Independent Review of Telecom APIs (pre-conference workshop at Telecom API Event)

The Good, The Bad, and the Ugly of Telecom APIs

Tuesday 7th October 2014

There can be only One?

Truth, Lies, and APIs. It’s all about the Services, I repeat, it’s all about the SERVICES


Independent Review of Telecom APIs


The Art of Ignoring

Structure

•  Introductions •  Ground Rules •  Home Truths •  Market Situation (2PM) •  Why Do We Need Telecom APIs •  Reality Check: AT&T, Telus, Etisalat, Telecom Italia, Telefonica,

Verizon, Turkcell o  Likely take a break through these case studies (3PM)

•  Mapping the Landscape (4PM) •  Building the Telecom Application Developer Landscape •  The Litany of Excuses •  Open Discussion (5PM)

Keep in mind throughout the workshop

•  Web APIs not Device APIs •  Telecom APIs across the business

o  Internal, Partners, Customers, 3rd Parties

•  Standards where appropriate (UNI and NNI, everything else is ?) o  Especially if market unproven

o  Especially if developed by people who have NO experience in APIs o  Note if anyone accuses me of being anti-standards – I led FSAN GPON, and worked in

ETSI, ITU, ATM Forum and IETF – I know what I’m talking about

•  Telecom skills are no longer sufficient, need IT and Web skills / experience o  Multi-disciplinary problem

•  Competition is global, competition is beyond other telcos, and we can only survive as part of multiple ecosystems

•  OTT is pejorative (like Redskin), use the term OSP (Online Service Provider) its what they call themselves

No developed market telco has successfully engaged

mobile application developers with Telecom

APIs

BUT Telecom API successes have come from

using APIs internally

AND Telecom API successes have come from

using APIs with existing partners

APIs reduce business friction. This means the

value is not ‘in the API’ it’s in the service or data

delivered through the API.

Mobile Application Developers ONLY care about direct access to

a large engaged customer base that is prepared to pay.

Apple and Android fulfill this

need, Telcos are IRRELEVANT

Analysys Mason Prediction on Voice Usage

Telco voice usage will remain significant (74% of usage by 2018). New comms services will be essential to maintain revenue given price pressure and data revenues not offsetting declines.

Analysys Mason Prediction on Messaging and ARPU

Telco p2p messaging will become niche, anticipate rapid revenue decline as SMS moves to data. Analysys Mason is predicting a >25% ARPU decline by 2018.

Industry needs to find >$100B in new revenues within 5 years.

Easy and Economical 90% Global comms clouds Laggards 10%

Applications and Services

Customers

Telco

What if a Telcos continue to do nothing? Telcos become the “path of last resort” as apps use “easy and economical” APIs for

90% of comms, and Telcos for only 10%

We’re Underestimating the Impact of when WhatsApp adds Voice

Page 24 The Western European Syndrome may be upon us sooner than we think

BUT Telcos can get it Right!

Page 25

What is an API?

•  http://www.telco.com/api.php?action=remove_friction

APIs reduce business friction by making it easy for software systems to work together using existing well understood web technology that any IT person can understand

Why do Telcos need APIs?

Without APIs Telecoms will become irrelevant as Service Providers because customers will expect communications to be embedded in their experiences. — Alan Quayle, Independent Telecom Thinker

§  APIs will become critical to maintaining Telecom’s customer relevance

The money is not ‘in the API,’ it’s in the service delivered by the API. APIs are simply delivering services more efficiently, which opens up new business opportunities. — Jose Valles, ex-VP Partner Products at Telefónica

Digital

§  APIs are just a technology, its all about the services

An API strategy is becoming a must…in terms of speed to market with new products, maximizing business development, and product development opportunities. — Steve Kurtz, VP Business Development, USA

TODAY

§  APIs are a global IT trend across all industries

Why do Telcos need APIs?

1995 2000 2005 2010

Why do we need a Web site?

Of course we have a Web site

Why do we need an API?

Of course we have an API

Innovation Upsell

New business

Operational efficiency Increase footprint Accelerate internal projects

Extend products / services Make churn harder Partner opportunities

New distribution Device and mobile support

Telecoms is the ‘vital spice’ of any successful business ecosystem

Process automation

What APIs can Telcos offer?

Capabilities Opportunities Telco API

internal systems

billing, rating, charging

lower operational costs

payment services identity and security calling

location

customer insight customer profile

cloud call centers

enterprise cloud

messaging

device CRM

VAS personalization

hypervoice communication enabled

business processes

directory fraud management

Show me the money? graphic

Where’s the Money in External APIs? Mobile payments revenue, source BI Intelligence. Includes Apple, Android, Square, Visa Mobile, etc. $244B by 2017

$157B by 2018 Total Telecom API revenue, source Mind Commerce. Payment, Communications, Identity, Cloud, etc.

$18B in 2016 Alan Quayle’s view is the revenues will be $18B and dominated by payment and communication service revenues by 2016

Juniper predicts DCB (Direct Carrier Billing) growing from $2.5B in 2012 to $13B in 2017 (this assumes only digital downloads, not goods and services)

Mobile Payments Prediction from BI Intelligence

Receipts

Revenues

MBA BS!

Offers services direct

Offers services direct

Consumers Business

Commoditizes pricing

Easy and Economical 90% Global comms clouds

Laggards 10%

Telco gets commoditized and detached from customers for comms services

Telco

Wholesale that’s a good model!

Bait and Switch graphic

Market Situation: API Bait and Switch

API

Roll-up, roll-up, buy my API software, expose some APIs, to gain fame and fortune just

like Apple and Google

What is sold

What happens in practice

Reality graphic

Market Requirements: Why are operators spending money on API? •  M2M to support provisioning and management

o  Verizon (Hughes Telematics), Rogers, AT&T, Telefonica, Ericsson (bought Telenor assets)

o  This is generally treated as a silo, and not part of a broader API business o  And is getting wrapped up in the silly IoT hype

•  Wishful thinking in building a developer community like Android and Apple o  AT&T, Globe, BlueVia, Deutsche Telekom’s Developer Garden o  Market does not yet universally understand this is a failed strategy

•  Support open innovation and work more easily with partners on new business models and market opportunities o  AT&T – this really started only in the last year

Market Requirements: Why are operators spending money on API? •  Support internal innovation, in some cases focused on specific market segments

like enterprise o  Verizon, Telecom Italia, Portugal Telecom

•  Support open innovation with specific partners targeting specific market segments o  Telus – targeting approach, no long tail engagement

•  Experimenting in what APIs could means to their business o  SingTel, Rogers

•  Build specific business opportunities like direct carrier billing (mobile payments) o  Telefonica and Telenor, Ooredoo, Etisalat, most telcos these days

•  Laziness o  Brow beaten into doing something by their vendors o  Copying AT&T

o  Following GSMA and OneAPI Exchange

AT&T Graphic

Learning •  It doesn’t matter how much you spend, developers are rationale decision

makers o  Telcos continue to struggle in engaging long-tail developers, but developers will

happily turn up to events to take AT&T’s generous prize money at hackathons.

•  Telcos have many APIs they can offer beyond voice, messaging, payments

and customer information, including speech processing, authentication,

identity, mHealth, M2M (Machine to Machine), really any service can be

exposed through an API. o  The hard part is building a business around the API, not offering the API.

•  Long tail is being redefined as light-weight open innovation. o  That is not trying to build a developer community in competition to Apple and

Google.

o  Instead, exploring with select partners, universities, and friendly developers new

ideas or unique capabilities to telcos, e.g. mHealth, connected car, and M2M, and

more (some of which will be at TADSummit)

Telus Overview

•  A continuing source of SMS revenue growth comes from the enterprise use of SMS for alerting and notifications

•  Telus has implemented a focused API program over the past 7 years – targeting SMB with SMS alerting capabilities o  Through both direct sales people and local system integration partners o  Value to an enterprise is the ubiquity of communications with its customers in Canada o  Cost is irrelevant as business value far exceeds margin costs of an SMS

•  Note SMS is both AT&T and Verizon’s largest by volume API •  Process is designed to enable Telus to launch more apps and faster with a focus

on SME (Small Medium Enterprise) o  Achieved a 4 to 40 annual service launch improvement o  Reduce cost by 75% in launching new apps

•  Profitable within the first year of operation •  Now dominated by internal consumption of APIs

Background •  The project started on 10th June, 2010

o  Within 9 months there were 150 running applications in the market and 10600 registered users. o  Today the total number of network based services developed & available for consumption is >500

•  Etisalat has two methods of revenue generation from the services: subscription and on-demand. o  On-demand basis works on the subscriber being charged for every transaction or messaging that they

receive from a service, for e.g. a subscriber sends a message requesting the current exchange rate of his local currency and he gets a reply message from the service with the information and is charged for that message only.

o  The developer keeps 90% of the revenue. •  Both methods ensure recurring revenue for Etisalat as opposed to one time downloadable fees and

a focus on keeping the customer engaged •  The Developer portal enables the simplified creation of mobile apps for amateur as well as expert

software developers equipped with standard & open APIs, Software Development Kits (SDKs) covering the major programming languages, sample apps & user guides to direct them.

•  Their interaction with the solution is through easy to use interfaces enabled by Web Services that expose the operator service and network capabilities to allow developers to concentrate only on developing the app without concerning about the complexities of network protocols.

•  Mobile application developers, both amateur and professional, now enjoy a simplified process of Application Development, deployment and commercialization with mChoiceTM Cloud TAP’s Mobile Application Developer Portal. Sample Applications, Simulators and Guides help enhance the application paving the way for the creation of a series of sought after mobile applications.

Etisalat Sri Lanka, Emerging Market Telco App Store USSD API for 100% reach in $1.25 ARPU market

•  Top 5 apps subs 3 months after launch: •  Yalu (anon chat) 40,668 •  Sinhalalen (local) Jokes 33,787 •  Fun Facts 12,807 •  Technology News 8,262 •  Word Puzzle 5,554 •  Business models supported are per

message and subscription •  Accounts for 3.5% of ARPU (2012 #)

Developer Portal

Key Points

•  Developing markets are different – messaging still matters, USSD is a massive untapped potential for infotainment services in developing markets.

•  Local matters – content local developers, not localized, locally originated are proving successful with customers because they identify with the content.

•  Size doesn’t matter, Etisalat Sri Lanka only has 3 million subscribers with low ARPU. Yet they engaged developers creating sticky application and differentiated their offer in the market.

•  The supporting technology is run on a cloud, lowering costs and allowing greater flexibility.

Telecom Italia Graphic

Summary

•  Program started in 2008, offered SMS APIs to their content partners. •  Focused across the demand curve, success remains in using APIs internally and

within Telecom Italia’s existing ecosystem of partners / customers. •  Revenue of $250M per year made attributed to the platform, this does not

include the revenue retained by the Lines of Business. Roughly 1B transactions per month. >1.5B transactions now

•  Generally considered within the Telecom community to be the most successful API implementation of any operator. o  They are Oracle’s largest OCSG (Oracle Communications Services Gatekeeper, API

platform) deployment. •  New division formed in July 2013 called “Service Delivery Platform and NetAPI”,

this appears to consolidate some of the lines of business that were taking most of the revenue generated by the API platform. o  It is rumored the new division’s annual revenue is >$2B (figure needs to be confirmed).

Learning

•  Demonstrates the money is not in long tail developers, rather use API with partners and internally.

•  Highlights the importance of using APIs across all possible business models, internal innovation, partner innovation, not simply focusing on the “long-tail”.

•  Importance of an integrated platform that enables Telecom Italia to efficiently support high transaction volume partners as well as internal services enables it to support the relatively high priced solution of Oracle licenses and Accenture professional service.

•  API standards are purely a baseline; they are adapted to meet specific needs, which means API standards are useless. o  Processes around defining new APIs are key for rapid innovation.

Telefonica Logo

Summary

•  Long history starting in 1998 of attempting to build developer communities, 2-3 year cycle of launching and closing developer initiatives. BlueVia is its longest running initiative.

•  Internal operational efficiency and long tail developer. Current focus is on the payment API in cooperation with Telenor and 2 other telcos, targeting partners and large accounts, not long-tail developers.

•  BlueVia has turned around its API business by focusing on the payment API. •  Developers consider the BlueVia program to have failed like every other long tail

telco program in the past. •  Jose Valles, head of BlueVia recently promoted to VP Partner Products at

Telefónica Digital, and now out of the business. Focused on build the payment service business, adding new APIs particularly in communications, but focus has moved solidly internal.

Learning

•  “The money is not in the long tail.” Jose Valles, Head of Blue Via, presented at the SDP Global Summit . The money for BlueVia is with partners, building powerful partnerships on Telecom APIs.

•  SMS revenue share failed as a business model as the market moved to buying bundles of SMS, so customers did not want / expect to pay a full price SMS when using the services built on BlueVia APIs.

•  Focus on the core capabilities of a telco, the advertising APIs did not work as TEF lacks the credibility, inventory, and ability to build a business in this domain.

•  Long tail is about light-weight innovation, not trying to build a developer community in competition to Apple and Google. Instead, exploring with partners, Universities, friendly developers new ideas / unique capabilities to telcos, e.g. Arduino GSM Shield for M2M over mobile networks.

•  TEF Digital is going to have to re-invent itself again as its filling with corporate politicians. For example, the TU Go application is being forced on OpCos based on the Jahjah platform it bought for $100M, this requires expensive integration for the OpCos so they are pushing back.

•  And now all the external API stuff is dead

Verizon Logo

Learning

•  Copy Tropo or Twilio if you want to compete in the US in communications APIs. •  Don’t chase long tail developers in the back yard of Apple and Google

o  Focus on businesses that need to run on Telecom APIs, or using APIs within your existing ecosystem (Internally and with partners)

•  Operators cannot credibly engage the long-tail, need to focus of specific technologies or domains, e.g. in M2M with relevant M2M companies, it’s a more a focused open innovation model.

•  OneAPI is not relevant to long-tail developers, and looks archaic compared to modern well-written APIs.

•  Money is not in the APIs, 1c per location dip required 100 million dips a month to make $1M and no developer will pay 1c location these days. o  The money is in the services and solutions enabled by APIs.

Mapping Telcos across the API Implementation Landscape

Internal APIs External APIs Both

Experiment

Broad

Focused

Bus

ines

s U

se o

f API

s Organizational Focus of APIs

Likely Evolution Path

Telecom Italia does not have everything right, for example, they lack the focus on building API-enabled businesses, but its closer than most.

mapping telcos across the API implementation landscape

Internal APIs External APIs Both

Experiment

Broad

Focused

Bus

ines

s U

se o

f API

s Organizational Focus of APIs

Mapping vendors across the API landscape

Cloud / BOSS Assets

IT / Service Assets

Network Assets

IMS Assets

Transactional APIs e.g. call control

Informational APIs (e.g. customer profile)

Developer Community

Developer Portal

API Management

API Services

Network Gateway

API Publishers Tropo, Twilio,

etc.

API Management (including API Security) Intel Software (Mashery), CA (Layer 7), Apigee

Real World Complexity

Cloud / BOSS Assets

IT / Service Assets

Network Assets

IMS Assets

Transactional APIs Informational APIs

Developer Community

Developer Portal

API Management

API Services

Network Gateway

Intel (Aepona), Ericsson, Huawei, Oracle, Open Source

Apigee, Intel (Mashery), Layer 7 (CA), SOA Software, 3Scale, IBM, Open Source

2600Hz, Aculab, Apidaze,

Bandwidth, hSenid Mobile,

OnMobile, OpenCloud,

Plivo, Restcomm, Solaiemes,

TelAPI, Tropo, Twilio, etc.

Fixed Voice($325B)

Mobile Voice($615B)

Fixed Data

($275B)

Mobile Data

($275B)

Regulated Services($1.5T)

Un-‐regulated Services($650B)-‐5 to -‐7%

5.5 to 9%

3 to 4%

0 to 2%

0-‐2%

Total Telecoms Services($2.15T)

3-‐6%

+ =

Over the Top Messaging hits SMS growth

Mobile substitution of fixed broadband with LTE

OTT substitution, saturation, competition

Mobile and OTT substitution

Sources: operator averages across developed and developing markets, supplier estimates, Alan Quayle

1-‐3.3%Threats to Revenue

There’s just 2 things we need to focus on

Customers

Services

“Most men would rather deny a hard truth than face it.”

Make Telecoms an Essential Spice for every Business Ecosystem

Do more VAS!

Work with Developers to embed communications

into applications, services and business processes.

Make Comms the ‘essential spice’ of every business

ecosystem.

$40B by 2018 source Mind Commerce

Work with Developers to create new services and

applications using communications

capabilities. Innovate in communications else watch

revenue decline.

$35B by 2018 source Ovum

So What Should Telcos Do?

Telecom Application Developers are now essential to addressing the revenue decline in communication services.

Previous efforts have failed, corrective action is required urgently.

Defining what is meant by Telecom App Developer R

even

ue

Product

Internal Telco Developers

Partner Developers

Telecom App Developers

Mobile App Developers

Long Tail Developers

This Is A More Accurate Representation R

even

ue

Product

Internal Telco Developers

Partner Developers

Telecom App Developers

Mobile App Developers

Long Tail Developers

‘Cut and Paste’ web developers using web-scripting and graphical tools on

app platforms (10Ms)

IT/Web Programmers building on FOSS, telecom app

platforms and telecom APIs (1Ms)

What do we mean by Telecom App Developer?

Hardcore Telco Software Infrastructure

(10ks)

All based on IT / Web Technologies and Development Principles

Developers that recognize they build telecom apps

today

‘Cut and Paste’ web developers using web-scripting and graphical tools on

app platforms (10Ms)

IT/Web Programmers building on FOSS, telecom app

platforms and telecom APIs (1Ms)

TADS is about Building an Ecosystem

Hardcore Telco Software Infrastructure

(10ks)

All based on IT / Web Technologies and Development Principles

Developers that recognize they build telecom apps

tomorrow

Examples of Telecom App Dev happening today! For more details: http://alanquayle.com/category/startups-to-watch/

Uber Revolution

Communications is Core to On-demand Services

Page 107

Business Models

•  Communication API Business Models o  Nexmo, Tropo, Twilio have set the market expectations

o  Simple per minute / per message / per telephone

number per month. With discounts at volume.

o  0.5 to 0.25c per min over IP

o  1c (rx) and 2c (tx) per min over PSTN

o  $1 per month for number provision

o  Only difference is support. Tropo is free. Twilio free to

$5k per month.

108 © 2010 Alan Quayle Business and Service Development

For the simple calling, messaging and number provision the business model is clear and commoditized.

For Services the key word is flexibility, this requires a willingness to be entrepreneurial, to experiment, to focus on the customer value and find business models that work for all parties.

•  Telecom Services Business Models ›  This is your traditional services

business, flexibility and bundling »  Simple professional services deals

where Telco keeps all the services revenue

»  Revenue share with Telco as a go-to-market partner

»  Flat monthly fee for API usage »  Stimulate API usage with revenue share »  Bundling to lock-in enterprises to Telco

Go-to-Market is Critical, and a Critical Telco Value

Customers

Selling Services

Selling Capabilities

Internal

Partners

External

Telco

Telco GTM

ECOSYSTEM

SERVICES

Building the Telecom Application Developer Ecosystem

Building the Telecom Application Developer Ecosystem

Middle Managers, Desk Jockeys, PowerPoint Politicians, Full-Time Standards People, People who believe Management Consultants, Wage-Slaves, People waiting to retire or made redundant, The Risk Adverse, Yes-People, People

who do what the boss tells them regardless, Corporate Anti-Bodies, etc.

Innovators, risk takers, small companies, technology leaders, independent thinkers, creatives, people working at intersections of industries, etc.

TADS comes from the grassroots

The Web has won, so let’s get with the program

BUT no ‘black and white’ thinking! There’s space for both,

Telecom reaches 6B+ people

$100B Ecosystem!

Developer Needs/ (Responsibilities)

Telco Needs/ (Responsibilities)

Vendor Responsibilities/ (Needs)

Modern and easy to use tools, docs & support (Communicate Needs) Go-to-market support Viable business models

Meet Dev tech needs

Support and protect the telco network

Brokering

Safely expose assets

Help from vendors in

building the necessary go-to-market support and business models

Innovation Community of

developers

(Publicity)

Process that supports hundreds of new services

(Publicity) Industry-wide Best Practices

TAD Manifesto

Communications is Core to On-demand Services

Go-to-Market is Critical, and a Critical Telco Value

Customers

Selling Services

Selling Capabilities

Internal

Partners

External

Telco

Telco GTM

Brown-Nosed Middle Manager!

Market Chatter is Monopolized

NFV

SDN

Internet

Of Things

Mobile Everything, WebRTC

No. We tried a similar service in our market and it failed, and we’re never ever

going to try again

What do you think of this service idea?

No. It will not work in our market. Because I’m a 50 year old guy who understands all my customers better

than they know themselves.


No. A feature of your service overlaps with

an existing.


No. We have a similar service

launched, and are not going to experiment to make it better or

address other customer segments.


No. Our network can not support such as service, even though

such services are going over the top

today.


No. It looks a bit like Joyn, we’re not sure about it, but because

it looks a bit like something we may do in the future we’re not

going to do it.


No. It must work across all devices, even though most

devices will never use it.


No. We need additional (random)

features included before we could

consider it.


No. It must work on IMS (even though it

doesn’t need to).


No. It must work across all our

customers from day one, even though

most will never use it.


No. It must conform to our process and design norms. But

we’re not going to tell you what they are.


No. It must integrate with all our existing

platforms, even though it can work fine in the current

configuration.


No. It must be delivered through our preferred SI or NEP, who will copy / kill

the service immediately.


No. You must work through our app

store / portal, which we’re in the process of

closing.


No. We can only focus on 4 service launches per

year. We only back major successes like Video

Telephony, Mobile TV, Push To Talk, See What I

See…


No. We just don’t have the bandwidth,

to do our job.


No. We have a network lock-down as

we launch LTE so cannot do anything

for the next 6-9 month.


No. Bob has left the business and we’re

waiting on his replacement, who

never comes.


No. We’re waiting on annual budgets to be confirmed, sometime

in the next 6-12 months.


No. We’re re-organizing again this

year.


No. Someone in the organization doesn’t

like such services.


No. That cannot be implemented without

changing our IN / product catalog / CRM / billing /

network.


No. We cannot bill / sell services under $5

per month.


No. We have a backlog of 24 months

on billing updates, even though the

service doesn’t need to be in that pipeline.


No. You must work through our

innovation group who we all hate and ignore as they’re parasites on

our business.


No. You must talk with Bob who will then pass

you to Bill, who will then pass you to Mary, who will then pass you to

Paul, who will then pass you back to Bob.


Grassroots of the Industry

Open Discussion