Stephen Sale Practice Head, Consumer Services at Analysys Mason
“With their own retail services falling behind those offered by over-the-top (OTT) providers, operators can rethink their wholesale propositions to move beyond minutes and megabytes, and into API calls.”
Operator activity in communications services in 2015 focused primarily on VoLTE roll-outs and Wi-Fi calling. These are both perfectly reasonable activities for operators to undertake, yet they have been largely driven by network strategy, and not service strategy. Instead, service evolution has come from the developer community in the shape of innovative communications apps such as GeeVee and Slack, as well as from the integration of communications capabilities with other apps and services such as Airbnb and Uber.
If operators are to participate in communications innovation – and most appear to want to – it is crucial that they engage meaningfully with the community of developers that is building these apps and services, either by building up in-house capabilities or by acting as service enablers. This article explains the context around operators’ current communications service development, and outlines some of the improvements that they can make when working with developers to innovate in this space. The industry is currently focused on network – not service – strategies Many telecoms operators are currently embarking on major transformational projects for their communications services, yet a vision of service evolution is conspicuously absent from most of their plans. For example, VoLTE deployments are overwhelmingly driven by network strategies such as freeing up inefficiently used spectrum for reuse to support mobile data growth, making longer-term cost savings by consolidating core network functions, and, ultimately, decommissioning legacy equipment. CTOs can see the allure of legacy switch-off and understand the value of the released spectrum, but they will struggle to see the value of the promised faster call set-up times or the claims made for HD voice by their engineering department.
In addition, although Wi-Fi calling usefully addresses the poor indoor coverage offered by macro cellular networks, its feature set is from the last century. While VoLTE and Wi-Fi calling have strong propositions from a network strategy perspective, they have done little to progress operators’ service proposition significantly. Indeed, the attention lavished on these services over the past couple of years may have served as an excuse for the industry to avoid addressing a more difficult question: how should an operator’s core service offering evolve in the era of the smartphone? Innovation is coming from the developer community, and voice is ripe for disruption! Meanwhile, innovation continues apace, mainly centred on the app developer community.
The initial focus for innovation was on mobile messaging, but the barriers to entry are now being lowered for voice and video, as LTE offers higher data speeds and falling unit prices per GB. Dedicated communications apps such as WhatsApp continue to improve their feature set, adding voice alongside location sharing and other features. In addition, ‘social messengers’ such as LINE and WeChat combine these features with social networking platforms, often extending into several adjacent services (such as gaming, grocery delivery and taxi ordering). Communications services catering to the needs of specific niche communities are also burgeoning: Wickr follows on the heels of SnapChat, and Periscope adds video to Twitter.
Communications features are also being added as complements to other apps and services, which reduces friction and improves the user experience. Airbnb, Tinder and Uber are three high-profile examples of app providers that take advantage of these capabilities. Operators are approaching developers in the wrong way; they must be enablers for app developers Telecoms operators are missing the opportunity to be enablers for app developers like Airbnb and Uber. Instead of using operators, these app developers are using APIs from companies such as Nexmo and Twilio to add capabilities such as SMS/IP messaging notifications, two-way authentication, temporary/masked numbering and real-time video streams. One option for operators, with their own retail services falling behind those offered by over-the-top (OTT) providers, is to rethink their wholesale propositions and move beyond minutes and megabytes, and into API calls. Many operators want to be in this business, but are failing to get sufficient traction with their services. The success of companies like Twilio highlights how telecoms operators could adjust their approaches.
Operators wishing to target developers directly should: think first about what developers need (not what operators have that can be sold to developers). A fundamental change of mind-set is required if operators are to gain traction with developers. Operators’ attempts to enter the market continue to be characterised by a ‘if you build it, they will come’ approach. APIs are typically poorly implemented, and the fees for API calls fail to take into account the emerging business models of the apps themselves. Operators need to take the design and marketing of APIs seriously. For example, they should spend more time searching developer sites to find out what makes a good API and apply that learning: they must start with the needs of the customer, not what the network departments choose to expose. make it easy for developers to experiment with operators’ capabilities. There are many tools available to developers, and ease of access comes as standard.
Developers will not wait 2 weeks for a user account to be opened up for them; they will go and experiment with something ready-to-hand. Operators should, for example, open up access to their sandboxes. move faster on (local) standardisation initiatives. Industry-wide API standardisation has a very poor track record, typically stalling in endless rounds of committee reviews as members try to juggle requirements. In the meantime, the door is wide open for proprietary APIs to gain de facto standard status. Operators need to learn from this experience. One potential answer is to create localised partnerships to standardise APIs. For example, the Weve initiative in mobile marketing, though poorly implemented, showed promise as a joint venture between operators targeting developers in a single country. Another option is for a single operator to take the lead in building an API hub for multiple operator APIs. close down the grey routes that subsidise alternative providers. Some of the alternative platform providers are reported to use grey routes to avoid termination fees, which enables lower prices for their A2P messaging services. Closing these arbitrage opportunities should make operators more competitive on price.
