What Is Communication Platform-as-a-Service (CPaaS) and How Does it Lay the Foundation for Operator Network-as-a-Service (NaaS) Transformation?

The headline announcement at MWC 2023 was, of course, GSMA’s Open Gateway initiative. This is an open source CAMARA framework of common network Application Programmable Interfaces (APIs) that aims to provide universal access to operator networks for developers. This initiative looks to ease application development experience for developers and cloud service providers via a single point of access. It should enable third-party developers to embed operator network capabilities directly into their applications. This is not only valuable for developer applications, but it also supports operator commercialization by making 5G networks the crucial link between edge/cloud applications (developed by third parties) and the enterprises.

So far, 21 operators have supported this initiative, with heavyweights like Telefónica, Deutsche Telekom, KDDI, AT&T, Orange Business, and Vodafone leading the way. It is expected that this move will have a huge impact on operator economics as it supports accelerated technology deployment, innovation, and commercialization, as well as encouraging the accelerated deployment of digital network services with seamless access to 4G/5G network capabilities. Across MWC, operators were showcasing the opportunity for API-supported applications with embedded networking capabilities, such as immersive gaming from Orange, Telefónica, Vodafone, and Ericsson, and an immersive concert experience from Axiata. This announcement has led to renewed interest in operator Communication Platform-as-a-Service (CPaaS) deployments, but will operators uncover value from CPaaS?

CPaaS is a cloud-based application platform sitting on top of the operator network. Using APIs, developers can build applications with embedded networking capabilities. But what value will deploying CPaaS offer operators?

• Drive Network Traffic to Support Traditional Business Model: Given that most edge/cloud applications are data heavy, CPaaS will contribute to increased enterprise network traffic supporting telcos’ traditional data volume-based revenue models. Incubating a strong application ecosystem aligned with enterprise vertical digital strategy through CPaaS can help sustain telco revenue. Telefónica’s Activation program, aimed at helping startups deploy vertical-specific applications on top the network, shows the operator pivot from network to application as the main traffic driver.
• Engage Commercially with Enterprises: CPaaS creates a marketplace that connects cloud providers/developers with enterprises across the operator network. With apps deployed, enterprises will engage more effectively with operators, as it offers differentiation compared to interconnection providers like Megaport or Equinix. This can sows the seeds for future customer development through further service deployment, e.g., Internet of Things (IoT) connectivity services and Multi-access Edge Computing (MEC).
• Develop Deeper Partnerships with Developers and Cloud Service Providers: CPaaS provides an opportunity to engage strategically with developers and cloud providers. “Go-to-market” partnerships will give operators a new channel to enterprise through cloud ecosystems.
• Expand Total Addressable Market (TAM) for Operator-Led Applications: Open Gateway enables operators to deploy services across different regional networks. Operators can grow new revenue streams through in-house application deployment. However, given the skills gap, this revenue growth will be best achieved through partnerships with Independent Software Vendors (ISVs)/startups (e.g., SK Telecom and VMware building MEC applications).

CPaaS and NaaS are different. While CPaaS opens up the network to support application deployment with networking capabilities, NaaS is all about offering enterprises network services in a cloud-based “pay-as-you-go” consumption model. These may include Wide Area Network (WAN)-on-demand, bandwidth-on-demand, cloud connectivity, virtualized Software-Defined WAN (SD-WAN), network slicing, and many others. Moving toward NaaS will still take time, given the required investments across technology, culture, and structure. However, for ABI Research, API-led CPaaS deployments can be seen as helping lay some of the building blocks necessary to support operator NaaS development:

• Places Partnership Ecosystem Firmly in Focus: CPaaS has brought together cloud providers, ISVs, telcos, and developers. This mentality shift will be critical for NaaS deployment, given the necessity for ecosystem partners that can help patch over operator skills gaps.
• Start to Build Out Cloud and Edge Expertise: CPaaS forces operators to explore applications in the distributed compute continuum, as well as the role of network virtualization—these are central tools necessary to support NaaS build-out. But CPaaS will only take us so far, as NaaS relies on end-to-end network virtualization, which is still a long way off.
• Begin to Integrate Automation across the Network: API-led CPaaS deployment enables ISVs to integrate automation directly into the network. With mature automation solutions embedded within the network, operators can easily scale NaaS solutions, including deployment, management, security, and back-office operations. But CPaaS-led automation integration is not sufficient and further investment will be needed before true NaaS platforms can be deployed.
• Build Common Go-to-Market Strategies with Digital Service Providers: CPaaS and NaaS are both service models that require strong enterprise relationships. This can be challenging to build, but CPaaS deployments will strengthen relationships with hyperscalers/digital service providers and help form common go-to-market strategies. These partners will start to build strong channels to enterprises for services beyond pure connectivity, which is traditionally what telcos are known to offer.
• Begin to Re-Architect Billing/Back-Office Operations: CPaaS forces operators to restructure back-office operations and create horizontal teams that provide end-to-end enterprise support across Information Technology (IT) operations, marketing, customer services, billing, etc. This structure is essential for NaaS, given the required focus on client relationships, flexible billing, and customizable services.

A NaaS deployment is one of the goals for telcos as they seek commercialization opportunities. CPaaS development will support operators’ internal and external changes that can help build some of the foundational elements necessary for NaaS. But even so, telcos still seem a long way from NaaS deployment given that, among cultural and structural problems, the networking layer remains largely unchanged. Network virtualization and automation from the core (through transport and aggregation) to the edge, which isn’t addressed by CPaaS, will remain a key sticking point for operators looking to make NaaS a commercial reality.