Over-the-Top (OTT) service providers, like Skype, Google, WhatsApp and Netflix are riding on top of Communications Service Providers (CSPs) capex-intensive infrastructure by delivering Web and mobile competitive offers either directly (pure OTT VoIP applications) or indirectly (embedding voice, video and messaging into social, mobile, or gaming apps).
While some services are free, consumers are increasingly willing to accept “freemium” models where they have small upcharges for parts of these applications. The issue is minimal revenue is reaching the CSPs while the rise of video content strains network capacity.
How are the big CSPs attempting to move up the value chain and compete with software and Web services companies? There are a few options, particularly as the “Open Stack API” approach to Real Time Communications becomes more prevalent:
The CSPs can monetize their big data by exposing it through what has been referred to as “telco APIs” (see examples later)
Alternatively the CSPs can build their own competing OTT applications, or leverage existing ones to white label and offer as a service enhancement (free roaming with a single number and billing plan)
Thirdly, the CSPs can combine their data assets (subscribers, location, BSS/OSS, and more) with the development of new services and not expose their proprietary data as APIs
This is not just about voice, video, or messaging and other “traditional” real time communications scenarios. As the online entertainment market continues to grow, CSPs are facing even more serious challenges.
While thinking about innovation to compete, it is important to remember two words: EMBED and CONTEXT - human communications shared inside the digital process. For example, remotely watching sporting events with friends or extending beyond movies to e-commerce (see the shoes in a movie, buy the shoes in the movie). These are all part of a “New Real Time Communications Ecosystem.” New, because the definitions are changing as “interop” is being supplanted by “APIs”. Creating valuable experiences for consumers and businesses is limited not by the ability to share data, but by the creativity of the innovators and their ability to envision and build sustainable business models around the exchange of value, not just data.
By some counts, there are over 10,000 public APIs, or Application Programming Interfaces. By exposing data sharing functionality with other services and applications, APIs can spawn a wealth of common application features. APIs make it faster, less cumbersome, less expensive and less risky for developers because they don’t need to start from scratch to create specialized functions. APIs also make it easier for consumers, who don’t have to log in and out of a lot of applications (think, for example, about the massive popularity associated with signing in using Facebook – one of the most successful early APIs in this new API ecosystem).
CSPs who are sharing their APIs are growing, particularly in their mobile app businesses. While Web APIs are still larger than mobile APIs, the mobile segment is growing fast, and this is great news for the CSPs.
Here are a few ways CSPs can generate revenue through an API strategy:
Exposing subscriber, device, application, network and other analytics to Big Data companies (aggregated and/or privatized as appropriate)
Marketing global CSPs reach for operational processing (billing, call completion, SMS and MMS delivery off-net)
Opening APIs to have purchases made using their existing account (billing a bottle of water from a vending machine to the subscriber’s monthly invoice)
Providing opportunities for ISVs to add value to existing business services (UC applications) and sharing revenue based on uptake of the enhancements
Providing location for Location-Based Services (marketing, advertising, public safety, and other applications)
Mixing their API’s with off-the-shelf API’s to create new vertical or horizontal applications
Market forecasts differ, but most analyst agree CSP or “Telco” revenue from APIs could top $100 billion by 2020. There are many initiatives underway already, including the OneAPI movement, sponsored by GSMA, which is working to set standards or at least uniform practices associated with multiple APIs from multiple service providers. While GSMA has backed off their original grander plans, they are playing a positive role in continuing to highlight the challenges and opportunities to their members.
This article was originally published in GENBAND's Blog.