network offerings. Early success will be achieved by targeting the simpler use cases, such as those in the identity family of APIs with longer term revenue coming with greater availability of network performance-related APIs that unlock the enablement value that is wrapped up in CSPs’ edge and private networking propositions.
International Data Corporation (IDC) also sees revenues for telecoms and network-related APIs accelerating. The firm reports that, as the value of connectivity has slowly commoditised, the value shift toward digital- and platform-based capabilities across all industries has risen. Indeed, platform-based commerce has enabled the rapid growth and expansion of marketplace economics. CSPs have been slow to adapt to the new paradigm.
Network APIs unlock CSP value
With this backdrop, the meshing of 5G networks and API exposure can empower CSPs to reinsert themselves as a key connectivity platform, unlocking the ability to more easily sell and scale up customised, programmable connectivity underpinned by app developer platforms grounded in telecoms network APIs. Commercial APIs are already available for fraud detection, location and device information as well as quality on demand.
IDC expects CSPs to accelerate API volume and developer engagement. IDC forecasts that worldwide revenues for telecom and network APIs will reach US$6.7 billion in 2028, at a CAGR of 57.1% over the 2023–2028 forecast period. Worldwide market revenue for APIs was just over US$700 million in 2023.
“While the telecoms industry has a mixed history of API monetisation, its latest focus on novel network APIs is being championed by all leading telecoms service providers to include global support from key API aggregators, such as the hyperscale cloud providers and leading CPaaS entities,” said Patrick Filkins, the research manager for IoT and Telecoms Network Infrastructure at IDC. “Even so, the long-term success of these efforts is expected to largely fall to the broader ecosystem consisting of API aggregators and systems integrators that can generate the value propositions required for market education and adoption to take place.”
Juniper Research meanwhile has urged CSPs to invest in cloud and API services to maximise revenues. It sizes the telecoms market at US$900m this year but highlights that, in spite of their significant investment in 5G networks, CSPs have struggled to monetise the widespread adoption of 5G by consumers. Failing to gain a significant price premium over 4G services has been a key issue, the firm says.
Turning to the enterprise market, the firm recommends CSPs invest in cloud technologies that enable new services such as CAMARA-compliant APIs to better manage IoT services over networks. An API will enable third-party software to communicate with specific applications present in telecoms networks.
The firm also emphasises that 5G is the key enabling platform for operator growth in the IoT market; owing to the high degree of software defined processes allowing the swift deployment of APIs. However, to maximise this growth, operators must provide APIs that enable real-time management of devices, remote configuration and integration with third-party solutions. This will position operator networks well to capitalise on the opportunity for IoT connectivity revenue; a market forecast to grow from US$10bn in 2023 to US$23bn by 2028.
Research co-author Benjamin Clark commented: “Despite the investment into new technologies, strategies to monetise networks via mobile subscribers have fallen short. Future business models must create value for enterprises and new revenue streams that monetise via enterprise activities.”
AnalysysMason reports that CSPs are beginning to deploy advanced 5G services following their significant investment in the network. They are starting to see early signs of revenue growth as a result, forecast to expand from US$400 bn in 2023 to US$722bn by 2027. CSPs are beginning to prepare their commercial and operational systems to be able to support the full breadth of 5G standalone-based services.
Configure, price, quote
CSPs have increasingly been pushed into non-telecoms business-to-business (B2B) services in search of new revenue streams, the firm says. This has resulted in CSPs facing new competitors, often with historically superior customer experience capabilities using self-service and faster responses for quotes. The firm advocates deployment of a single ‘configure, price, quote’ process (CPQ) that can deal with all the complexities associated with telco B2B and B2B-to-customer/user (B2B2X) value chains, and increasingly important partner ecosystems. This single CPQ approach must cover the most complex scenarios, whilst also supporting the simpler services typically found as standard in many generic customer relationship management (CRM) platforms.
Although it has been possible to expose network APIs for a while, CSPs have struggled to adopt a standardised approach that can be adopted at hyperscale. Recent initiatives by the mobile industry to develop a common set of network APIs have provided new momentum to operator initiatives, reports GSMA.
Caught on CAMARA
This began when Telefónica officially launched CAMARA (a Telco Global API Alliance) at MWC Barcelona 2022 in collaboration with the Linux Foundation, hyperscalers and other operators. This work was extended in 2023 with the GSMA’s Open Gateway initiative, with 21 CSPs committing to expose network APIs via CAMARA. By the start of February 2024, that number had increased to 42 CSP groups, representing 237 mobile networks and accounting for 65% of global mobile connections.
CSP commitments are now starting to translate into commercially available network APIs. In September 2023, Deutsche Telekom and Ericsson announced an agreement to sell network APIs through Ericsson’s Vonage platform under the banner MagentaBusiness API. A month later, Sri Lanka’s four mobile operators – Bharti Airtel, Dialog Axiata, Hutchison and SLT-Mobitel – also launched a set of network APIs. This was followed in November by Brazil’s three largest mobile operators – Claro, TIM and Vivo – announcing the launch of three network APIs focused on improving digital security. In addition, Spain’s leading mobile operators – Orange, Telefónica and Vodafone – announced the launch of two network API services in February 2024.
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