The Role of Telecom APIs in the CSP Ecosystem

New business models will depend on 3rd-party apps, developed by small companies, relying on APIs

As many in IT know, the term API stands for Application Programming Interface.  An application programming interface (API) is a protocol intended to be used as an interface by software components to communicate with each other. What many outside of B2B networking do not know is that APIs enable network operators to capitalize on existing network infrastructure to facilitate third-party creation of a vast array of business opportunities for carriers worldwide.

Telecom APIs allow carriers to disseminate a wealth of internal information or resources to third parties on an asymmetric basis as the network operators typically do not provides services to the end-users.  The use of APIs is also causing an evolution of business models within the ecosystem.

As many know, fourth generation (4G) cellular via the Long Term Evolution (LTE) standard brings a significant increase in bandwidth.  LTE will also drive many new business models, many of which will depend on third-party applications, developed by small companies, and relying upon telecom APIs.  One of the most common API business models that has been adopted by most carriers at the start of the API commercialization is the two sided business model, where carrier charges subscribers for access and third party service providers for APIs. In this model, revenues from traditional core services can be augmented with revenues derived from the use of their IT assets by partners, for instance by allowing their billing systems to be used by third-party merchants in return for a transaction fee.

The second business model is exposing APIs to attract individual developers, who are presented with a pre-defined route to market for their applications and access to APIs based on billing, SMS, messaging etc. Many notable Tier 1 Carriers have created application stores that utilize APIs to deliver rich downloadable applications that can be delivered through the operator portal, potentially reaching millions of subscribers.

Developers are now starting to embrace carrier initiatives, as the latter are starting to become developer friendly – contrary to earlier schemes that required developers to familiarize with complicated telecoms-grade protocols.

Another major business model is based on web “mash-ups”, where web developers can combine web services with telecoms functionality to embed voice, SMS or LBS to existing applications, including enabling communications for social networks. In present circumstances, although monetizing mash-ups may not be a major driver, the additional traffic generated by mash-ups may incrementally add to existing voice and data revenues.

The use of APIs by companies who do not make their use widely known is also increasing. Many companies are reinventing the way applications are built within their own enterprises by exposing their existing assets as APIs, enabling their internal developers to build innovative new mobile, social, and cloud apps. Many of the “traditional enterprises” are employing APIs to increase their overall agility in delivering applications and to open up new opportunities for dealing with partners.

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Understanding and Capitalizing Upon Telecom APIs for Communications Enabled Applications
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