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Global Telecom Middleware Market Perspective : 2016 - 2021

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Published February 2016
Pages 106
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Overview

Executive Summary

Telecom API or middleware refers to the protocol used as an interface by software components to communicate with each other. They enable network operators to leverage existing network infrastructure that allows the creation of a range of business opportunities by third-party providers for telecom carriers.

Middleware is used in telecom and it refers to a set of calls that allow a software application to initiate and receive calls and SMS text messages. This obviates the need for the application developer to know details about telecommunication technologies and protocols. Thus the middleware or API provider forms an interface between the software application and the telecommunication provider.

The telecom API market can be segment along different lines such as service type, user type and by geography. Based on service types, the telecom middleware market can be categorized as Payment, SMS, MMS and RCS, Maps and location, Voice or Speech, Identity management, WebRTC and others. Based on users, the telecom API market is divided into Enterprise developer, partner developer, internal telecom developer, and long tail developer. For the purpose of geographical analysis, the market is segmented into: North America, Asia Pacific, Europe, Latin America, and Middle East and Africa.

Though they are not a revenue item in and of themselves, APIs hold the key to continued growth of the US$1 trillion telecom services market. The operators in this huge market will benefit by opening up their networks to others through middleware.

Telecom service provider can monetize APIs through increased usage of the service. By opening up and supporting APIs, operators can create an innovative ecosystem of independent software developers that can in turn bring in new business. Operators can also monetize the innovation of other companies in many ways depending on the types of APIs and applications.

Operators can effectively monetize APIs by offering a variety of data plans and innovative services suitable for different subscribers. APIs are used by nearly 24% of web applications and 15% of mobile applications and this represents an untapped market for operators. They can leverage the growth opportunities offered by APIs but to do that they will firstly need to choose the correct API business model.

For the operators, the market and revenue outlook is very attractive. With the right API strategy the operators can look at a collective market of about US$115 Billion as of 2015. Against the background of the changes and the growth in the market the role of equipment vendors is seeing many changes. They are aiming to position themselves as enablers of new business models between carriers, content producers and application developers. This approach gives them a new and unique role within the Telco APIs value chain. An open community of independent developers has the potential to provide major value additions for the operators. The operators can utilize the vast pool of talent to speed up the process of innovation and broaden their portfolio of services.

However developers are not a homogeneous group, and work from a position of different needs and business models. They can vary in size from individuals to global enterprises and therefore for telecom operators they represent a broader category of third parties.

With the growing interest in telecom middleware and the consequent growth in the industry, we also see the increasing use of APIs Many companies are reinventing the way applications are built within their own enterprises. They are now exposing their existing assets as APIs. This allows their internal developers to build innovative new mobile, social and cloud apps. Given this growth in middleware, many of the traditional companies are using APIs to increase their speed, agility and range of providing applications. This opens up new opportunities for dealing with partners.

We can see an evolution in mobile network API models where aggregators are introducing a model in which the carriers are paid for access to the SMS network.

▪ Telecom middleware enable a company to monetize its information and drive awareness and partnerships besides providing other benefits. They also enable in-house and third-party developers to enhance a company's offerings which extend the utility of these offerings.

▪ With telecom technology now moving towards large scale roll out of the fourth generation of digital services, these telecom providers can drive further adoption and use of the new services by offering APIs. Given that market opinion points to IP-based solutions that consist of traditional, native network services and useful app functionality being the next wave of digital services, telcos need to expand their market gaze in this direction as well.

▪ Telecoms can help application developers to integrate various services such as payment, voice, SMS and WebRTC into their mobile applications using their middleware. This can help the developers enhance their customer experience and market their mobile applications among end-users while telecom providers can gain incremental revenue and also offer better end-user experience.

▪ Telecom middleware helps telcos successfully ward off competition from over-the-top (OTT) providers such as WhatsApp and Skype that use open API platforms.

Telecom service providers have realized that potential B2B customers need to be nurtured gently to begin a steady business relationship and to lower the hurdles for engaging with telecom services and APIs. They are inviting interested companies to work together and collaborate on new products and services. Technology demonstrations help explain the project while the larger objective is to shorten the time to market and achieve faster project cycle times.

We estimate the global telecom middleware market at about US$54 Billion in 2014. This market is expected to grow to about US$301 Billion in 2021 and on to US$323 Billion by 2022 at a CAGR of about 23.6% in the period from 2014-2021 or about a six fold increase.

North America was the largest market for telecom API in the year 2014, accounting for a market share of around 35%. By 2022, the Asia Pacific market for telecom middleware is expected to be the fastest growing market for telecom API with a CAGR of over 20% during the period 2015 – 2022, driven by the adoption of 4G LTE, M2M devices and large unique subscriber base. Among different types of users of telecom middleware enterprise developers are the largest end users, accounting for about 34% of the market in 2014.

▪ Telcos can find opportunities for significant new revenue streams by embedding core communication capabilities into systems by leveraging APIs. This helps telcos gain an efficient way to embed communication capabilities into existing applications, services and business processes. This approach allows telcos to make communications one of the basic components of business ecosystems and provide significant efficiency, convenience and productivity gains to users.

The telecom middleware market is being driven by the fact that several different technologies have attained maturity at the same time. With 4G networks becoming available access to wireless broadband is easier now while affordable smart phones and global adoption of the technology across all economic segments has meant that the user base and therefore the demand source is growing all the time.

The proliferation of smartphones in the marketplace has allowed developers to create applications that can be integrated into different services such as mobile payment, MMS and RCS, voice/speech, WebRTC, SMS, maps and location, and identity management into the mobile ecosystem. The introduction of more services and solutions has facilitated the quicker adoption of telecom APIs and we expect these rates to grow.

The market for telecom APIs comes with a few challenges as well. While telecom providers look for differentiation in the context of their competitors, the API implication of this would be that they would deploy and market completely different telecom middleware. At a global level this would mean nearly 800 (operators) members of the GSMA releasing and marketing their own proprietary APIs to software companies with very unfavorable consequences. There would be lack of critical mass and total fragmentation while for telecom players such a move would mean intense efforts and high costs.

Table of Contents

1. Market Overview .......................................................................................................................................................................................................... 10

1.1 Introduction ................................................................................................................................................................................................................ 10

1.2 Telecom Middleware Market Segmentation............................................................................................................................................................ 14

1.2.1 By Service Type ........................................................................................................................................................................................................ 15

1.2.1.1 Payment ................................................................................................................................................................................................................. 15

1.2.1.2 SMS, MMS and RCS................................................................................................................................................................................................ 15

1.2.1.3 Maps and Location................................................................................................................................................................................................. 16

1.2.1.4 Voice/Speech .......................................................................................................................................................................................................... 16

1.2.1.5 Identity Management ............................................................................................................................................................................................ 16

1.2.1.6 WebRTC.................................................................................................................................................................................................................... 17

1.2.1.7 Types and Categories of Telecom API.................................................................................................................................................................. 17

1.2.2 By User Type .............................................................................................................................................................................................................. 19

1.2.2.1 Enterprise Developer ............................................................................................................................................................................................. 19

1.2.2.2 Internal Telecom Developer ................................................................................................................................................................................. 19

1.2.2.3 Partner Developer................................................................................................................................................................................................... 20

1.2.2.4 Long Tail Developer ................................................................................................................................................................................................ 20

1.3 By Geography................................................................................................................................................................................................................. 20

1.3.1 North America............................................................................................................................................................................................................. 20

1.3.2 Europe.......................................................................................................................................................................................................................... 20

1.3.3 Asia Pacific ................................................................................................................................................................................................................... 21

1.3.4 Latin America .............................................................................................................................................................................................................. 21

1.3.5 Middle East and Africa................................................................................................................................................................................................ 21

2. Market Factors.................................................................................................................................................................................................................. 22

2.1 Market Outlook............................................................................................................................................................................................................... 22

2.1.1 Operators ..................................................................................................................................................................................................................... 22

2.1.2 Telecom Equipment Manufacturers.......................................................................................................................................................................... 23

2.1.3 Third-party Developers ............................................................................................................................................................................................... 23

2.2 Industry Dynamics........................................................................................................................................................................................................... 25

2.3 Key Success Elements ..................................................................................................................................................................................................... 26

2.4 Recent Trends and Developments.................................................................................................................................................................................. 28

3. Market in Detail ................................................................................................................................................................................................................... 30

3.1 Market by Geography ....................................................................................................................................................................................................... 30

3.2 Market by Service Type...................................................................................................................................................................................................... 34

3.3 Market by User Type.......................................................................................................................................................................................................... 40

4. Other Market Aspects........................................................................................................................................................................................................... 41

4.1 Key Market Opportunities ................................................................................................................................................................................................. 41

4.2 Market Drivers .................................................................................................................................................................................................................... 45

4.3 Market Challenges .............................................................................................................................................................................................................. 46

5. API Value Proposition ........................................................................................................................................................................................................... 48

5.1 Service Provisioning ............................................................................................................................................................................................................ 48

5.2 API and Network Sharing .................................................................................................................................................................................................... 50

5.3 Internal Operations and Solutions...................................................................................................................................................................................... 51

5.4 View of Flow of Data............................................................................................................................................................................................................. 52

5.5 Revenue Generation ............................................................................................................................................................................................................ 53

5.6 Innovation and Competitiveness ....................................................................................................................................................................................... 55

6. Key Points in API Engagement .............................................................................................................................................................................................. 57

6.1 Partnering .............................................................................................................................................................................................................................. 57

6.2 Public APIs............................................................................................................................................................................................................................... 58

6.3 Social / Big Data Analytics..................................................................................................................................................................................................... 59

6.4 Device Integration and Wearables ..................................................................................................................................................................................... 61

6.5 Data Assets............................................................................................................................................................................................................................. 62

6.6 WebRTC Development.......................................................................................................................................................................................................... 63

7. API Economy and the Market ................................................................................................................................................................................................ 65

7.1 Business Models.................................................................................................................................................................................................................... 65

7.1.1 Two-sided markets............................................................................................................................................................................................................. 65

7.1.2 Exposing API to Developers ............................................................................................................................................................................................. 66

7.1.3 Web Mashups .................................................................................................................................................................................................................... 67

7.2 Drivers of the API Economy ................................................................................................................................................................................................. 67

7.2.1 IoT ........................................................................................................................................................................................................................................ 67

7.2.2 SOA....................................................................................................................................................................................................................................... 68

7.2.3 Software-defined networking or SDN.............................................................................................................................................................................. 68

7.2.4 Network, Virtualization and APIs....................................................................................................................................................................................... 69

8. Aspects and Trends of API ...................................................................................................................................................................................................... 70

8.1 Challenges of API Management............................................................................................................................................................................................ 70

8.2 API Monetization and Revenues........................................................................................................................................................................................... 71

8.3 Reusing APIs ........................................................................................................................................................................................................................... 73

8.4 API vis-Ã -vis M2M, IoT and Cloud Services ......................................................................................................................................................................... 75

9. Key Market Players ................................................................................................................................................................................................................... 76

9.1 Operators ................................................................................................................................................................................................................................ 76

9.1.1 AT&T....................................................................................................................................................................................................................................... 76

9.1.1.1 Case Study- AT&T Apigee.................................................................................................................................................................................................. 76

9.1.2 Telekom Italia........................................................................................................................................................................................................................ 77

9.1.2.1 API Solution Brief .............................................................................................................................................................................................................. 78

9.1.3 China Telecom....................................................................................................................................................................................................................... 78

9.1.3.1 Case Study-China Telecom and Tropo ........................................................................................................................................................................... 79

9.1.4 Verizon .................................................................................................................................................................................................................................. 79

9.1.4.1 Solution Overview.............................................................................................................................................................................................................. 80

9.1.5 NTT ......................................................................................................................................................................................................................................... 80

9.1.5.1 API Solution Brief ............................................................................................................................................................................................................... 81

9.1.6 Vodafone................................................................................................................................................................................................................................. 82

9.1.7 Zain........................................................................................................................................................................................................................................... 82

9.1.8 America Movil .......................................................................................................................................................................................................................... 83

9.1.9 Telekom Malaysia Berhad...................................................................................................................................................................................................... 83

9.1.10 Case Study KDDI Twilio ........................................................................................................................................................................................................ 85

9.1.11 Telefonica................................................................................................................................................................................................................................ 85

9.1.11.1 Case Study Telefonica BlueVia.......................................................................................................................................................................................... 85

9.1.12 France Telecom...................................................................................................................................................................................................................... 87

9.1.12.1 Case study- France Telecom and Layer7.......................................................................................................................................................................... 87

9.2 Infrastructure Vendors................................................................................................................................................................................................................ 89

9.2.1 Alcatel Lucent............................................................................................................................................................................................................................ 89

9.2.1.1 API Solution Outline.............................................................................................................................................................................................................. 89

9.2.2 Qualcomm.................................................................................................................................................................................................................................. 91

9.2.3 ZTE................................................................................................................................................................................................................................................ 91

9.2.4 Ericsson ...................................................................................................................................................................................................................................... 92

9.2.5 Huawei ....................................................................................................................................................................................................................................... 93

9.2.6 Nokia .......................................................................................................................................................................................................................................... 93

9.3 Application Support Developers ................................................................................................................................................................................................ 94

9.3.1 Aepona........................................................................................................................................................................................................................................ 94

9.3.2 Aculab ......................................................................................................................................................................................................................................... 95

9.3.2.1 Case Study-Aculab and Alert Solutions................................................................................................................................................................................ 96

9.3.3 Apigee ......................................................................................................................................................................................................................................... 97

9.3.3.1 Case Study- Apigee Swisscom................................................................................................................................................................................................ 97

9.3.4 Layer 7 Technologies.................................................................................................................................................................................................................. 98

9.3.4.1 Case Study -IceMobile and Layer7..................................................................................................................................................................................... 99

9.3.5 hSenid Mobile .............................................................................................................................................................................................................................. 99

9.3.6 Twilio, Inc. .................................................................................................................................................................................................................................. 100

9.3.6.1 Case Study-Twilio and Sprint ............................................................................................................................................................................................... 101

9.3.7 Nexmo........................................................................................................................................................................................................................................ 101

9.3.7.1 Case Study-Nexmo and Roamer ......................................................................................................................................................................................... 102

9.3.7.2 Case Study-Nexmo and Coda............................................................................................................................................................................................... 103

9.3.8 Telestax ...................................................................................................................................................................................................................................... 104

9.3.8.1 Case Study-Telestax and InPhonex ..................................................................................................................................................................................... 104

Tables of Charts

Chart 1-Telecom API and the Ecosystem............................................................................................................................................................................................ 11

Chart 2-Telecom Middleware Global Market, (US$ Billion), 2014-21.............................................................................................................................................. 30

Chart 3- Telecom Middleware Global Market Share by Region, (%), 2014...................................................................................................................................... 31

Chart 4- Telecom Middleware Global Market Share by Region, (%), 2015...................................................................................................................................... 32

Chart 5-Telecom Middleware Asia Pacific Market, (US$ Billion), 2016-21 ...................................................................................................................................... 32

Chart 6-Telecom Middleware North America Market, (US$ Billion), 2016-21................................................................................................................................. 33

Chart 7-Telecom Middleware Middle East and Africa Market, (US$ Billion), 2016-21.................................................................................................................... 33

Chart 8-Telecom Middleware Latin America Market, (US$ Billion), 2016-21 .................................................................................................................................. 34

Chart 9-Telecom Middleware Latin America Market, (US$ Billion), 2016-2..................................................................................................................................... 34

Chart 10- Telecom Middleware Global Market Share by Service Type, (%), 2015.......................................................................................................................... 35

Chart 11- Telecom Middleware Global Market Share by Service Type, (%), 2021.......................................................................................................................... 36

Chart 12-Telecom Middleware Voice Services Market Segment, (US$ Billion), 2016-21 .............................................................................................................. 36

Chart 13-Telecom Middleware IoT Market Segment, (US$ Billion), 2016-21 ................................................................................................................................. 37

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