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Telecom network operators and communications service providers are fundamental to how the world advances, and how our lives, economies, and societies improve. They build, expand and maintain the most critical infrastructure needed for connectivity and access to information and services in every country on the planet.
With billions of devices and end-users, the telco sector overall generates trillions of dollars in traditional business revenue. But as life becomes increasingly hyper-digital, telcos stand to grow revenues and profits when they take full advantage of the power of their infrastructure and – even more so – understand and capitalize on the value of the data and services generated at the edge of their networks. This data can be harnessed to fuel innovative new services consumers and businesses find attractive and exciting.
Given the proliferation of mobile applications, powerful and affordable smartphones, Everything-as-a-Service (XaaS) strategies, and the emerging 5G era (with speeds that are easily 10 times faster than 4G/LTE networks) and the final shift toward an all-IP network world, communications service providers are now becoming digital service providers. Telcos who own and operate infrastructure that has cost trillions of dollars to build can now monetize their investments in high-speed broadband by selling data and services made easily consumable by Telco APIs.
The Challenge for Telcos
The challenge is for Telcos to adapt to the new environment, understand their strengths and regulatory constraints, fully grasp the power and potential of services and data offered by their networks down to the device level, and build API marketplaces that drive consumption. New revenue streams are created by helping service providers grow their ARPU with addictive, personalized, and productive experiences developers can create using Telco APIs for everything from voice, video, to messaging and presence, to provisioning and billing.
If Telcos don’t make their moves now, they will be unable to compete, risk becoming irrelevant, and top and bottom lines will suffer. Over the last few decades we have seen Over-the-Top providers like WhatsApp tear into voice services revenue and wireless Internet access services drive a “race to the bottom” for fixed-line telephone services which has led to the extinction of analog networks.
The time is now for Telcos to commit to fundamental shifts in technology and business models. Embracing and providing new ways for developers to consume new network services will drive more services and data consumption making APIs a true win-win for network operators and the service providers they enable.
From Cloud First to Mobile First to API First: Great News for Telcos When They Invest
An increase in mobile device use drives the purchase of service and data plans, and consumers are using more services and generating more data than ever before. There are more mobile devices that connect to networks than human beings, and the number of devices (not just smartphones, tablets, and laptops, but smart home sensors, connected vehicle WiFi, health management and monitoring devices, factory robots, and endless more) will only continue to increase exponentially.
The number of devices is growing so much that Cisco, in their annual data forecast, shows a steady 10% Compound Annual Growth Rate (CAGR) between 2018 and next year.
As massive voice revenue streams continue to fall apart, the next wave of revenue beyond voice, messaging and data access are applications – and applications are enriched with services and data exposed by APIs. Who is better positioned to sell services than the network operators and service providers who naturally connect it, even if only to be able to monitor and manage quality?
Telcos must recognize this once-in-a-lifetime opportunity
To participate fully in the mobile-first revolution, Telcos need to make every service they offer consumable by applications and make everything they do mobile-friendly to participate fully in the rewards.
In addition to investing in 4G/LTE/5G, network operators and service providers have also made the leap into software-defined networking, with the virtualization of nearly every network function. None of these forward moves have been easy or inexpensive, so it is incumbent upon leaders, especially among the Tier Ones, to take advantage right now of the new economics of software, driven by open source and cloud computing, and greater standardization through industry cooperations, which means that the cost of building new services is dramatically reduced.
The challengers to the Telcos – the hyper-scalers, application providers, digital marketplace operators –get it, and they are going after strategies like buying connectivity wholesale and selling it with high mark-ups at retail by bundling connectivity with cloud services. What these challengers don’t have – yet – is the massive and critical infrastructure created and funded by the world’s biggest Telcos. The services the challengers need is provided by the network – not just in the core, but at the edge – and Telcos can not only build their own competitive offerings but can charge premium prices to tech giants when they get their API strategies and marketplaces right.
To be successful Telcos must provide developers:
- Well-designed APIs for network and other services that can be easily discovered and consumed by developers, including DevOps and AIOps teams that are transforming their organizations in big ways.
- Business models that make it easy for developers to build with their APIs then scale: in the world of the web, it’s important to support innovation efforts by providing free or limited trials, as an incentive for developers to adopt specific Telco APIs; succeed, scale and grow is the name of the game in this brave new world.
- Opportunities to market their applications and services back into the base of SMB and enterprise customers who already buy capacity and connectivity from the Telco; doing so with an open API marketplace benefits all participants – and the Telco is the natural fulcrum for this dynamic.
- Opportunities to also access individual subscribers through retail outlets and e-commerce, opening potential for developers to bring cool, useful experiences to customers in the millions. These are highly valuable assets for developers large and small to access, engage and promote their apps.
- A well-designed Communications Platform as a Service (CPaaS); in addition to the marketplaces, Telcos can succeed and compete by offering easy-to-use, convenient operational capabilities including registration, access, self-service, community support, and tools that are complementary to the APIs. By taking the “friction” out of the process, API Marketplace leaders like AT&T (Kandy powers their AT&T API Marketplace) gain favor with developers who are frustrated with bureaucratic processes that can take weeks to get through legal agreements, VPN set ups, requests for app approvals, and endless trouble tickets when the process breaks.
Simplify and Amplify
By designing, developing, and promoting largely self-service marketplaces and platforms, Telcos can compete and dominate in the API space, given their “natural resources” – network services, data collection, storage, and analytics. It’s one thing to have all these resources available, and another thing to make it easy for developers to discover and engage. Developers are not “customers” – they are truly “partners” of Telcos and should be treated as such.
Make their jobs easier. Make their futures brighter.
With solid developer support in place, a quality marketplace and CPaaS, and APIs that expose their valuable, real-time data, Telcos are the natural winners, ultimately, in the API economy.
With the right mindset and investments, Telcos can become the champions of innovation, can help bootstrap the most talented developers, and can support enterprise-grade applications that scale into the millions (driving more and more revenue) while at the same time maintaining security and control of the infrastructure – which means greater security and control for those who consume API-exposed data.
The Telco API Marketplace Imperative
Telcos need to create clean APIs that are easily accessible and adoptable by developers – including their in-house developers who can be the leaders of the community of developers the Telcos wish to attract. Hire rockstar talent and support internal innovation and external entrepreneurialism.
- Enable developers and partners to create amazing applications and experiences.
- Make it easy for developers to find and immediately engage with your marketplace.
- Get creative when it comes to the economics, and work with your partners to build sustainable revenue growth, including rev share and gain share agreements.
- Be more like web scale companies. Be agile, be brave, learn from past experiences, follow the leaders, then become the leader.
The Telco API economy is early-stage and according to every industry analyst following the space, it is poised for massive growth. This cannot be ignored. Kandy can help.
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