Telecom APIs capitalize on existing network infrastructure to create a vast array of business opportunities for carriers worldwide. In essence, these APIs allow carriers to disseminate a wealth of internal information or resources to third parties.
What are Telecom API’s?
Application Programming Interface
An application programming interface (API) is a specification intended to be used as an interface by software components to communicate with each other.
There are many telecom API’s with some of the more prominently utilized ones currently being messaging, location, and payments. Telecom API’s enable a third party company to access data/information from a telecom network operators for purposes of application support and more specifically the delivery of Value-added Service (VAS) applications.
Telecom API Example: Location
The location API enables a so called “location brokering” function. Location brokering can be defined purchasing location data from one party (the carriers most prevalently) and selling to others (content and application providers). An example of a location broker is Loc-Aid, who buys location from the carriers and sells it to various customers.
There are three main mechanisms in which to obtain location information from a mobile network operator:
- Direct to end-user: Smart phone with GPS
- Carrier direct: Involvement directly with carrier
- Indirect (Broker/mediator): Carrier conveys trust to broker/mediator to act as agent to share location data
Location brokering can be defined purchasing location data from one party (the carriers most prevalently) and selling to others (content and application providers).
The above diagram illustrates an example of location brokering in which the LBS Broker entity effectively purchases location query information from the network operators and sells to others such as depicted here in this hypothetical example: StarBucks, Visa, and AAA
Other Telecom API’s
In addition to location, payments, and messaging, there are many other telecom API’s including Billing, Advertising, Content, QoS, M2M, Presence, Subscriber ID, Subscriber Profile, and more. These API’s are leveraged to varying degrees and their utilization will evolve over time as the telecom API ecosystem matures.
Business Drivers for Telecom API’s: Value-added Services
Telecommunications network operators (or “carriers”) face some urgent problems today. Traditional fixed-network (or “wireline”) operators are losing customers as end-users migrate to cellular and/or IP based communications. Cellular mobile providers are faced with downward price pressure on so called “bearer” services (e.g. those that just carry a payload) such as voice and raw data. This is driven by a variety of factors including increasingly capacity, which will become even more of a supply-side factor with LTE. There is also an increasing awareness of Internet Protocol (IP) being cheap source of transport, application development, and delivery.
On the demand side, bearer services, particularly data, continues to grow at a healthy pace, but there are limits to growth in bearer service for consumer and even enterprise usage. Therefore, wireless carriers sell raw data and many end-users simply choose which so called Over the Top (OTT) applications they shall use on their smart phone. The carriers get paid for bearer revenue (raw data) but do not make any money on the OTT application itself.
These supply-side and demand-side issues place increasingly fierce downward price pressure on bearer services (voice services and even basic data service). With the marginalization of bearer services, there is an increasingly urgent growing dependence on VAS applications. By definition, VAS applications must add value, and not cannibalize existing/core services, unless clearly favorable. VAS applications initially provide a benefit to top line revenue growth (as data growth tapers off and margins are squeezed) and then subsequently improve margin growth as bearer services become a cost-plus commodity.
API’s Enable VAS
The main purpose for supporting the API ecosystem is to provide Value-added Service (VAS) applications. VAS applications are important to network operators as they initially provide a benefit to top line revenue growth (as data growth tapers off and margins are squeezed) and then subsequently improve margin growth as bearer services become a cost-plus commodity.
A telecom API enables VAS applications by allowing a third-party company to offer services in collaboration with network operators such as the above Locaid example. The telecom operator provides the asset (access to network data/information) and the third-party service provider does the rest.
Value-added Services Enabled by API’s
There are many potential VAS applications enabled by API’s ranging from mass consumer offerings such as person tracking to niche offerings such as community of interest shopping applications. The number of potential VAS applications is bound only by the imagination and access to API’s and related data.
In the future, we will see many VAS applications that go beyond typical telecom related services that touch on other areas such as enterprise concerns.
Telecom and Enterprise API “Mash-up”’
A telecom and enterprise “mash-up” API is one in which a query response is based on processing data from telecom sources and from enterprise sources. The query response is not simply a transport of the two disparate data packages but rather a so called mash-up of the two. For example, Subscriber Profile and/or ID information, along with data from a credit card company (and other consumer finance companies), and consumer records data (such as drivers license bureau) can be processed to make various decisions to answer important questions.
For example, the above scenario may be used to answer the question: “Is this the real person, are they where they are supposed to be, and should I open this account for them?” This is just one example of a telecom and enterprise mash-up. There will be many other use cases as the ecosystem evolves over time.
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