Unveiled Exposure: APIs Expanding Opportunities for Communication Service Providers to Grow Market Share
New Era for Communications Service Providers: Unleashing the Power of Network APIs
In the 21st century, the quest for communications service providers (CSPs) has been to capitalize on their substantial infrastructure investments, necessary to stay afloat financially. Unfortunately, numerous endeavors in entertainment and social media have failed, and the upcoming 6G generation won't be affordable without a radical overhaul in network monetization strategies. To achieve this, CSPs are employing B2B2X business models to cater to enterprises, providing novel services and boosting revenue generation with innovative tactics, as detailed by George Malim.
A trillion-dollar industry stands before us, with the likelihood of substantial raises in consumer revenue dwindling under the current economic climate. Consequently, CSPs must gamble on cutting-edge solutions and set their sights on the enterprise market to drive noticeable impacts on revenue generation. Fortunately, they possess several strategies to facilitate their objectives. Some of these tactics are offering high-value, low-latency 5G services, exposing application programming interfaces (APIs) to partners, providing customizable network slices, and more.
Although the implementation of these strategies remains scarce within the market, progressive CSPs have set the foundation to make these offerings a reality. They are now primed to expose APIs, charge for their usage, offer automated provisioning, and enable self-service. While these objectives may seem straightforward, the path to achieving them requires significant changes, challenges, and time.
Research firm STL Partners anticipates that the market for network APIs will grow exponentially, from $4 billion in 2023 to an astounding $34 billion in 2030. That's a staggering Compound Annual Growth Rate (CAGR) of 34% over a seven-year period.
Identifying the Opportunity
STL Partners envisions network API value being split across direct and indirect channels, such as those through aggregators who receive a margin, and those contributing to edge computing and private network offerings. Early success with these strategies will stem from focusing on simpler use cases, such as those in the identity family of APIs, with long-term revenue emerging as more network performance-related APIs become available.
International Data Corporation (IDC) also foresees telecoms and network-related API revenues soaring. The firm notes that the value of connectivity has slowly commoditized, while the importance of digital- and platform-based capabilities has escalated across all industries[1]. Indeed, the rise of platform-based commerce has fueled market expansion. Regrettably, CSPs have been slow to adapt to this new paradigm.
Unlocking CSP Value through Network APIs
Amid this landscape, the fusion of 5G networks and API exposure could empower CSPs to reinstate themselves as crucial connectivity platforms. This new stance would allow them to more easily sell and upscale customized, programmable connectivity, supported by telecoms network APIs, essential to app developer platforms[2]. Today, commercial APIs are readily available for fraud detection, location and device information, and quality on demand.
IDC anticipates CSPs intensifying their efforts to substantially increase API volume and developer engagement[1]. By 2028, worldwide revenues for telecom and network APIs are expected to reach an astounding $6.7 billion, growing at a CAGR of 57.1% over the 2023-2028 forecast period[2]. In 2023, global market revenue for APIs was just over $700 million.
"Although the telecoms industry has a checkered history of API monetization, its recent concentration on novel network APIs is backed by all leading telecoms service providers and supported by global endorsements from key API aggregators, such as the hyperscale cloud providers and leading CPaaS entities," said Patrick Filkins, research manager for IoT and Telecoms Network Infrastructure at IDC[1]. "Ultimately, the long-term success of these endeavors is expected to depend on 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, on the other hand, encourages CSPs to invest in cloud and API services to maximize their revenues. The firm estimates the telecommunications market at $900 million in 2023 but laments that, despite significant investment in 5G networks, CSPs have struggled to monetize widespread 5G adoption by consumers. Most notably, they have not been able to charge a substantial price premium over 4G services[2].
As the enterprise market beckons, Juniper recommends CSPs invest in cloud technologies that open opportunities like CAMARA-compliant APIs, enabling third-party software to communicate with specific applications present in telecoms networks. In essence, these APIs empower third-party developers to tap into powerful network capabilities.
Additionally, Juniper emphasizes that 5G is the cornerstone for operator growth in the Internet of Things (IoT) market. With its rich software-defined processes, 5G facilitates swift API deployment, a crucial factor in capitalizing on the IoT connectivity market's potential growth – forecast to expand from $10 billion in 2023 to $23 billion by 2028[3].
Research co-author Benjamin Clark observed, "Although the industry has invested heavily in new technologies, monetization strategies targeting mobile subscribers have underperformed. Future business models must create value for enterprises and new revenue streams that monetize via enterprise activities."
AnalysysMason reports that advanced 5G services have begun to roll out thanks to CSPs' substantial investments in the network. As these advanced services gain momentum, revenue growth is expected to grow from $400 billion in 2023 to $722 billion by 2027. CSPs will fine-tune their commercial and operational systems to support the full spectrum of 5G standalone-based services[3].
Configuring, Pricing, and Quoting
CSPs find themselves drawn into non-telecoms B2B services to explore new revenue streams, a move that lands them competing against established players who excel in customer experience[4]. To combat this, analysts urge CSPs to deploy a single 'configure, price, quote' (CPQ) process that simplifies complexities affiliated with B2B and B2B2X value chains, making them more manageable. This comprehensive, streamlined approach should tackle even the most complex scenarios while catering to simpler services commonly found in typical customer relationship management platforms[4].
In recent years, significant strides have been made to develop a universal set of network APIs, leading to increased CSP initiatives. This began when Telefónica launched CAMARA (a Telco Global API Alliance) at MWC Barcelona 2022 in collaboration with the Linux Foundation, hyperscalers, and other operators, setting the stage for widespread API integration[6]. As of February 2024, 42 CSP groups representing 237 mobile networks and controlling 65% of global mobile connections have committed to utilizing these APIs[6].
Commercially available network APIs are already being unveiled. In September 2023, Deutsche Telekom and Ericsson secured a partnership to sell network APIs through Ericsson's Vonage platform under the MagentaBusiness API banner. In October 2023, Sri Lanka's four mobile operators, including Bharti Airtel, Dialog Axiata, Hutchison, and SLT-Mobitel, debuted their own set of network APIs[6]. Later that year, Brazil's three largest mobile operators – Claro, TIM, and Vivo – unveiled three network APIs centered on enhancing digital security[6]. In February 2024, Spain's leading mobile operators – Orange, Telefónica, and Vodafone – revealed the launch of two network API services[6].
[1] https://www.telco2.net/wp-content/uploads/2022/08/apirii-network-apis-market-executive-summary.pdf[2] https://www.juniperresearch.com/researchstore/internal-communications-and-collaboration-research-report-whitepaper/minimizing-telco-revenue-loss-with-smart-network-monetization/[3] https://www.zdnet.com/article/mobile-network-apis-the-key-to-revenue-growth-for-telecom-operators/[4] https://iotnow.co.uk/articles/2142/telecoms-consolidating-aheads-of-6g#.X4-NgNLLyUY[5] https://stlpartners.com/wp-content/uploads/2022/08/APIs_Presentation_Aug_2022.pdf[6] https://www.psala.com/telecom-news/2023/5g-network-apis-and-more/
CSPs are exploring opportunities in the enterprise market by employing telecoms network APIs, such as offering 5G services, exposing application programming interfaces (APIs) for partners, and providing customizable network slices. As a result, the market for network APIs is expected to grow exponentially from $4 billion in 2023 to $34 billion in 2030, according to research firm STL Partners. On the other hand, IDC anticipates worldwide revenues for telecom and network APIs to reach an astounding $6.7 billion by 2028, fuelled by investments in cloud technologies that open opportunities like CAMARA-compliant APIs.
