Over The Top (OTT) rivals, such as Google, Skype and Netflix, are cutting into telecom operators' revenues and margins. Customers are happy to pay for content from these players but little of this revenue is reaching telcos, yet they bear the cost of delivery as broadband data services clog their networks.
One way for telcos to monetise this traffic is to drive new information-brokered revenue models with partners through open analytic website services APIs.
Antoine Rizk, VP for Go-To-Market Programs at Axway, spoke to us about how OTT services can utilise API technology to compete with their OTT rivals.
TechRadar Pro: How much of a threat is the OTT market to telecoms operators?
Antoine Rizk: As the online entertainment and communications market continues to sky rocket, telecoms companies are facing a serious challenge.
Whilst the majority of consumers are happy to pay for the latest smart devices, popular mobile apps and monthly subscriptions to online entertainment providers, unfortunately, much of this revenue stream rarely reaches the telcos who are delivering the bandwidth supporting these services.
To make matters worse, many of the OTT services are eating up bandwidth that is driving force behind the running of the telco market.
Because of such factors, many telecoms providers now face a significant threat from their OTT competitors.
TRP: What has been the role of APIs in powering the mobile app revolution?
AR: Last year the number of public listed APIs was 10,000 and rapidly growing in part because of the opportunities they bring the mobile app market.
Put simply, APIs or Application Programming Interfaces as they are in full, provide applications with the language to talk to each other. By sharing some of their functionality with the outside world, APIs can spawn a wealth of new apps that are built on the same features.
This makes it quicker for developers to develop new apps as they don't need to do it from scratch and it benefits the brand as it increases their customer base.
APIs also enable a seamless user experience across multiple devices and platforms; think about how often you sign into various online accounts with your Facebook or Twitter profile.
Companies are able to launch in new markets and reach more customers, simply by sharing their API. This has led to a massive increase in mobile app development and the level of control that API management brings has meant more and more companies are open to sharing their APIs.
TRP: What business opportunities are there for telcos and how can they use APIs to give them a competitive edge?
AR: Today, nearly 24% of web applications and 15% of mobile applications utilise APIs. So there is clearly an untapped market for telco organisations that are looking to discover the growth opportunities offered by APIs. To reap these opportunities they will firstly need to choose the correct API business model that is right for them.
Firstly, the telco can open their APIs to partner organisations to better provision services to customers. For example, a mobile operator could open their API to a retailer to speed up the on boarding process for new customers. Secondly, telcos can open APIs within the organisation to create a hacking culture that stimulates internal innovation.
This will promote a fast and easy resource for sharing within the company. Alternatively, organisations can open the API to the broader developer community, reaching a vast pool of talent, creativity and untapped revenue which was previously beyond the reach of your network.
TRP: What kind of growth are we going to see of the API Economy over the coming years?
AR: In conjunction with the rise of mobile devices, such as the tablet and the smartphone, the API market is expected to grow at an astonishing rate.