Firstly, I do like your article and this is a topic that I have been banging on about for years. Ironicially, I am from the town of Naas that Kevin Smith referred to above, which roughly translated into English means meeting-place. How apt if it were a reality.

But as we see iPhone 3.0 hitting the market, and when I look at what is really happening on the ground in terms of Cloud computing, what’s missing from the mobile world is speed and commitment.

So unless we are to become the “dumb” bit pipe, we have to see a true change of heart and a level of true openess and inclusiveness on the part of the mobile operators.

Regards,

Niall

BLOG: http://danu.typepad.com/my_weblog/

Following excerpts are straight to the point:

A: Network Capabilities Exposure

Network capabilities comprise the wealth of information and services that reside in the mobile operator’s network. The most striking of these, beyond access, are:

1) Identification: By means of any SIM card, every subscriber gets out on the mobile internet with an ID and will bring it along any time he or she moves around; the intelligent use of this identity information simplifies cumbersome (mobile) log-in procedures, increasing service accessibility and usability.

2) Location: Cellular networks are special in that they know where you are. In urban areas, accuracy can be within 10–100m. Th is may be not suffi cient for navigation, for which satellite-based systems are better, but it’s useful for other, less demanding applications.

3) Status: Cellular networks incorporate status information, such as whether the user is on or off , whether a large or small bandwidth is available, whether the user is willing to receive services or not.

4) Payments: Cellular networks provide standardized micropayment means, with direct charge to the user’s mobile account. SMS has established itself as universal bearer, but more-sophisticated methods like on-navigation purchase areon the way. (The extension to standard payments is the next logical step, whereby SIM-based authentication, reinforced by security procedures, is a key ingredient.)

5) Messaging: Simple text or multimedia messaging is an
increasingly powerful means of communication between a
networked enterprise and customers or citizens for promotions, alerts, and informing.

B: Key Subscriber Information

Among the key information residing in mobile networks is
user data: demographic, contextual, behavioral.

The value of this information is almost totally untapped. However, the game is tricky, and privacy implications are of paramount importance. But even in aggregated, anonymous form, current data-mining capabilities allow for great value extraction for the operators and possibly for third parties.

C. Middleman role

Th e variety of capabilities and services calls for a transformation from the current vertical integration model (such as when selling ringtones) toward an independent, industrialized, whitelabel service broker. The service broker would standardize network service interfaces and make them available to a networked enterprise working with multiple operators’ services. Th is would, in the long-run, create a market for brokered capabilities, in which each transaction has a value to the mobile operator at market prices.

This monetisation chime is echoed by Vodafone CEO’s recent interview: http://www.totaltele.com/view.aspx?C=0&ID=443352

Full article available at:

http://www.ericsson.com/ericsson/corpinfo/publications/ericsson_business_review/pdf/208/8_monetizing_attraction.pdf

Comments are welcome!

Giovanni

The good news is that we will be at WIP Jam on the Thursday so hopefully will get a chance to learn from you and your readers! We will have a demo running (assuming our batteries last that long…)

My colleagues in Vodafone R&D Spain are heavily involved in BONDI development and we work closely to help share learnings and align the two API offerings.

Best,
Kevin

Good to hear about the momentum behind OneAPI (and no, did not realise about NaaS being an Irish town!)

I would suggest presenting OneAPI at one of the WIP Jam sessions (there’s one at MWC next week), which is a good forum for addressing (and getting feedback from) developers.

Also, the OMTP guys should be able to give you some good pointers regarding engaging developers, as they are quite successfully doing just that with the BONDI 1.0 SDK.

Best,

Andreas

Very thorough argumentation on the monetisation of NaaS which I did not dig into in the post.

True, social information cannot be charged for (the likes of Facebook make money through ads and that’s because they control both the APIs and the web real-estate; on the contrary operators control the APIs but not the handset real-estate).

Location can certainly be charged for, but it has to be on a bulk basis rather a per request (it’s far too expensive as it is. cell-ID is preferable to GPS only for large population coverage).

B2B APIs can certainly be charged for. Voice and SMS APIs can also be charged for. Also more apps = more users = more service consumption and less churn, which positively impacts P&Ls.

In general, there will be a variety of pricing models that can be applied depending on the NaaS API; some will be free, some charged for.

I think the issue operators have is that they are not keen to experiment; they ‘d rather follow proven monetisation strategies, as everyone who has signing authority has 3 and 6 months P&L targets.

Yet, as with any new market, someone has to test the waters and try out revenue models. This someone has to be operators, as the window of opportunity is finite. It will be 2-3 years before GPS is everywhere and Facebook has phone APIs and EU forces voice prices down lower and lower. Operators (at least those with vision) have to move fast – no one else is going to open up this market for them.

Andreas

There are different sets of NaaS APIs which serve different purposes and different business opportunities.

Take the social-oriented and personal APIs (like messaging, contacts, authentication, contents). One would think that they bring a great symbiosis between the internet and telco worlds (it would be indeed pretty cool to be able for instance to seamlessly send SMS messages from my Outlook app, or even to automatically stream my mobile pictures into Flickr and get phone numbers resolution of my Facebook friends based on my SIM card address book). But then the question is ‘will it generate money for operators?’

Most of these APIs won’t. End-users won’t be willing to pay for leveraging mobile data (like my contacts, contents and messages) within Internet apps, nor developers. At best the NaaS APIs will indirectly drive new subscriptions to operators’ services (like SIM backup offering).

Looking at enterprise and application-oriented APIs there is apparently more potential of incremental revenue for the operators. Location, IVR, voice (click2call, conferencing), multi-channel broadcasting, SMS sending APIs can generate revenue. But they face serious challenges depending on who is charged to use the service/API. If the end-user pays (on a per-txn model for each location query or sent SMS for instance), the API needs to solve the charging complexity (through the user’s operator) and the API should also be operator-agnostic to make it appealing to the developer. There are potential technical solutions and this is where the middleman can play a key role of API aggregation; unfortunately it will take quite some time to get enough operators joining the movement to see compelling cross-carrier telco-enabled Internet apps and to make a business out of this aggregation. If the developer or application provider pays for the API usage, it is actually a B2B model where the developer has to pick the operator of his choice to build his app with telco-enabled features ; in this case operators compete with each other (Orange has obviously taken the lead here), there is no business for the middleman and the scope and potential of the API isn’t mainstream anymore but simply for niche apps.

All this means 2 things:
- The lack of strong business incentive will severely slow down the involvement of operators in the NaaS market. Some carriers though, like Orange who doesn’t exclusively focus on pure ARPU-generation (by valuing the innovation factor around Naas) will lead the market but still it will be a long journey before making real money.
- The interest in the telco NaaS offering by the Internet community is highly undermined. In addition to all the barriers you mentioned (lack of interworking, lack of global reach,…), the lack of revenue-share models (‘how the developer makes money?’) limit the value of NaaS-enabled features for Internet applications; Internet developers will keep finding workarounds and the cheapest alternatives rather than leveraging carriers capabilities (for instance getting location directly from the device instead of querying the network), reinforcing the dreadful “bit pipe” curse. Micro-payment and voice-oriented enterprise-type APIs could be exceptions to this though (this is probably why BT acquired Ribbits for over $100M for voice services).

Under these conditions, in my view, the future for the middleman and the NaaS market are not that bright…

Andreas