A new report from ABI Research explores the role that application programming interfaces, or APIs, can play in the monetization of telecom networks.
Telecom APIs aren’t a revenue item by themselves, the firm noted, but allowing access to APIs by content companies, developers or other third parties creates more usage of networks and supports different levels of quality of service that those third parties are likely to pay for. APIs allow third parties to draw on data from networks and is common among Internet companies, according to Joe Hoffman, practice director for mobile networks at ABI. Hoffman added that although operators will definitely want to police who has access to that information, they are likely to be an attractive option to leverage for monetization.
“With telecom APIs, what we’re talking about that is different from the rest of the web industry is the ability to reach down and get information that is very intimate to the operation of the network,” said Hoffman.
Increasing traffic and congestion on networks is likely to continue as users consume more data and the Internet of Things connects more and more devices to the wireless network, Hoffman said. While OTT apps generate relatively little revenue per user and tend to be low cost, Hoffman noted that the IoT has the potential to offer new services and connectivity where users, and third parties who are offering connectivity, will expect a high-quality user experience and be willing to work with operators to guarantee it. If, say, a user buys a connected car with a monthly subscription fee of $30, he said, the auto maker will want to be certain that the user has a good wireless experience.
“If there’s real money being transferred, they want to ensure a good experience,” Hoffman said. “If there’s bad performance, people won’t pay.”
Hoffman noted that while organizations such as the GSMA have offered standardized APIs, most operators take that basic framework and customize it in order to differentiate. Infrastructure vendors such as Ericsson and Nokia work with operators in order to develop APIs.
Beyond individual contracts that include API access, Hoffman said, programs may be implemented by carriers in order to properly vet and communicate with companies with access to their APIs. Billing and charging systems will also have to adjust to support more leverage of APIs, he noted.
“Operators are continuously looking to gain a competitive edge and at the same time avoid losing revenue to low-cost OTT applications. Telecom APIs help operators build a ‘sustainable moat’ which draw OTTs into a cooperative position, open new markets and to generate extra revenue from existing customers,” said Sabir Rafiq, ABI Research analyst, in a statement. “It is important for operators to consider the bigger picture of APIs, as this is a long-term way of growing their businesses, and not just a one-time thing.”
Read more about the report, part of ABI’s focus on telco big data analytics and CEM, here.
