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Forget the hype - the smart enabler role is a tough call for operators
Michele Mackenzie, Eden Zoller
Forget the hype - the smart enabler role is a tough call for operators
The operator as a smart enabler is generating a lot of excitement, and a plethora of buzzwords has emerged to describe what is involved in this role: 'telco 2.0', 'the two-sided business model', 'network as a service (NaaS)' and so on. A forthcoming Ovum report agrees that there is potential in the smart enabler role, but warns that the industry is in danger of dressing it in too much hype and viewing it as a 'silver bullet' that will solve the challenges facing mobile operators today.
Do not underestimate what the smart enabler strategy involves
There is a tendency to view the smart enabler role as some sort of tweak to an operator's existing way of doing business, but this is not the case. Implementing a smart enabler strategy is transformational in nature and as yet largely untested. To become a smart enabler an operator needs to view its network assets, communications expertise, customer intelligence and other capabilities as resources that can be marketed to third parties, not just end users. While this kind of approach is not new in other business environments - notably for web services and in the software as a service (SaaS) model - in the mobile market it involves profound change, and not all players will be able to make the transition to achieve best-of-breed smart enabler status.Think of smart enablers as part of a holistic telco platform, not a string of isolated assets
There is lot of excitement around the prospect of operators opening their network APIs to third parties; although important, this is only part of the story. Network APIs need to be considered alongside earlier, 'first-generation' enablers that still have good currency and can be improved - the most obvious being billing and wholesale. In addition, some operators have a regional play that can offer attractive scale and reach, while others are developing cross-platform capabilities that span both fixed and mobile Internet. These assets and capabilities should be viewed as part of a holistic telco platform, which in turn needs a robust technical, operational and commercial framework to support it. Creating a developer ecosystem is part of this framework and is one of the most challenging tasks for operators. Most operator developer programmes do not compare well to those offered by device/platform vendors and online players. They are still seen to fall down when it comes to providing the right tools, for example, a developer sandbox, or the right commercial framework. We must have a consistent commercial framework for opening network APIs
The business model for first-generation enablers is established but there is no consensus on the commercial framework under which third parties utilise network APIs. A range of different models are being used, including revenue share on the applications sold, revenue share from advertising, and a variety of fees specifically tied to activating APIs. The latter in particular can prove expensive, particularly for those applications that are transaction intensive - i.e. those that need to call on APIs several times within the execution of the application, such as location services. Experimentation and flexibility are understandable at this early stage, but the industry should move quickly to establish a consistent commercial framework. We think the most equitable model is one where there is an element of risk sharing; for example, a tiered approach where operators only charge for API access once an application reaches a certain revenue threshold. Operators are not the only smart enablers in town
Developers and other third parties can also turn to device platform vendors, such as Nokia, Apple, Microsoft and Google, and online players that, besides many of the aforementioned, also include AOL, Yahoo, Amazon and Facebook. These players offer a number of benefits such as a large addressable market, lower levels of fragmentation with regard to the device and platform, and a trusted consumer brand. Operators have been slow off the mark to open their APIs and may have left it too late to make the impact they hoped in some areas. Location is a case in point. In light of GPS, cell ID databases and other technologies, the operator's network-based location services are just one of many options, and not necessarily the best for all applications. For more analysis on these issues, please see our forthcoming report The role of smart enabler: positioning for growth in the open mobile market.
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This article is an extract taken from Ovum's Straight Talk service. This daily email bulletin provides our expert's views and opinions on important news and events in global IT and telecoms. If you have a comment or question regarding this article then please submit your details here:
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