Focus on Developer Experience Should Support Network Revenue Generation and a Shift towards “Network-as-a-Service” for Operators and Hyper Scalers

The headline announcement at MWC 2023 was, of course, GSMA’s Open Gateway APIs. This framework aims to open up operator networks to easily enable developers to design and deploy applications Over-the-Top (OTT) across multiple operator networks from a single point. It will achieve this by offering common Application Programming Interfaces (APIs), developer-friendly tooling, and software code. Although this announcement should not be viewed as revolutionary, given previous attempts to expose the network (e.g., OneAPI in 2013), it highlights operator intent to commercialize the underlying network through application deployment. An important part of this announcement is the involvement of hyperscalers. Their relationship with developers, a mature application ecosystem, and the route to enterprise are important pieces in the jigsaw puzzle that can help telcos quickly deploy enterprise-ready applications that will actually drive commercially positive outcomes.

Beyond leading with the Open Gateway API announcement, Telefónica, a leader in GSMA, showed its further intent to support developers. It announced a closer strategic alignment with Microsoft to focus on the development of consumer applications (e.g., gaming, connectivity, and communications). Further alignment has potentially interesting implications in the consumer Network-as-a-Service (NaaS) market that has widely been overlooked by the industry. In addition, Telefónica’s Open Gateway Early Adopters Program signals its focus on cross-enterprise/consumer vertical application deployment. By supporting startup application developers, Telefónica seems to be open to a high level of monetary support/investment to create a large ecosystem of cloud-delivered applications that solve real vertical problems and support specialized use cases. It gives several examples of real-world applications, such as an Extended Reality (XR) application developed by apoQlar using Microsoft’s HoloLens to support surgery preparation.

On top of these flagship announcements, Azure for Operators further highlighted the ecosystem focus on developers. Azure Operator Nexus provides a platform for developers to build mission-critical network applications in both private and public clouds. Its goal is to simplify the deployment of Virtual Network Functions (VNFs) and Containerized Network Functions (CNFs) on-premises and in the cloud.

Open Gateway APIs and the Azure Operator Nexus platform are both looking to expose the underlying network capabilities to developers and provide them with a simpler path to application deployment. For telcos, these announcements could have huge commercial implications:

• Revenue Creation
  • Create new revenue streams through vertical-specific network application deployment and NaaS provision.
  • Support organic growth of existing revenue streams by increasing traffic across the network.
  • Support customer retention by aligning with market expectations on digital application time to market, agility, customizability, and deployment of emerging technologies.
  • Build common “go-to-market” and application marketplaces with hyperscalers.
• Cost Saving
  • Lower overheads by integrating automation to simplify manual processes (e.g., establishing first-mile enterprise connections, interconnecting with cloud providers, and deploying network slices).
  • Help optimize network performance and an infrastructure deployment strategy through real-time data insights and digital twin deployment.
  • Reduce perimeter security by integrating security services directly into the network to improve quality of experience for end users.

In short, by finally opening up the network through APIs and engaging more deeply with application developers, telcos have the opportunity to lower overheads, drive new revenue streams, and move closer to an NaaS model. Optimistically, this ecosystem-wide developer support could be the start of telco digital transformation.

These announcements targeting the application development experience are definitely a step in the right direction for telcos. It shows that they are serious about exposing the underlying network, deploying edge/cloud-delivered services on top of it, and hopefully moving toward an NaaS delivery model. But although recent announcements will support the development and deployment of vertical-specific network applications, this does not mean that they have overcome other problems that have slowed operator-led NaaS deployment:

• Internal Fragmentation/Silos: Traditional telco structure revolves around multiple siloed business units that act independently; however, with cloud-delivered network services, operators must start to think horizontally. Business Units (Bus) must work together to provide end-to-end customer service experiences from network virtualization to service delivery and billing.
• Lack of Automation: Pivoting from network connectivity provision to an application-focused NaaS approach requires embedded automation across networking processes. Developing and deploying this piece of the puzzle is hugely complicated and time consuming, so operators should look to acquire and integrate automation similar to Console Connect by PCCW Global.
• Cloud Skill Set: Opening up the network is one thing, but shifting toward cloud-delivered network services requires upskilling/hiring to introduce cloud awareness and accelerate network virtualization. Orange Business’ acquisition of Basefarm in 2018 is a perfect example of a successful cloud acquisition that can bring the right skill set into an operator model.
• Customer Service/Experience Mentality: NaaS is about providing a service to enterprises, not just connectivity. Operators must readjust everything from incentive schemes to team structures to focus on services, rather than connectivity.
• Communication Platform-as-a-Service (CPaaS) Is Not NaaS, but Operators Are Getting Closer: Deploying applications on top of the network (CPaaS) is not the same as delivering virtualized network services. But it is a step in the right direction, as it shows operators are looking to hyperscalers and cloud delivery to better monetize their network infrastructure.

Industry veterans have been here before with OneAPI in 2013, but operators did not previously have the pedigree to successfully support a developer ecosystem. The industry has now matured and operators are working closely with hyperscalers to support more developer-friendly environments through easy-to-use tools. Building on this market development, ABI Research will be conducting a competitive assessment of emerging operator/hyperscaler developer tools for the edge.