CSPs Could Fake Network-API Platform Providers Out of Long-Term Profits

Communication Service Providers (CSPs) have the option to buy back Application Programming Interfaces (APIs) from an aggregated platform to sell through their own developer marketplace, and if network APIs take off, they may just use it.

So far, the industry has observed movement in the opposite direction: the progression from CSPs’ developer marketplaces toward global aggregated API platforms. There is a good reason for this: CSPs have been historically unsuccessful in building industry scale for network APIs from within their silos, and scale is exactly what is needed right now among all industry stakeholders. Network vendors, particularly Ericsson and Nokia, are stepping in with global platforms for expanding scale (see ABI Research’s Telco API Platforms for Internal Exposure competitive assessment ranking (CA-1511)). Key stakeholders are not currently in a revenue competition, but are instead focused on expanding the telco developer community and network API market. Competition will heat up when a critical mass of developers is active using these platforms and APIs undergo monetization. ABI Research projects an anticipated market of US$13 billion by 2028 for Quality of Service (QoS) on demand, slicing, and security APIs alone (see ABI Research’s Telco APIs: Market Sizing and Key Findings report (AN-6157)). With such market sizing, the industry is interested in whether Ericsson or Nokia will have the advantage for platform monetization and who will rise to the top of this market.

However, this overlooks a third option, which is that once global platforms have served their purpose in building industry scale, CSPs may retract and resell through their own developer marketplaces. That CSPs are liable to follow this strategy is suggested through: 1) their platform agnosticism, with several CSPs joining both Ericsson and Nokia platforms, and most of all 2) several CSPs’ continuous investment in and support for their developer marketplaces, including T-Mobile, Deutsche Telekom, Verizon, Orange, and Vodafone. Vodafone has clearly stated that it is prepared to consider the buy-back option. While Vodafone does work with several aggregators, it also strategically avoids overreliance on them for commercialization, retaining control over API sales through direct channels to consumer and enterprise. Vodafone is positioning to grow its developer marketplace as a popular entry point for APIs in the long term.

Despite past failures to monetize network APIs, stakeholders should not underestimate how CSPs may thrive in an established API economy and the tough choices they are prepared to make to maximize their own Return on Investment (ROI). For instance, CSPs are already doing the heavy lifting with developer engagement by forming developer-relations teams, instituting support for API testing, and planning engagement events. Some CSPs, such as Vodafone and Orange, have already invested 5+ years in developer relations. Notably, all these assets are more useful when there’s already a developer market to service. While CSPs have been ineffective in attracting developers to the idea of network APIs and building this market, they may be more effective in migrating developers that already have API buy-in to their own marketplace through developer support and business incentives.

If other CSPs think similarly, global platform initiatives may be threatened by a long-term trend of disaggregation back into telco marketplaces. Unfortunately for aggregators, it does not seem that the market would come apart in such a scenario: developers may continue to apply API code across network services because, by this time, APIs should be sufficiently federated through a combination of CAMARA-compliant standards and common heritage in the aggregator platforms. CSPs will be able to (finally) capitalize on their own marketplace and developer investments. There appears to be no limitation on which APIs can be bought back. If not careful with CSP contracts and long-term incentivization for global platforms, API providers may be left holding the bill instead of their due share of profits. The ecosystem has not yet matured and a lot could happen before API sales increase, which itself is no guarantee; however, opportunity for business alignment is now while CSPs and API platform providers enter partnerships.

There is opportunity for API platform providers to retain operators, but the burden is on them to ensure this. Providers are in a difficult position because, on the one hand, they must set a low bar of entry onto their platforms for a sufficient market supply of APIs for the industry to grow and for the platforms to be successful. However, permitting buy-backs and allowing exploratory partnerships with $0 buy-in will not result in long-term business growth. Platform providers express disinterest in short-term API revenue while the industry grows, but as APIs monetize, they will expect firmer CSP commitment and compensation for network API enablement. The main way to accomplish this is by showing the long-term technical demands for API enablement and a productive development pipeline extending into the 6G future. API platform providers should dispel any notion that a technical-enablement phase will end and be followed by a business phase that CSPs can take over on their own. The case must be made that as long as network technologies are evolving, so will APIs, and CSPs will need to quickly adapt to stay ahead of monetization opportunities. There will be continuous demand for new APIs, Operation Support System (OSS)/Business Support System (BSS) for API monetization (including developer account onboarding, dynamic charging, and Service-Level Agreement (SLA) enforcement), and even potentially custom APIs aligned to specific enterprise applications. Technical demands should keep CSPs close to their enablement partners.

On the flip side, CSPs will want to keep pressure on platform providers to create additional incentives to remain on the platform. To keep this pressure on, CSPs should continue accepting low-investment contracts as long as they are available, continue investment in and upgrading of their own marketplace, and forming close independent relationships with hyperscalers that can be leveraged for infrastructure solutions or access to developer communities.

If both aggregators and CSPs fulfill these roles, the industry will see an advantage overall from these competitive pressures: platforms will be feature-rich, contracts will spell out long-term developments beneficial to both parties, there will be a healthy mix of standardized and custom APIs available based on application, and collaborative partnerships will be rewarded in the market.