Research Notes

There is no doubt that there is a large market for mobile services

– but the big question is how this market will develop in the future?

So far, most mobile services that have been marketed and sold have been “dumb” services, that have simply been delivered via the mobile operators’ networks and most often paid for via the customer’s mobile invoice.

In the mobile world, the operators’ networks contain a great deal of intelligence that can be used like Lego bricks for future applications and thereby help make these applications more exciting for end-users.

There has been a great deal of discussion in the mobile industry regarding how to handle this and with the OneAPI initiative, the GSMA has paved the way for the development of mobile services and mobile broadband services. The basic idea with OneAPI is that the operators allow third-party access to their networks via open APIs, thereby allowing service providers to develop services that take advantage of the built-in functionality and intelligence in the operators’ networks.

The GSMA and operators have thereby sent out a clear signal that operators should not handle the development, selection and marketing of services themselves, but instead compete on offering the best possible conditions for service developers, thereby helping them develop attractive services for each individual operator’s customers.

When Strand Consult examined OneAPI in its current form, we found that the concept is mostly based on a walled garden philosophy, as OneAPI does not make services network independent, but on the contrary ties them to one individual operator. It is understandable that some operators will find it to their advantage to use OneAPI to tie service providers to individual operators and the idea with the concept is to allow operators to compete on differentiated services.

However, the mobile services market originally started with a walled garden strategy, where operators believed that they should control the mobile services market. But over time it developed to an open garden strategy, allowing content providers to offer services across operator networks.

In this report we will show what the market looks like and how it is developing and we will explain why OneAPI can be perceived as a step in the right direction towards an open garden model for mobile services.

As operators start opening networks, they will see that it will be the independent service providers that develop the most interesting and profitable services – and not the operators themselves. This is analogue with how the SMS services market originally developed, where the introduction of premium SMS and revenue sharing resulted in the SMS services market exploding.

Today there are many gateway companies (WASPs, Wireless Application Service Providers) on the SMS services market that have specialised in functioning as middlemen between the operators and end users. They ensure that SMS services function across operators, allowing service providers to sell services to all end users on a market regardless of which operator the individual customers use. They have been a very important part in ensuring the enormous success of SMS services.

In the same way a new type of provider will emerge – the Value Add Service gateways. They will not only integrate services across different operators’ mobile networks internationally, but also between fixed line networks and the Internet, allowing services to function across all networks and across all operators.

On the one hand the operators will thereby lose their theoretical possibility of differentiating themselves on services, but on the other hand they will receive far greater revenue by using their billing system for payment of services, thereby receiving a share of the revenue generated from those services. The way to make money on this market is by combining open service APIs with access to operators’ billing systems to invoice the services.

The mobile operator’s strength is – and will continue to be – the combination of having a large customer base and a billing system. Combined with open APIs, this will make them intelligent bitpipes.

By further developing OneAPI for mobile broadband, operators will additionally be in a good position to receive a revenue share from IP-based Internet services that will be delivered via mobile broadband connections in the future.

In Strand Consult new report OneAPI – Next Generation Value Added Services in the Mobile industry in the Mobile industry we have described and analysed the operators’ path from premium SMS, over OneAPI, to a developed OneAPI-mode (OpenAPI model), where the operators have realised that open APIs in an open garden model will result in the most lucrative market.

The report describes in details the service platforms and services that can help create a healthy market for all market players and the report puts forward suggestions on how to create and develop this market based on a number of business models.

We believe we have now created the same knowledge and underlying business models that will enable operators and content providers to create a healthy business case based on Open API and an open garden strategy.
More information – OneAPI – Next Generation Value Added Services in the Mobile industry

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