Mar 3, 2024

A $300bn Market for Telco-APIs

How much of the opportunity will mobile network operators capture? 

The business opportunity to access mobile network capabilities via application programming interfaces (APIs was one of the top stories at MWC 2024. Valued at $300 billion by McKinsey, the management consultancy, the scale of opportunity positions APIs as a vehicle to move the industry’s revenue dial materially.

However, the opportunity will be complex to realize. From this GSMA webinar, it was evident that business model and monetization frameworks are a work in progress. In addition, market realization depends on a multi-party service delivery chain; critical elements to the telco API ecosystem reside outside of mobile network operators’ (MNOs) control. Finally, the mobile industry’s focus on API monetization and revenues puts the sector at risk of overlooking wider considerations and key market-development levers. 

Telco API Market Opportunity

Go back a year to MWC 2023 which is when the GSMA launched its Open Gateway initiative. The initiative set out to give developers access to a range of universal network APIs. One stated benefit from providing a single, standardized point of entry into a network is to lower the barrier to creating more compelling mobile experiences. In the MWC 2024 update, the initial scope of these APIs includes subscriber identity, location, network quality, mobile edge cloud, and payments capabilities. 

The $300bn headline figure that was used to quantify the telco API opportunity represents the upper end of a $100-300bn range that covers connectivity- and edge-computing-related revenues. This forecast is expected to materialize over a five-to-seven-year period with a composition by industry vertical as illustrated below.

The majority of the projected opportunity applies to media and entertainment applications as well as a combination of vertical sector applications that typically feature in IoT application domains. The size and composition of these data points are important to grasp if the industry is to target the maximal opportunity. McKinsey also estimated that the APIs themselves will amount to an additional $10 billion to $30 billion in mobile operator revenues. 

Business Model and Service Delivery Chain 

According to McKinsey, one of the first challenges the industry faces stems from the current market structure. AS things stand, MNOs might relinquish up to two-thirds of the value potential to other ecosystem participants. The following simplified representation of the telco API ecosystem illustrates the mobile operator challenge. It shows the north-south APIs, the focus of the initial APIs released, being exposed to channel partners and on to consumer and enterprise customers.

The benefits arising from innovative use cases, consumer convenience, and business efficiency gains, for example, are weighted to the end users in the form of consumer surplus and services provided by developers, enterprises, and service enabling channel partners. The process of converting value generated in the customer base and channels to market depends on external intermediaries to reach the MNOs. 

APIs are a technical enabler to capitalize on these opportunities. Mobile operators can amplify the potential of these APIs by making it easy to access and apply them. Since end-users want dependable and mass-market solutions, market making will inevitably take MNOs beyond the telco-to-techno journey. 

Mobile operators also need to pursue a strategy of massive scale. It will not be enough for a few operators to cultivate this market opportunity, setting out a relatively small prize for application developers to chase. A better outcome would see telco-API capabilities becoming universal and appealing to a wider base of developers and users. While the GSMA’s first crop of APIs focuses on consumer applications, future extensions are likely to service enterprise needs and IoT use cases which exhibit quite different requirements. Compared to an individual’s smartphone, for example, IoT devices are deployed in batches and will call for APIs that can handle remote management of constrained devices and group handling. IoT devices that are constrained in terms of processing power and storage memory can also benefit from offloading processing activities to network functions. This expands the scope of API opportunities for MNOs to offer. 

In addition to standardizing APIs in the north-south direction (up-and-down the service delivery chain), universality would also take the form of a horizontal capability. In effect, the industry could reposition its role to providing a multi-sided, horizontal platform for the API-enabled economy through standardized interoperability in the east-west direction. The GSMA published guidelines on this topic after MWC 2023 but seems not to have featured the horizontal API capabilities in its 2024 promotions. 

Industry APIs or Cross-Industry Platform? 

McKinsey’s telco API market study proposes a roadmap for industry change to capitalize on API revenue opportunities. Might there be another way to approach the market if the emphasis shifts from APIs to a horizontal, cross-industry platform? The field of platform strategy provides a few pointers, beginning with this definition of value creation in platform businesses. Value creation results from dynamic interactions between different resources, components, processes, and autonomous actors, most of which reside outside the focus of a platform provider and its hierarchy of control. This description applies to the simplified ecosystem illustrated above. 

According to research from the World Economic Forum (WEF), the first pointer in making a platform business model work is the concept of the inverted firm. This arises in situations where a platform organization seeks to grow and orchestrate external resources. It involves harnessing external resources and labor to shift production from inside the firm to outside it. One challenge is to switch from managing vertical integration to open orchestration. Another is the shift from managing resources under a telco manager’s control to resources that their eco-system partners must volunteer. 

A second pointer applies to ecosystem governance because of the importance of convincing partners that they are engaging with an open architecture with rules designed to facilitate interactions. A rise in the number of interactions is proof that the platform is being used. It also indicates that network effects will drive platform scale which increases a system’s appeal to users and developers. 

The third pointer applies to the relative prioritization of revenue monetization over value creation strategies. According to the WEF study, the emphasis should begin with ideas to create and share value. Too early the emphasis on revenue generation puts friction into initiatives intended to drive third-party engagement because, without that external engagement, a platform has no value to monetize. 

With considerable technical and testing work completed, the GSMA’s Open Gateway participants are in the initial stages of developing the telco-API market. There is more to do in terms of experimentation, market testing and strategic market development. Framing the challenge with a ’big-picture’ perspective will be critical for the industry to evolve beyond its telco-connectivity business model. It will determine whether success is shaped by digital platform strategies and results measured in the hundreds of billions of dollars.


  1. 6 March 2024 update

    Orange Group CTO Laurent Leboucher talks to Mobile Europe about building industry momentum for Orange’s telco platform offerings after launch of two APIs this month.

    Orange is working on the next tranche of application programming interfaces (APIs) to make available to developers following the launch of its first two API services this year as it looks to build industry momentum for its telco platform offerings.

    In Spain, Orange teamed with Telef√≥nica and Vodafone to introduce two network APIs earlier this month, Number Verification and SIM Swap, which are aimed at fraud prevention and detection use cases as part of the GSMA’s Open Gateway initiative.

    The APIs are commercially available in Spain for developers to use. The operators worked together in order to “expose APIs in a consistent manner,” said Laurent Leboucher, Group CTO and Senior Vice President of Orange Innovation Networks.

    Orange has also made these APIs available in France and is working with other operators in its home market to get them more involved in the initiative.

    Turning attention

    Now, the operator is turning its attention to geofencing and quality-on-demand APIs for new use cases, which were some of the demos on its stand at this year’s Mobile World Congress.

    “We started with APIs that are easy to expose. Our plan is to go commercial … with some other APIs where we need to [work] on the technical aspect – the network exposure function,” said Leboucher.

    He explained that the geolocation API “is probably the easiest one that will come very soon,” but “quality on demand will need a bit more time to understand where it makes a big difference.”

  2. 7 March 2024 update

    Telefonica chief likens API impact to roaming

    Alvarez-Pallete noted when operators collaborated on roaming 37 years ago, “we changed the world”, predicting the Open Gateway initiative would have the same impact.

    Figures released by the GSMA during MWC Barcelona 2024 show the initiative is gathering pace, with 47 operator groups already on board.

    Alvarez-Pallete noted fibre and 5G are no-longer simply telecommunications networks, instead effectively being “something much more powerful, some massively decentralised supercomputer”.

    “So at the end of the day, exposing the capabilities of this thing to everybody to make sure that we are able to monetise elements of the network” operators are “building anyhow”, means they can exploit those to generate revenue.

  3. 21 Mar 2024 update

    Accelerating the Future of Wireless Communication with the NVIDIA 6G Developer Program

    6G will make the telco network AI-native for the first time. To develop 6G technologies, the telecom industry needs a whole new approach to research.

    The world of wireless communication is on the verge of a major transformation with the advent of 6G technology. 6G, the upcoming sixth-generation wireless network, is expected to provide extremely high-performance interconnections, even under strenuous scenarios such as diverse mobility, extreme density, and dynamic environments.

    The key driving applications for 6G include the delivery of global-scale generative AI applications, smart cities, smart factories, unmanned aerial vehicles, immersive communication services, and multi-dimensional sensing services.

    To accelerate the development of 6G technology, NVIDIA is launching the NVIDIA 6G Developer Program. This program aims to democratize access to AI/ML tools, radio frequency simulation environments, accelerated compute infrastructure, and a full set of software-defined end-to-end network functions. The goal is to enable 6G wireless researchers to conduct cutting-edge research at a new level to gain early mindshare on key areas in 6G.

    The NVIDIA 6G Developer Program includes a system-level simulation platform called NVIDIA Aerial Omniverse Digital Twin, a fully software-defined radio access network (RAN) platform, and an AI/ML framework that integrates with the software-defined RAN platform.

  4. 2 April 2024 update

    A deeper dive into the 5G network API opportunity

    It's been a year since the global wireless industry announced its newest API networking initiative. It could be worth $300 billion, according to some. Others think it's 'unlikely to gain critical mass.'

    The 5G API ecosystem is ready, but are communications service providers?

  5. 3 April 2024 update

    Abstraction from Network APIs to Service APIs is necessary:
    - To simplify telco complexity making APIs easy to consume for customers with no telco expertise (user-friendly APIs)
    - To satisfy data privacy and regulatory requirements
    - To facilitate application to network integration

    Availability across telco networks and countries is necessary:

    - To ensure seamless customer experience
    - To accelerate technology development and commercial
    - To accelerate education and promotion To support application portability

  6. 8 April 2024 update

    SK Telecom embraces ODA to support Global Telco AI Alliance

    Will Cho Sang-hyuk, Vice President of Strategic Partnerships at SK Telecom, explained why ODA is important for telco implementations of Generative AI (GenAI).

    “[Operators] are excited about GenAI and thought using big tech companies’ APIs is sufficient to apply the technology to respective telco use cases, but this is not true … Without seamless integration with the back-end system, you cannot achieve the outcome you want to deliver for customer satisfaction,” he said.

    The Alliance is initially focused on creating LLMs to support digital assistants and chatbots to improve customer interactions by making them more conversational. Examples of the GenAI use cases include providing real-time assistance to call center agents and generating post-call summaries.

    Customer service use cases require access to Business Support Systems and Operational Support Systems (BSS/OSS), and the Alliance needed a standard way for LLMs to integrate with telco systems without having to handle “scores of APIs,” he explained. This is where ODA comes in.