What “interfaces” are to hardware, APIs are to software. Thus, any transformation in network services that’s based on adding features to connectivity is very likely to rely on APIs. But this new mission for APIs is hardly the first mission. Operators have long exposed connection services through APIs, and APIs are the basis for application connections over traditional services. With MWC just starting, it’s not a surprise that API-related announcements are coming out. The question is whether they’re pushing us toward the new API missions, or taking root in the old.
According to one announcement from the GSMA, 21 operators have joined forces to define an Open Gateway initiative, which is a set of open-source APIs that provide access to features of a mobile network. These APIs, unlike those that have been offered in the past, expose more OSS/BSS than network features, including identity verification and billing. The article notes that eight services are initially targeted; “ SIM swap (eSIMs to change carriers more easily; “quality on demand”; device status (to let users know if they are connected to a home or roaming network); number verify; edge site selection and routing; number verification (SMS 2FA); carrier billing or check out; and device location (when a service needs a location verified).”
On the surface, this looks very conventional in that it targets things already provided by operators rather than seeming to present new features or capabilities. There’s also been plenty of talk in the past about operator revenue opportunities associated with exposing OSS/BSS features, and none of it has generated more than a pimple on the operators’ bottom lines. Despite that conventional bias, something good might come out of this.
The first potential good thing is the federation concept I blogged about earlier. The GSMA is playing the role of an API harmonizer here, and it’s also presenting its offerings in open-source form, meaning other operators would be free to adopt it. One of the challenges operators face in “higher-layer” services is a lack of consistency of features and interfaces when such a service has a footprint larger than that of a single operator.
The second potential good thing is that you could characterize these targeted features as “facilitating services” of the kind that AT&T says it’s interested in offering. AT&T is one of the operators who signed on to the initiative, which I think means that they’re seeing this link to facilitation too. It’s long been my view that the best way for operators go gain profits from higher-layer services is through offering mid-layer features that would make those services easier for OTTs to develop and deploy.
The third potential good thing is the most general, the most potentially important, and the most difficult to assess in terms of real operator commitments. It may be that this initiative represents a kind of capitulation by operators, an admission that connection services can’t pay off and that in order to make higher-level services pay off, you need an application/mission ecosystem to develop the framework in which they’re used, before the services themselves can be commercially successful. If operators are finally seeing that, then they may take realistic steps toward a new revenue model instead of trying to resurrect Alexander Graham Bell.
One must always take the bad with the good, of course, and the bad here is that the new APIs and services may be too low a set of apples. Yes, it makes sense to launch an initiative with service features that an operator can already deliver out of their software. However, what’s facile isn’t necessarily what’s valuable. An initiative that doesn’t deliver the desired incremental revenue or other benefits is not only crippled, it’s potentially destructive of further evolution of capabilities.
That’s particularly true of international bodies like the GSMA. Recall that when the NFV ISG was launched, it got off on the wrong foot and was never able to admit it and make the major adjustments that generating relevance would have required. High-intertia processes not only take a long time to put into place, they also take a long time to change. In the market for higher-level features, speed of offering and pace of response to market changes are both critical. That’s particularly true when some of the players most likely to avail themselves of these APIs are the cloud providers, and they have their own aspirations in the “facilitating services” space.
The challenge of mid-layer opportunities is that they can be attacked from below or from above. Cloud providers could build a “telco PaaS” set of web services that would be designed to let OTTs build services faster, cheaper, and better. In fact, most or even all the feature areas the new Open Gateway initiative wants to offer could be offered by cloud providers too. Given their well-known agility and the fact that they’re facing their own revenue growth pressure, cloud providers could well grab all the truly high-value facilitation for themselves, and leave the operators to handle the stuff that’s more trouble than it’s worth.
Telefonica, one of the operators in the initiative, announced it was expanding its relationship with Microsoft “to the area of programmable networks through APIs in the context of the GSMA Open Gateway initiative.” It’s not difficult to see how this might represent the classic “fox in the hen house” challenge, focusing Telefonica on delivering little pieces of value out of its OSS/BSS, but leaving Microsoft in control of the way that truly high-value stuff like a digital-twin metaverse, would be facilitated.
If, of course, Microsoft is really that much better at moving away from comfortable, incumbent, missions. The biggest problem operators have in any advanced services concept development may be their bias toward evolution. If you’re winning the game, you have less interest in changing the rules, and the rules need to change if operators are to restore their profit growth.
Saving profits for telcos globally would require telco advanced services revenues that total over $190 billion annually, according to my model. If telcos were to be the dominant providers of facilitating features, my model says that the total service revenues for all players involved would have to be about $350 billion. If telcos provides a smaller piece of the facilitating pie, the top-line revenues would have to be higher in order for them to meet their own revenue goals. Once total revenue goals hit roughly the $650 billion level, the benefits needed to justify that level of spending become difficult to achieve.
This may be the critical point that telcos and their vendors miss. It’s not enough to expose a few easy and limited-value OSS/BSS or connectivity services via APIs, you have to expose things valuable enough to induce OTTs to wholesale them. Otherwise, even major new revenue opportunities won’t contribute enough telco revenue to move the needle on declining profit per bit, and something more radical may be needed, even perhaps more radical than subsidization.