Industry Voices are op-eds from industry experts or analysts invited to contribute by Fierce staff. They do not represent the opinions of Fierce.
Since my last article on the topic of network APIs in mid-February, I have had several discussions with mobile network operators on this subject to better understand their perspective. The overall message I took away from those conversations is a mixture of excitement and concern.
Operator excitement over what network APIs can do for them has come through loud and clear. Between the two global surveys Recon Analytics has conducted of mobile network operators (MNOs) since the fourth quarter of 2023, 80% of the respondents said their company was in the process of developing a network API strategy. Eighty six percent of respondents also said they were aware of CAMARA and the Open Gateway initiative.
My direct conversations with mobile operators only reinforced the survey data. The service providers I talked to were enthusiastic about the positive benefits of opening their network APIs to application developers.
Several MNOs told me that the development of network APIs was a key company objective and part of their overall telecom digital transformation strategy. They see network APIs as a way to monetize their most valuable asset, their communications network. The concept of monetizing the data generated by the telecom network has been a point of discussion for years. Network APIs, MNOs hope will make that a reality.
As one MNO told me, he was excited about the potential of network APIs as this was one of the few times, in a long time, that he has seen all the major telecom players coming together to create something that will increase value, rather than destroy it. But concerns regarding security and monetization, if not addressed, could kill that excitement.
The security issue
Security is already a major issue today with MNOs battling network attacks and data leakage. It should come as no surprise to anyone that security concerns are also impacting how MNOs are approaching network APIs.
These concerns start with the building of the actual applications that will consume network APIs. MNOs want assurance that developers are building those applications following all standards and safety protocols. If not, those applications put the telecom network and data at risk of compromise. And, even if those applications follow all safety standards and protocols, they can still be a threat as use of applications grow. As the use of applications increases, so will the threat of hackers wanting to use those applications to gain access to MNOs’ networks and data.
Another concern expressed to me was the storage and management of data created through exposure of network APIs. MNOs want assurance their partners are following secure data storage protocols and are not sharing or corrupting the data in any manner.
As one person told me, he does not want his application partners selling customer data to another party that will in turn use it to bombard his subscribers with advertisements.
Issues with the storage and management of sensitive data will become a bigger challenge as the amount of data created to support new applications grows. There needs to be industry wide protocols put in place to govern data management, if not network APIs could create more problems than they solve.
The following figure below, from Recon Analytics’ Q1 2024 survey, shows other security concerns.
Monetization and more
The big issue, as always, concerns monetization. Monetization concerns include more than just actual payments and revenues.
The people I talked with said monetization actually begins with MNOs and keeping to the plan to standardized network APIs. A lack of adherence to standards will cause fragmentation and make it difficult to get app developer support. App developers do not want to create bespoke solutions for every MNO. App developers do not want to become telecom network experts either.
Standards play an important role in lowering the bar to entry for app developers. Even with standards, getting developers interested in building applications for network APIs remains an MNO concern.
MNOs told me they think the best way to get app developers interested in working with network APIs is to give them access to those APIs, free of charge initially, to experiment with. MNOs hope firsthand exposure to network APIs will get developers excited to create new applications. Creating an ecosystem of application developers is crucial for monetizing network APIs. MNOs did say that they are already getting interest in the possibility of network APIs from their large enterprise customers.
The biggest monetization concern of course is who gets paid and how much. MNOs, based on their past experience with the CPaaS market, are understandably concerned they will get very little in return for opening up their network APIs.
Between mobile network operators, platform providers, and app developers it is easy to see how margin stacking can quickly eat into the earnings of everyone involved. MNOs said there needs to be a tiered approach, and charge based on the requirements of the application.
With some consumer apps used by millions of users, MNOs may only get a fraction of a penny per use, with revenues hinging on the expected high volume of app transactions. In other cases, there will be customized enterprise applications that will generate tens of thousands of dollars per month based off a single customer. This is also why MNOs will have a hybrid application development strategy. Third-party developers might build and manage consumer applications, while MNOs will take the lead and create and manage applications for high-value large enterprise customers.
MNO excitement regarding the potential of network APIs is high but that does not mean it will always stay that way. There is still lots of work necessary to ensure all of the pieces are in place to make network APIs a success. Realistically this will take a few years, but it is important that all the parties involved see progress along the way to maintain their commitment to network API monetization.
Daryl Schoolar is a director and analyst at Recon Analytics where he focuses on telecommunication service providers and companies that provide networking communication solutions to those service providers. Some of the topics he covers are digital transformation, 5G, 6G, cloud networking, and telecom service strategies.