As connectivity becomes ever more integral to enterprises’ operations, network APIs have emerged as a highly anticipated means for telcos to monetise their 5G investments while meeting customer needs. How big is the opportunity, and what commercial models will work?
Network APIs promise new revenues for telcos
Since 2020 there has been a resurgent interest in applications interfacing with the network they run over. The exponential increase in the number of connected devices and complex traffic, particularly video, is exerting pressure on network resources. Applications must become more aware of network and edge compute resource availability to meet increasingly stringent customer requirements as well as energy efficiency targets – for example, by prioritising critical applications. MEC allows data to be collected and processed closer to the customer (more information on edge computing is available on our Edge hub).
STL Partners forecasts the revenue opportunity created by mobile network APIs to reach over $20 billion by 2028 (the full version of this report provides a breakdown of the opportunity for the top 11 network APIs), as well as enabling powerful new applications that leverage programmable, cloud-native networks.
Increased network programmability will enable developers to build applications that require guaranteed connection speed and bandwidth, giving users/providers the option to pay a premium for network resource when and where they need it. The network APIs fuelling this market fall into two broad categories:
- Network information APIs: Basic network APIs that provide real-time information about the network will reach extremely high volumes over the next decade. These will gradually be consolidated into the core network offering as a hygiene factor for all operators. Examples include network performance (information only), hyper-precise location, real-time device status, etc.
- Network configuration APIs: APIs that instruct the network will not reach the same volume of usage, instead offering a premium service to a smaller pool of users wanting to define their network environment. Examples of these APIs include quality-of-service on-demand, slice configuration and device onboarding. These APIs offer a longer-term monetisation opportunity for operators, although there is little visibility around what developers and enterprise will pay for these services (e.g., pay per use vs. monthly subscription, etc.).
In this report, we explore the work that is currently happening to develop network APIs from a technical and commercial point of view, surveying the telecoms industry consortia that are proactively building the technical and commercial tools to make network-as-a-service a revenue-driving success.
Enter your details below to download an extract of the report
Two API domains: The macro network and MEC
MEC APIs control both the compute and networking elements at the edge. In the instance that a telco is operating and managing the edge site, these APIs come under their remit. In some instances, however, the MEC APIs could be defining edge or cloud compute not operated by the telco. Therefore, we do not consider all MEC APIs to come under the umbrella of network APIs (See figure below).
MEC APIs vs. Network APIs
Source: STL Partners
A MEC API is a set of programming interfaces that allow developers to access and utilize the resources of mobile edge computing platforms. These resources include computing power, storage, and network connectivity, and can be used to run applications, services, and tasks at the edge of the network, closer to the end users. MEC APIs can provide a way to offload workloads from the cloud to the edge, reducing latency and improving the performance of applications and services. CSPs must make a strategic decision on where to focus their development: general network APIs (quality-on-demand, location, etc.) or MEC APIs (edge node discovery, intent-based workload placement, etc.).
Need for reliable, real-time connectivity across a wide area will drive demand
Based on our interviews with application developers, we developed a framework to assess the types of use cases network APIs are best suited to enable. This framework sets out the network API opportunity across two dimensions:
- The geographic nature of the use case: Local area vs. wide-area use cases. This influences the type of edge that is likely to be used, with local-area use cases leveraging the on-premiseedge and wide-area use cases better suited to the network edge.
- Need for real-time vs. non-real time insight and response: This depends on the mission criticality of the use case or the need from the application point of view to be dynamic (i.e., adapt to changing circumstances to maintain a consistent or enhanced customer experience).
As network operators, telcos’ primary value-add is the ability to provide quality connectivity. Application developers leverage awareness of the network throughout their development process, and the ability to define the network environment enables use cases which require constant, ultra-reliable connectivity (see figure below).
Importance of connectivity features for developers
Source: STL Partners Survey (December 2022), n=101
Table of Contents
- Executive Summary
- Network APIs promise new revenues for telcos
- Two API domains: The macro network and MEC
- Need for reliable, real-time connectivity across a wide area will drive demand
- Layers of API needed to translate network complexity into valuable network functions
- Cross-telco collaboration and engagement of developers
- Each industry fora focuses on specific layers of the API value chain
- Operators must leverage multiple distribution channels for network APIs
- Failure to standardise quickly allows other distribution channels to achieve greater scale
- Operators must engage the developer community to play an aggregator role
- Challenges and barriers: What needs to change
- Understanding the fundamentals of APIs
- What are network APIs and what has changed?
- MWC 2023: You are now in a new industry
- Edge computing market sizing forecast: Second release
- Telco cloud deployment tracker: Deploying NFs on public cloud without losing control