Dimitris Mavrakis wrote an interesting blog post on the Informa Intelligence Centre, posing the question: Network APIs moment of truth: Are there revenue opportunities?
As mobile operators wrestle to understand their role in the services ecosystem of the future, one thing is certain. The mobile operator has one unique asset; the network itself. Today the noise around operator API’s is largely contained to Telco core competencies like sending SMS messages or handling location look up’s.
Clearly these API’s represent low hanging fruit – operators understand this space, they have robust infrastructure and business processes built around the operation of these services. In the main, service providers recognise the value of a messaging transaction, and can create services that utilise these API’s to charge end users downstream, creating a two sided business model.
Where’s the problem then?
Well it’s kind of dull don’t you think? Where is innovation? How can operators become relevant and appeal to small independent software houses developing the apps and services that are driving the digital economy, when they are more familiar with the Google’s of this world, rather than working with a “dinosaur” like mobile operators?
The three hurdles to overcome for Network API Success:
1. “Operators just don’t get it”
The first problem is one of perception and behaviour. The majority of Developers hate mobile operators, many for good reason. Developers question why operators even need Developer communities. The track record is not good. Operators have a tendency to be too obsessive about service levels, have complex processes, are slow to respond, are arrogant, and are greedy.
Dimitris mentions a few operators at the vanguard, trying to work hard to address the opportunity, but of course all operators will make mistakes as they evolve. The key is making the mistake quickly, listening, learning, reiterating, and providing something better.
Of course this behaviour needs to be consistent, genuine, and sustained before we can expect any shift in the perception of operators in the market place, but this has to be the goal.
Scale is key to success in this market, as the global Developer community represents a classic long tail opportunity. Admob research shows iPhone users are downloading 9 – 10 new apps per month, and over half of iPhone users spend more than 30 minutes per day using apps. The goal for operators has to be to provide relevant, compelling, and accessible API’s to enrich the user experience of app’s and web services.
2. Finding a business model that works
Web Developers want everything free, so from the off there is a clash of mindset. Mobile operators are coming from a world of scarce premium priced resources, which customers are willing to pay for. Give things away for free? Are you mad?
Even when there is a justifiable charge for a service, the ability for the end user to pay varies dramatically region by region, affecting the ability to create clear, transparent global business models. For example a Big Mac in Germany costs 45% more than a Big Mac in Mexico.
Operators have to justify every investment with a payback model. Free to use API’s with an internal cost to develop and expose look incompatible when analysed with the same financial payback model for a traditional operator investment like an SMSC.
Therefore there needs to be evolution in the internal mindset of the operator to recognise there are multiple strategic benefits in adopting an API strategy to enable external 3rd party innovation, which in turn require new measures of success.
3. The really interesting stuff is hard, but that’s why it’s interesting!
In some ways creating compelling Network API’s represent a perfect storm.
Many operators have a desire to innovate and differentiate, Developers however want a standardised approach to network API’s to reduce the fragmentation and complexity of working with the operator world.
As I mentioned earlier, one of the keys to operators successfully positioning themselves in the ecosystem is for them to successfully understand, package, and retail their unique asset: the network.
Unlocking the value & insight that is available from the analysis’ of network transactional data, and the demographic information of the operator’s customer base represents a rich opportunity.
Of course this is not as simple as it sounds. It requires investment in CRM capability, and there are obvious sensitivities around the protection of customer data, and respecting the customers’ privacy. As I say, this stuff is hard, but that’s exactly why its interesting.
Key to success is putting control in the hands of the end user – opt in on a per Developer / application / or transaction basis allows the user to control how and when their data is accessed.
With O2 Litmus we have started to take network API’s in this direction. An example is our “Manage Post Pay Bolt On’s” API.
Free to use, this API has been introduced to help improve the customer experience of using Mobile Applications. Clearly we want the experience to be great for every customer. To avoid customers new to the world of mobile data and apps receiving bill shock for data usage, this API allows the Developer to check the customers account for the presence of “All you can eat” data plans or Wi-Fi.
The Developer simply queries the customers mobile number to be returned a status on if the account has all you can eat data or Wi-Fi access. The Developer can then use this information to create a better customer experience by warning customers that do not have those unlimited products provisioned, and advise how they can add them.
The end result is a clear demonstration of how a network API can add value to the user experience. The Developer is happy because they have proactively improved the customer feedback loop, minimising churn from their app. The customer is happy because there are no hidden surprises. The operator is happy because there is no bill shock scenario to deal with in customer services.
This also highlights that there is a second opportunity for network API’s to demonstrate value generation.
The first, covered by the Informa blog post discussed the ability for operators to generate direct revenue via charging Developers and service providers for access to, or transactions across, their API’s.
Operators, however, can also justify investment in API’s by understanding how exposing the right kind of API can introduce cost saving benefits e.g. reducing calls into customer care, and improving business processes to create happier customers. Simultaneously encouraging the adoption of new data services, and reducing churn.
I’ll regularly post further ideas and discussion points on how operators can continue to innovate to ensure they stay relevant and valuable in tomorrow’s digital ecosystem.
Please let me know what you think.
