Opening the API gate: generating revenue in a 5G era

18 June 2019 | Venura Mendis

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Venura Mendis

Blog Author | CTO, Apigate

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The dawning of a new age of connectivity is upon us: the fifth generation of cellular network technology, or as it’s commonly known, 5G. The hype surrounding it is fully justified, and has led to significant investment in network infrastructure across the globe.

With speeds of over 1GBps, the low latency, reliable connectivity is set to support mobile devices offering data-intensive applications such as gaming and VR, and a host of enterprise-ready IoT applications across multiple verticals from retail, to automotive, healthcare and industrial.

The years of initial trials, research and development are over, and finally we’re seeing 5G networks being rolled out across the globe, alongside compatible handsets. According to Analysys Mason, 5G will make up a large part of the estimated $95 billion spent on telecoms software by 2022. However, the reality is that it will take a long time for mobile operators to get the payback on any 5G investment, especially if they are only taking a network-centric approach. There needs to be a change in the operator mindset. They need to add value beyond the connectivity stack, which means identifying new lines of business that will enable telcos to monetise the delivery of services, and keep them profitable and competitive.

An open approach

By partnering with digital service providers using open source software, it is possible for operators to open up their networks to third parties, such as cloud service providers, and mobile application developers. OTT players, such as communications application WhatsApp and video streaming platform Netflix, have already managed to muscle into the market by free-riding on operators’ networks. But there is plentiful reward to be had if operators follow suit, opening up their network APIs to partners that can help them access new revenue streams such as online payments and in-app purchases, in areas such as the IoT.

An API stack promotes the use of a ‘network-as-a-platform’ model, enabling third parties to easily tap straight into mobile network operators’ (MNO) resources, fostering collaboration across the industry. Using this model, MNOs can create wide-reaching ecosystems of partners faster than ever before, enabling them to quickly capitalise on new revenue opportunities presented by 5G. It is a two-sided business model, also allowing businesses to quickly tap into the capabilities that MNOs’ 5G networks offer, with the ability to pay for specific premium services, such as direct carrier billing.

MNOs can generate revenue via a business-to-business exchange, where companies can quickly dial up a specific service from an operator, and pay for it in real time. This capability will be greatly enhanced by network slicing, which involves multiple virtual slices (supporting different 5G use case requirements) on a shared physical infrastructure.

A 5G future

5G is the catalyst for a huge range of new consumer and enterprise services, and more importantly, is an opportunity for telcos to quickly monetise their solutions, and diversify into new lines of business to keep their offering competitive, and in line with end-user demand. MNOs have a captive audience of companies who want to leverage 5G to improve their operations, and they should capitalise on this, looking beyond traditional communications in order to continue their 5G expansion, and ensure they do not simply become bit pipes for other companies’ services.

The connectivity landscape is growing richer and more varied by the day. Cellular connectivity for the IoT is moving from basic use cases, such as utilities and smart metering, to exciting applications such as driverless cars, gaming and robotics. And businesses looking to leverage these new IoT technologies will see huge benefits from direct access into the telecoms service layer, which they can orchestrate to suit their specific business requirements. The partnerships forged in this area will ensure that operators play a critical role in the evolution of the IoT and the industries that are defining it.

By opening up their networks through open-source API technology, the telecoms industry will experience an innovation boom that will help operators create the revenue they need to accelerate the deployment of 5G, and claw back the revenue from their initial network investments. From digitisation to monetisation, it’s a win-win situation for all!