When you think about sources of business or technology innovation, does the current telecom or cable TV industry players come to mind? Yes, it's a rhetorical question, we already know the answer.
Most broadband service providers are not recognized for new business ideas or product leadership. That's why they typically rely upon outside vendors to create the concepts for new original sources of revenue. That's particularly true for software-based innovations.
The telecom network Application Programming Interface (API) is the conduit for that creativity. Telecom APIs are not a revenue item in and of themselves, but rather table stakes needed to continue growth of the $1 trillion telecom services market.
Network operators in this huge market will benefit when opening up their networks to others through Telecom APIs, as they are delivering revenues of well over $100 billion per year.
Telecom service provider monetization comes through increased usage of the service, and supporting APIs can create an innovative ecosystem of independent software developers that in turn drives new business development.
Service providers want to monetize the innovation of other more creative companies in multiple ways, which vary according to the types of APIs and applications.
ABI Research believes that the most effective monetization from APIs is to offer a variety of data plans and innovative services that will suit different subscribers, by an overall data plan and targeted bundles of service offerings.
In addition, Telecom APIs provide access to reporting and billing facilities for applications to respond to network conditions and subscriber data plans. The access gained with the API improves performance and customer satisfaction, and most importantly, gets the creative over-the-top (OTT) providers working with legacy network operators.
"Operators are continuously looking to gain a competitive edge and at the same time avoid losing revenue to low-cost OTT applications. Telecom APIs help operators build a sustainable moat which draw OTTs into a cooperative position, open new markets and to generate extra revenue from existing customers," said Sabir Rafiq, research analyst at ABI Research.
Infrastructure vendors -- such as Ericsson and Nokia -- are working with network operators to develop APIs for monetization, optimization, new business models, increase efficiency and lower costs.
ABI believes that it's important for network operators to consider the bigger picture of APIs, as this is a long-term way of growing their businesses, and not just a one-time fix to the current quarter's revenue shortfall.