How leveraging network APIs can create value and monetization opportunities
Providing developers with easy access to advanced 5G capabilities through network APIs will drive innovation and ecosystem growth.
Key findings
The evolution of cloud-based technologies paired with 5G capabilities offers numerous opportunities for developers. Leveraging network APIs can foster a combination that delivers innovative solutions that will enable developers to create new and advanced applications to enrich customer experiences.
For service providers, the focus on network APIs is not just about introducing new product offerings, but also about nurturing and mobilizing the industry to develop new services at scale. Exposing advanced 5G network capabilities to application developers, through network APIs, brings new possibilities to drive innovation and enable new ways of monetizing 5G by transforming how network features, such as quality of service, security and location, are exposed, consumed and paid for globally. This will create new revenue streams for service providers, enterprises and developers — through new and advanced use cases using 5G capabilities.
Providing developers access to advanced capabilities through network APIs will enable service providers to charge for new services. These services include enhancing quality and performance for mobile gaming, ensuring reliable drone management through low-latency video and location services, and enhancing authentication and security for financial transactions. Another significant potential impact is stimulating increased 5G network services usage by businesses and consumers.
Leveraging network APIs can foster a combination that delivers innovative solutions.
API monetization value chain: How service providers can capture value
Currently, service providers around the world are at different maturity levels when it comes to network API exposure. But no matter what their level of maturity, 5G technology provides the opportunity to expose advanced network capabilities by enabling and stimulating the creation of dedicated solutions to serve enterprises and consumers.
The exposure of APIs to application developers is not a new concept. Communication APIs have long provided businesses with the ability to embed video, voice, SMS and more into their applications to enhance and personalize the customer experience. With the development of network APIs, and specifically 5G network APIs, their value becomes more apparent when multiple APIs are used to create use-case-driven services as offerings for the application developers, enterprises and consumers. The value network APIs can potentially bring are in the context of 5G use cases, as well as the way in which application developers can access 5G network capabilities to create new applications. The potential of capturing value from APIs is dependent on a clear understanding of market segments, use cases, and go-to-market channels. To this end, many service providers are becoming part of standardization organizations like CAMARA1 and Open Gateway,2 and are also seeking a deeper understanding of the revenue prospects from exposing network capabilities.
Figure 14: Network API monetization value chain
Service providers have the opportunity to capitalize on the expansion of the communication platform as a service (CPaaS) market, which has already enabled them to realize substantial value through communication APIs such as those for SMS. CPaaS providers have also expanded significantly from SMS, now also delivering video, voice, messaging and over-the-top (OTT) social media messaging apps, advanced authentication, AI processing and virtual agents for voice and messages, all within a single developer experience with low-code/no-code3 tools. Developers will expect to use new network APIs with a similar experience, increasing the need for service providers to participate in full CPaaS offers. Another value sought by developers, application service providers and enterprises with global users are common APIs that work across service providers worldwide, provided through both standardization and CPaaS platform aggregation. More than 40 service providers have deployed or launched 5G standalone (SA).4 As more service providers invest in this technology, we will see enterprises across industries and the world unlock value by harnessing 5G’s advanced capabilities to create innovative services via open standard network APIs.
Potential business models
Business models where service providers can commercialize APIs include wholesale or retail applying revenue share, subscription, or usage-based commercial models. This is also dependent on a service provider’s go-to-market strategy, including other CPaaS, aggregators, or direct from service provider's platform. For example, in a direct relationship model with an application service provider (ASP), the end-customer uses current network subscription from a service provider, while an ASP offers applications to the user and pays the service provider for the API usage.
Figure 15: API provided directly by service provider
Figure 16: API provided through aggregator
In a typical model, the CPaaS providers acquire APIs from service providers. The CPaaS providers then aggregate, normalize and harmonize these APIs before offering them to ASPs as one single API, who subsequently integrate them into their applications or other software solutions. The application provider compensates the aggregator according to usage – by the minute, message or conversation – which is then bundled into the application charges to the enterprise. The CPaaS aggregator then shares the usage revenue with the service providers involved.
Go-to-market strategy
The choice of whether the service provider should launch its own marketplace through direct selling, or by partnering and selling through other ecosystem stakeholders, depends on various factors such as the type of use cases and geographical reach. A network API and its use case could be relevant for either one country/market with single or multiple service providers, or across multiple countries and service providers addressing the international market. For example, digital native companies offering ride-sharing apps, which have users across international markets, are primarily consuming telecom services, such as SMS and voice services from global CPaaS providers. SMS one-time password is such an example, where CPaaS providers have worked with digital natives to adopt SMS verifications, which is now used across industries. Other examples are global voice and speech applications with local numbers interconnected with mobile apps and AI processing.
These equip service providers with the flexibility to choose their go-to-market approach based on the API and use case. For a global business, it would be simpler to purchase API access from a single provider rather than establishing separate relationships with hundreds of service providers. For such solutions, collaborating with other service providers based on a common API may be preferable, making a third-party aggregator more suitable. Conversely, in some cases of local offerings, service providers may consider direct engagement with developers and enterprises to be more appropriate.
Figure 17: Go-to-market choices
Pricing APIs – estimating values and cost
A service provider’s decision on the go-to-market and commercialization models will have implications on pricing and cost assessment. If a service provider decides to leverage a third-party aggregator, then most of the pricing and costing discussion will be between the two partners. If, on the other hand, a service provider is interested in exploring go-direct channels, then it will need to define the service for the specific API and validate the benefits and values for application developers and enterprises. Furthermore, the service provider also needs to assess willingness to pay among the target market segments. The resulting value and cost assessment enables the service provider to charge for APIs under various tiers based on pay-as-you-go subscriptions or revenue share including service level agreements.
A service provider’s decision on the go-to-market and commercialization models will have implications on pricing and cost assessment.
Enabling rolling launches through co-branded partnerships
Another strategy for service providers, which may provide faster market entry, is through co-branded partnerships. Collaboration with leading CPaaS providers can swiftly offer low-code/no-code solutions for small to medium businesses, as well as robust API solutions for more tech-savvy large enterprises. Early collaboration among partners, and building a go-to-market strategy collectively, can facilitate a rolling launch, where initial APIs can be built upon and utilized while keeping an open aperture of opportunities. Additionally, co-branded partnerships make it possible to integrate go-to-market strategy, sales training and customer support. Offering a combination of communication and network APIs including open standard (CAMARA) APIs to developers, can simplify and guide the service provider’s customers to rapidly implement and achieve revenue growth through new and differentiated experiences.
Building value across the industry ecosystem
Enabling developers to access APIs in an easy and scalable manner empowers the creation of new and enhanced applications, thereby presenting service providers with additional revenue streams through performance-based business models. As more service providers begin to expose network capabilities, they can capitalize on their investments in high-performing networks, further stimulating the developer community to drive service innovations.
1. GSMA, CAMARA: Telco Global API Alliance.
3. Low-code and no-code are methods of designing and developing apps using intuitive drag and drop tools instead of coding.
4. GSA and Ericsson (November 2023).
