Platform Opportunity for the Communications Industry

The VW Golf and Audi TT share a common platform, as do Chevy and GMC SUVs. The foundations for these automotive platforms are, firstly, critical shared dimensions (e.g., between front axle centerline and driver’s hip point) and, secondly, the placement of hardware (e.g., chassis, floor pan, powertrain) within those dimensions. Sharing an automotive platform maximizes the return on engineering investment by keeping a check on the development costs for unseen structural elements and by reusing the platform across several (market segment) vehicle types to generate multiple lines of sales and economies of scale.

Automotive and telecommunications industries exhibit platform commonalities. Communications service providers (CSP) serve several consumer and enterprise segments with service offerings that operate over a common network infrastructure. Standardization applies to unseen structural and operational elements such as network elements, chip sets, roaming. Is this as far as the platform model goes? Might there be other platform models for the communications industry to pursue?

Solutions vs. Systems

Many years ago, while working on the GSMA’s “Beyond M2M” strategy, an M2M service provider described their service offering to manage office photocopier machines remotely. This included continuous status monitoring, diagnostics, and just-in-time replenishment of consumables. At a time when cellular hardware and network connectivity were costly, the provider chose cellular over Wi-Fi connectivity. This was for economic and user-experience reasons. The cellular approach avoided the costs of liaising with the customer’s IT staff to customize local area networking policies. It also reduced technical support costs that arose from dispatching support technicians when remote management was ineffective due to local IT and firewall configuration issues.

Unlocking 5G’s Innovation-to-Market Bottleneck

Ultra reliable, low-latency communications (URLLC) accounts for the largest number of standard essential patent (SEP) declarations for 5G. This is based on data from GreyB Services, a specialist in intellectual property (IP) for the communications sector.  

However, URLLC’s strong showing of URLLC does not show up in market offerings. Instead, 5G market propositions feature mobile broadband for consumers which map to the enhanced mobile broadband (eMBB) category. The difference suggests a disconnect between supply-side technologies, where innovators have invested, and commercial outcomes that should address demand from gaming and enterprise types of application.

 Explaining the difference is complex. It involves the life-cycle steps of taking innovation through standardization into market ready networking equipment. Then, communications service providers (CSPs) face decisions in balancing the rewards from new propositions against the costs of incremental technology licensing fees and business model changes. Value-chain bottlenecks also arise when insufficient evidence about end-user demand results in corporate hesitancy. 

Central Agency in Telecommunications

Mobile network operators (MNO) have long been the engine at the heart of the modern communications industry. With operating licenses and obligations set by government, MNOs’ reach stretched from the shaping of technology standards in 3GPP to deciding what communications services consumers would get.

From the 2000s, however, internet era dynamics lessened the revenues dominance of voice communication; messaging, data, and media services filled the gap, beginning with the hype around 3G. That is when the MNO cog started to lose some of its motive force as the communications industry began to resemble an increasingly intricate machine.

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.