Network Exposure as a new route to revenue
As CSPs look for new ways to drive value from their networks, APIs are taking centre stage. CSPs are opening up 5G networks to application developers to jumpstart innovation.
The time has come to take a fresh look at how networks are monetized, and chargeable APIs present a burgeoning opportunity for CSPs. Exposing network functions at the application level through monetizable APIs enables CSPs to deliver unique value to new users and will position networks at the centre of the API economy.
This article was originally featured in Telecoms.com.
We are experiencing a moment of major evolution in how networks fundamentally work. Major advancements in 5G, network slicing, edge computing and network-cloud convergence have come together to make networks increasingly programmable and containerized. This has made networks massively nimbler and more responsive to changes at scale which, in turn, creates opportunities to think creatively about new routes to revenue for network services. That said, capitalizing on this architectural evolution requires a fresh look at how networks are monetized. Network exposure allows Communication Service Providers (CSPs) to transform the network into a programmable, service enablement platform by exposing network capabilities through open APIs (Application Programming Interfaces) for access by Third-Party developers and enterprises.
Applications have become the bedrock of the modern digital economy. More and more, these applications are composed of microservices – self-contained software components – which work in coordination, allowing these applications to fulfil essential functions. However, it is the communication between these software components where the opportunity lies. APIs bridge the metaphorical ‘space between’ software components, allowing applications to communicate with one another. Today’s digital economy is foundationally dependent on this sophisticated ecosystem of microservices and APIs. While the value of the applications has long been recognized, the value of the APIs and the ability to monetize these distinct assets presents a new opportunity for CSPs as part of the API economy.
Marrying Networks and Applications
Telcos have been somewhat limited players in the application ecosystem, largely providing connectivity indirectly to downstream applications while not interfacing directly to achieve outcomes for specific applications. App developers traditionally do business by leveraging cloud services through a Hyperscaler marketplace, while there has been limited ability for networks to engage the needs of specific applications. Network exposure not only allows discrete network functions to be made available at the application level, but it also allows operators to serve industries that have in the past presented a challenge due to a lack of inhouse domain knowledge or uncertain ROI.
Exposing network APIs furnishes ready and eager domain experts, in the form of application developers, with the tools they need to build and enhance their own application offerings to new markets. Putting networks firmly at the centre of this cross-industry innovation ecosystem and offering considerable advantages to both businesses and consumers alike. Businesses can readily enhance the functionality and user experience of their applications by incorporating telecom services, while consumers can access advanced communication features and enjoy the seamless integration of telecom services with their digital applications.
Exposure is More Than NEF
5G heralded a new dawn for how networks work. A move towards softwarization of the network meant a move towards architectures which decoupled the software implementing network functions and protocols from the hardware beneath. This introduces a network agility that allows for the launch and scaling of new services with remarkable efficiency. As part of the 5G network function catalogue, Network Exposure Function (NEF) was introduced. NEF allows CSPs to securely expose new capabilities of the 5G core to external Third-Party applications across standardized APIs. This includes information about the location and reachability of devices and the ability to apply quality-of-service and charging rules to specific data flows.
Those CSPs who have an interest in making network exposure a reality have by now likely selected a NEF vendor and are keenly looking for ways to monetize. Most are rolling out a phased approach, initially putting these APIs to use internally to simplify operations and make key data across the business more accessible to a wider range of functions. Now, the issue of how best to monetize network APIs externally is becoming central to how CSPs expect to create new revenue streams in the coming years. Telecom consultancy and research firm STL Partners forecast the market for all mobile network APIs (including MEC) to be US$22 billion by 2028. The addressable market may be clear but there is a lot to consider when assessing the go-to-market options for network exposure.
Exposure Models
Go-to-market considerations are complex when working out how best to monetize exposed assets to new markets. The primary decision to make is where the APIs or exposed network services are going to be made available to application developers. CSPs can choose to sell APIs directly through their own shopfront or through partnering with a Hyperscaler marketplace, depending on how much of the application relationship the CSP wishes to manage inhouse. Whether electing for an individual CSP model or partnering as part of a global aggregator model, both paths have their own advantages.
For instance, the CSP who decides to make their APIs accessible through a CSP-branded marketplace or portal benefits from a direct relationship with the customer and does not have to contend with their offerings being marketed alongside competitor offerings, as they would be in a Hyperscaler marketplace setting. Utilizing the CSP’s own platform also allows for hardware to be bundled into such offerings, giving the opportunity for greater potential footprint gains in target verticals.
In comparison, leveraging the Hyperscaler marketplace provides a greatly expanded market reach into new industries that already have an established relationship with cloud service forums and may be less au fait with engaging with networks directly. This avenue to market also simplifies the inherent complexity in exposing APIs by allowing CSPs to onboard new services to a central aggregator who manages the downstream application access.
Abstracting the Complexity
Key to all of this is how each CSP intends to manage exposure overall. APIs are complicated and messy to coordinate and monetize as they form a blizzard of protocols which will become increasingly complex as new APIs are made available in the standards. For this reason, many CSPs are looking to transform their networks into service enablement platforms. This means creating a ‘layer’ above the network dedicated to managing these APIs and coordinating with external Third-Party applications. There are many benefits to this approach – most importantly it addresses the security issue. Opening up the network to external parties requires a significant shift in mindset for CSPs and security is a significant and understandable concern.
Adding an abstraction layer on top of NEF allows there to be a single security policy applied consistently across all APIs. It also facilitates the use of a single protocol format and creates a single point of access through one mapping engine for all APIs. This allows CSPs to apply rate limiting to APIs, for example, to prevent too many calls being made to specific APIs. This single version of the truth resolves a great deal of the governance issues when it comes to network exposure and enables monetization flexibility through the logging of who is using which APIs, at what TPS and how valuable each call is. This unlocks a wide array of charging scenarios for CSPs to get creative in how they monetize this new market.
CSPs are uniquely positioned to capitalize on network exposure by creatively monetizing exposed services through chargeable APIs. There are many options available when it comes to considering how to charge for the use of such APIs. Network exposure presents an opportunity for the creation of innovative charging models. Modes of charging could include a subscription model requiring a recurring fee for the use of a particular API, a revenue share model where the CSP charges a percentage of an application item or there could be a ‘Time of Day’ model where rates for use are increased during predefined peak times. Alternatively, one might simply charge for the quantity of API calls made. Whatever the strategy, there is significant monetization flexibility to hand when it comes to network exposure and how to make it pay.
Learn more about new ways to monetize and the possibilities of Amdocs Network Exposure.
