These telecom-led API initiatives are good, but are they sufficient?

A dozen of the world’s largest telecom operators including AT&T, T-Mobile, Verizon, and Vodafone have partnered with Ericsson and Google Cloud on a new commercial API joint venture targeted at taking advantage of the cloud ecosystem to drive revenues from their telecommunication network assets.

The new for-profit venture includes operators América Móvil, AT&T, Bharti Airtel, Deutsche Telekom, Orange, Reliance Jio, Singtel, Telefonica, Telstra, T-Mobile, Verizon, and Vodafone. They will work with Ericsson’s Vonage division and Google Cloud, which will provide access to their developer ecosystem.

The new venture will include financial and asset investments that will see Ericsson hold 50% equity in the new operating company once it becomes a living entity, which is expected to happen early next year.

Once up and running, the venture will work on developing and selling network APIs that can power new digital services running on platforms from hyperscalers, communications platform-as-a-service (PaaS) providers, system integrators (SIs), and independent software vendors (ISVs). Those APIs will be based on the current Camara Project API standard that was developed by industry trade group GSMA and the Linux Foundation.

The new group is encouraging other telecom operators to join in the efforts, adding that its “platform and partner ecosystem will remain open and non-discriminatory to maximize value creation across the industry.”

Telecom angles cloud API work toward revenue opportunities
An AT&T spokesperson in an email to SDxCentral pointed to several reasons as to why the carrier joined the initiative.

“In order for the telecom industry to grow, there needs to be new business models that allow CSPs [communication service providers] to monetize more advanced features of 5G networks through new high-performance applications,” the spokesperson noted. “The new venture will provide CSPs with a large [go-to-market] channel to Vonage and other major platforms like Google with tens of millions of developers.”

The carrier also pointed to the bottom-line focus of the venture, stating the “newly formed company is a commercial organization that has profit and loss responsibility.”

IDC predicts the worldwide telecom and network API market will be generating north of $6 billion in revenues per year by 2028. This includes the market surging at a 57.1% compound annual growth rate (CAGR) from the approximately $700 million in revenues generated last year to more than $6 billion in 2028.

The IDC report, which came out before this week’s deal, noted that this opportunity has put additional pressure on telecommunication service providers to be more aggressive in positioning themselves against more technologically advanced and focused industry segments that have historically taken most of this revenue opportunity.

“While the telecom industry has a mixed history of API monetization, its latest focus on novel network APIs is being championed by all leading telecom service providers to include global support from key API aggregators, such as the hyperscale cloud providers and leading [communication platform-as-a-service] entities,” Patrick Filkins, research manager for IoT and telecom network infrastructure at IDC, noted in the report. “Even so, the long-term success of these efforts is expected to largely fall to 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.”

The new venture’s push toward the bottom line also differentiates its efforts from that of the underlying GSMA Open Gateway initiative, which is also based on the Camara project.

The Open Gateway initiative was launched in early 2023, targeted at standardizing network APIs that the telecom industry can offer to the developer and application community to simplify revenue-generating interactions. It uses common, northbound service APIs to expose a mobile operator’s network capabilities “within a consistent, interoperable and federated framework.”

Open Gateway launched with support from more than 20 companies, including many of the operators that are part of the new API project and hyperscalers like Amazon Web Services (AWS) and Microsoft. It has since released more than a dozen APIs that can be accessed through Camara.

Ericsson gets a Vonage win
The new operating company is a significant win for Ericsson and its Vonage subsidiary.

The equipment vendor was skewered when it first moved on acquiring Vonage for $6.2 billion in late 2021, a skewering that was seemingly bolstered by Ericsson’s moves since to basically write off that entire investment.

“Given deterioration in the market environment and elective decisions we have made to refocus our investments in strategically prioritized areas, we have reassessed certain growth assumptions,” Niklas Heuveldop, head of Ericsson’s Business Area Global Communications Platform and CEO of Vonage, noted in a statement on the move.

Ericsson CEO Börje Ekholm figuratively fell on his sword during the vendor’s most recent earnings call about that financial blunder stating, “I’m accountable as CEO, no choice about that, so you can have that there.”

However, Ekholm quickly added that the final chapter on that decision had yet to be written.

“But hold your horses a bit before you assess the overall transaction until we know if we can create a separate new market for network APIs,” Ekholm said. “I think that’s where our focus was the whole time. Maybe we have not delivered on the current performance of the existing business. Take that. We need to improve that. So let’s take a look at this in a few once we see how the market for network API pans out.”

Who’s not here?
However, there are notable names missing from the new venture’s opening roll call.

One is Ericsson rival Nokia. That vendor has been working on its own network API strategy over the past several years in an attempt to help operators better monetize their network investments and make sure Nokia is a source of those monetization efforts.

Those efforts culminated late last year with the launch of Nokia’s Network as Code platform that includes a software development kit (SDK), network API documentation, a sandbox for creating software code, code snippets that can be included in applications, and developer analytics to track usage. Like many others, Nokia’s efforts are based on Open Gateway and Camara, but the vendor added its own flavor on top of those efforts.

“In order to win in this particular market with developers, the Camara initiative and Open Gateway are necessary but not sufficient,” Shkumbin Hamiti, GM of Nokia’s network monetization platform business unit, explained during a press briefing. “You need to have the developer experience offered to them, and that is what is really important for the telco industry to get right; but Camara will just make it very simple to aggregate across the operators. And then even for the operators that want to open up these to the developers, the developers would have a good understanding of those APIs.”

A Nokia spokesperson in a statement to SDxCentral noted that the new Ericsson effort “validates the meshed API ecosystem approach that Nokia has been driving over the past year since we launched the Network as Code platform. This ecosystem is guided by Camara and GSMA [Open Gateway Initiative] standards and is not exclusive to any alliance. All operators are working with multiple aggregator partners to reach developer audiences and that remains the path that Nokia will continue to lead and follow.”

The Ericsson-led API group is also missing some of the cloud API ecosystem’s largest players like AWS and Microsoft. Analysts have noted that these cloud giants are crucial cogs in any API effort.

“Hyperscalers, to me, have a huge untapped opportunity by just by the sheer volume of the cloud developer community and the reach within all these different verticals where the high-value use cases might come from,” John Byrne, research VP for IDC’s Communications Service Provider Operations and Monetization practice, said during a recent webinar.

Chivas Nambiar, GM for AWS’s telco business unit, during a press briefing earlier this year explained that these telecom-led API initiatives “are good, but they’re not sufficient.”

“You have to have additional components,” Nambiar said. “You have to be able to take a workload or a use case, and that use case needs to run on some sort of compute, it needs access to storage and databases and machine learning capabilities at the edge. And all of those need to work together in a way that a developer can use it to create the solution and test it and see what works and what scales.”

Nambiar said that independent software vendors (ISVs) are currently best positioned as an API intermediary between network operators and end users.

“That is where I suspect longer term most of the revenue is going to come from: ISVs consuming the telco APIs to build differentiated experiences,” Nambiar said. “But it’s very early in the game. This year you have probably seen from the plethora of announcements happening right now. This is where that discussion is really starting to heat up, and I’m excited about in two years what the marketplace actually looks like.” sdxcentral