13 December 2024
Amir Mehmood, Director of Solution Engineering, Optiva
For the telecom sector, monetization is everything. That’s not a cynical view, it’s just a fact. Despite investing more than $1 trillion in network upgrades in the last several years, telcos are still falling short when building new revenue streams from the 5G rollout.
Challenger operators and over-the-top (OTT) services such as WhatsApp are claiming a bigger slice of the revenue pie, with some 75% of operators expressing concern about losing ground to OTT players. Therefore, telco’s frustrations are understandable. They’ve poured money into costly infrastructure, helping push nations forward into the 5G era, and now they’re in the Wild West — competing with players that, in some cases, didn’t even exist a decade or two ago. So, what’s a telco to do?
For starters, it’s important to point out that there is still a market for basic, connectivity-driven 5G monetization. According to McKinsey, there is still some interest among younger generations for 5G booster packages, and 1 in 5 subscribers say they’d happily purchase ‘business plan’ bolt-ons to improve their connectivity. That’s all well and good, but OTT players are offering services that extend far beyond mere bits and bytes, and that’s where operators are losing out.
Network APIs can create new breeds of services that go beyond speed and bandwidth, which cloud providers and API aggregators are only too keen to exploit. Just as OTT platforms started eating operators’ lunches in the voice and revenue space, cloud providers and API aggregators are looking to do the same here. Operators must act quickly to embrace the world of APIs and stay ahead of the curve if they want to retain their seat at the table.
That’s being made easier through initiatives like CAMARA, the global telco API alliance. This alliance includes members from leading operators and the GSMA. It aims to help the telco industry make the most of the API revolution as it unfolds with technical support and guidelines. APIs are no longer viewed as just technical components to join digital dots; they’re seen as substantial business assets that drive innovation and provide a genuine competitive edge.
For instance, usage patterns can be analyzed and roaming data can be gathered, paving the way for new services that cater to modern consumers’ real-world needs.
This might solve a problem that banks or travel agencies, for example, never even knew they had. It would allow them to provide location-based, context-rich services that drastically improve customer experience.
As new network API use cases evolve, they are being made available to enterprises and the entire development community, unlocking a new generation of 5G-driven applications where telcos could — and should — play a central role.
The path to monetization
So how do APIs unlock new revenue streams? In a nutshell, they allow telcos to interact with their network and data systems on a whole new level and pass on those benefits as a service to external developers. Telcos have access to untold pools of data, from SMS, voice, location, data usage, and user behavior. By surfacing this data and making it available through APIs, they can create desirable platforms for third-party developers and application owners to build new, improved services. In short, telcos need to position themselves as the API gatekeepers to the wealth of network data.
That, however, is easier said than done. Much of a telco’s ability to tap into the benefits of network APIs will depend on their digital architecture. Bigger telcos are often stuck with legacy operations support systems (OSS) and business support systems (BSS) that aren’t suited to digital, cloud-based data management. Smaller operators, such as mobile virtual operators (MVNOs), however, are agile enough to tap into more modern, cloud-native BSS systems, so they’re likely to get the edge in the race to 5G monetization.
Why is BSS important?
BSS is like the brain and central nervous system of a telco’s operations. It allows them to manage customer relationships, orchestrate billing, and fulfill orders. Older BSS systems were purpose-built with yesterday’s needs in mind. So, they can’t really cater to API integration or the personalization of subscriber services.
Telcos with these older systems in place either need to upgrade their core BSS, which is difficult for a large telco company, or bolt-on additional services, which can get messy and result in lots of data silos and disjointed processes. What’s more, replacing one monolithic BSS with another — even with one that’s more current — is almost guaranteed to become obsolete a few years later.
That’s why scalable, customizable, cloud-based BSS systems are becoming increasingly vital. These are not static platforms but, instead, upgradable engines that can pivot and grow with the needs of operators, allowing them to deploy and take advantage of new APIs and plug-in functionality.
This kind of cloud-native architecture is already widely used across most industries, and now telcos have a reason to join the pack. It’s also why many MVNOs and smaller challenger operators can compete and sometimes outcompete larger MNOs — they benefit from being digitally-native businesses with more flexibility and far less to lose.
Opportunities and barriers
It’s worth noting that API monetization is not just about deploying the right technology. It’s about fostering the right mentality. Telcos almost need to reinvent themselves for the modern age — instead of classifying themselves as network operators, they need to become software innovators and disruptors
Take roaming insights as an example. If a telco can gather and curate roaming data and turn it into useful, meaningful information, it could completely transform travel on various levels.
Retailers could pitch their products more timely, banks could leverage location data to improve their fraud detection processes, transport services could provide context-rich notifications and updates, and that’s only scratching the surface. Governments and government agencies may also be interested in such functionality, such as enhancing emergency services by providing them with accurate location data. If telcos think outside the box, the potential monetization opportunities are practically limitless.
But it’s this ‘thinking outside the box’ that may prove to be the sticking point for some. Thankfully, operators don’t have to go it alone. There is an emerging trend toward growing partner ecosystems, including vendors, developers, and content providers, each with a stake in the same API landscape. With the right technology and ecosystem in place, the potential to capitalize on API exposure could extend into travel, banking, healthcare, and entertainment, where real-time data can dramatically enhance customer experiences and service levels.
The telecom sector may have been a passenger in the content monetization boom. However, when it comes to APIs and 5G monetization, they have the opportunity to grab the wheel and drive.
