Communications service providers (CSPs) are traditionally conservative, more focused on internal product innovation, targets mass-market services rather than niche-oriented. But CSPs now have a strategic business challenge; they are not growing fast enough. Subscriber numbers are still growing at a high rate in the emerging markets, but this rate is much smaller in developed markets. Here in the Nordics, we see huge competition with brutal price wars and hopeless fight for growing market shares. Meanwhile, competition worldwide has increased tremendously and ARPU (avrg revenue per user) is not keeping pace with the additional network costs associated with modern time, high-bandwidth services like mobile TV, HD video and the likes.
Graph 1- Operators with a commercial web services offering, worldwide
After some weak trials, most of the operators in developed markets have accepted that Telcos cannot compete on level terms with ‘over-the-top’ (OTT) content providers. In addition to that operators’ share of revenue from mobile content and applications is declining steeply in developed markets. This explains the growing interest – as can be seen from the graph above as well – in enabling third-party content providers by offering web services in the form of open APIs that expose network functions via standard web protocols. Web services (or Open APIs) promise to generate new revenue as part of a strategy to offset the fast decline in operators’ share of revenue from mobile content and applications, as third parties increase their overall revenue at operators’ expense. Without Open APIs, the picture will be even gloomier for operators.
But what are the most interesting APIs for CSPs to open up to the developer communities? I think the biggest potentials are on the messaging, mobile payments (in-app billing), location services, click to call features, identity (authentication and SSO) and Cloud services APIs like storage or networking APIs. In addition to all of these, I think the Femtocells can also be something as they enables subscribers to be tracked anonymously as they move between Femtocells (for example, could be used to track a shopping center to measure customer behaviors). All of these will allow services such as messaging, carrier billing & payment, some types of contextual user information and even voice to be ‘mashed up’ quickly into a wide variety of third-party applications.
To be able to create a successful web services (Open APIs) value chain, I think CSPs should care about the issues below;
- Interoperability: CSPs must overcome their long-standing culture of short-term self-interest, or their overall share of the web services market will be considerably smaller. Most of the developers are concerned about the interoperability and scale. Even though Open API enables developers to reuse their code to make an application working on many operators’ networks, they will still need separate commercial agreements with each. This limits the usefulness of APIs to single-network applications, and reduces attractiveness to developers who need to reach subscribers on many networks.
- Developer Community: Developers are hard to satisfy; they always ask for more and are very picky. They should also see the clear revenue path and a low-risk business model for them. So the Telco Developer programs should look like those of internet companies.
- Cost: The cost of Open APIs should be low enough to enable developers to compete against the OTT. Otherwise the developers will not spend time on the risky, expensive APIs.
If you look at into the Open API initiatives by CSPs today, the main focus of activities lies in the consumer space (B2C), although I believe the opportunities in the enterprise space (B2B) are also important. The age-old strategy of ‘selling picks and shovels in a gold rush’ might help CSPs to find some new revenue sources. I think Telcos should create “tiger” teams in the organizations who deal and take cares of the Open APIs which will also enable addition revenues for Cloud and M2M business. Local services which will solve a problem of an industry-niches will add so much value and revenue for Telcos.
IT - Telecom Business 
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