The new initiative by GSMA and connectivity providers to create Open Gateway intends to provide universal access to mobile operator networks for developers across connectivity provider networks. It is similar in principle to the concept of “write once, run anywhere.”
At least conceptually, the advantages include a more-robust mobile app development process that creates additional value for mobile customers and therefore mobile operators. There are possible revenue upsides for mobile operators who will attempt to license the use of the APIs.
And one might envision new apps that create “value-added” features that also boost operator revenue.
It also remains possible that the advantages partly accrue to mobile operators and mostly to app developers, in the same way that prior “over the top” apps have prospered without sharing of revenue with mobile operators.
Mobile operators, in that scenario, become more valuable as user and customer access to those apps becomes more valuable. Perhaps that value translates into higher internet access revenue; perhaps it does not. As with any ecosystem, all the participants add value.
What never is so clear is the amount of value created, “who” creates it and the ability to monetize that value.
As internet-accessed apps create the need for home broadband or mobile internet access, so, in principle, will Open Gateway apps. The hoped-for difference is creation of a new API licensing revenue stream.
Network effects also should be enhanced, as any developer using the common API is supposedly assured that code will execute in the same way on the most-used global networks. Think of it as roaming, but on steroids.
In part, Open Gateway intends to ensure that applications compliant with the API will run as expected on many global networks, including those operated by America Movil, AT&T, Axiata, Bharti Airtel, China Mobile, Deutsche Telekom, e& Group, KDDI, KT, Liberty Global, MTN, Orange, Singtel, Swisscom, STC, Telefónica, Telenor, Telstra, TIM, Verizon and Vodafone.
The expected business impact remains untested, though, in principle, the speed with which apps can be created should increase, while costs should decrease. That is the whole point of APIs and software primitives in general.
Application programming interfaces are not primitives, but they are related. A primitive is a basic interface or segment of code that can be used to build more sophisticated program elements or interfaces. An API is a set of defined rules that enable different applications to communicate with each other.
But the concepts and functions are similar to the extent that primitives are simple building blocks from which more-complex applications or functions are created, while APIs similarly allow whole processes to be constructed from different layers of software or disaggregated functions. So APIs, which are arguably more complex than primitives, are used as building blocks.
Some might use the term API primitives in that regard, as when containers, Kubernetes or objects are used to build apps.
Where revenue is created, and how, is not as clear. As has happened with open source, for example, monetization comes in many forms: donations; support and consulting; sponsorships; licensing; freemium pricing or merchandizing.
So APIs can create revenue for the suppliers by charging fees for usage (on demand or subscription based); freemium plans; support charges; revenue sharing or commission payments.
For mobile operators, the upside is licensing revenue; possible support revenue; faster mobile app development that translates into higher value for mobile subscriptions; higher value because apps run on all major networks (as with voice, text messaging or internet access roaming.
The possible downside is additional competition or commoditization. By definition, the API means the same app should run the same way, and work the same way, on all major networks. In that sense, the new APIs will have business impact similar to wholesale features: every supplier can use them or offer them, so arguably little business advantage accrues to any of the contenders.
It isn’t so clear that the APIs necessarily commoditize or enhance network supplier value and revenue. The APIs might have the effect of shifting value creation elsewhere, even as they speed up app development and deployment times or generate licensing revenues.
Some might cite higher security risks as another possible issue. But the main upside for mobile operators should be licensing revenue potential and additional value from mobile apps that make mobile subscriptions more valuable.
App providers will benefit if they are able to use the exposed network capabilities to add value to their experiences, thereby supporting their revenue models.
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