Communication as a Service
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By Christophe Coutelle
Communication as a service (CaaS) is not a new concept, but recent industry moves
towards richer communication services and the lessons learned from the recent
telecom opening initiatives, such as the large Tier-1 operator partnership programs,
now make it a significant opportunity for carriers, requiring a limited incremental
investment and therefore strengthening the telco case for business transformation.
You may think that Apple has created a new business paradigm with the App Store,
but this is actually not the case. The idea of providing a platform for service
enablement existed long before the iPhone. France Telecom launched a terminal in
the early 80s called the Minitel – a black & white screen with text and symbols only,
fully subsidized by France Telecom and distributed to all French households.
The Minitel ecosystem had the same two main working principles as the App Store or
Google Play – services designed and marketed by third parties, and an end-user
exposure platform with billing owned by the enablement platform provider. The
services running on the Minitel were quite diverse – flight information & booking,
school admissions, and national exam result publication on the B2C side, and
medicinal supply chains (from lab to retail pharmacy) on the B2B side. Minitel was a
big success; it enabled France Telecom and a lot of “developers” to become extremely
rich, but what can we learn from this?
Why CaaS makes sense now
CaaS is about opening the communications capabilities that operators have for their
retail businesses (B2C or B2B) and investigating new business models where they
enable services rather than directly deliver them to end users. The Minitel story is just
a way of demonstrating that platform and capability exposure is not a new concept in
the telecom industry, but case studies have to be carefully scrutinized to make certain
that the key success factors are still valid today.
The communications industry now is obviously very different than it was in the days
of the Minitel. With fixed voice already commoditized and ARPU declining for most
mobile operators, the key question now is whether or not there is still hope for
communications services and revenues in the mid-to-long term. Initiatives such as
joyn (the brand name for a universal, interoperable rich communications service seen
by the GSMA and most Western European and North American operators as the
natural evolution of voice) on the consumer market, or HDVC (high-definition video
conferencing) on the business market, aim at enriching the communications
experience without betraying the telco DNA in terms of quality of experience and
interoperability.
But is there still retail value (B2C or B2B) in providing carrier-grade communications
services? The truth is that hybrid models where end users simultaneously use
managed services provided by operators and best-effort services provided by OTT
players are already happening. The usage breakdown between those services will
shape the near future of the telecom industry. The bet made by the founders of these
initiatives is that by enriching carrier-grade voice and video services, the usage
breakdown will be a shade closer to the current business model, avoiding full
commoditization.
Most operators understand this trend and are currently upgrading their
communications offerings. Now that these rich retail services are starting to come to
life, it’s the right time to think about innovative ways to get a better return on
investment, by generating more valuable and voluminous usage. However, both
vendors and operators must acknowledge that the innovation may come from the
outside. Just as with the App Store or Minitel models, crowd-based innovation seems
more powerful than the largest R&D team, even one that labors for a disruptive
operator or innovative vendor.
CaaS today
CaaS covers telcos’ exposure capabilities on both the network and device front. On
the network side, CaaS is about publishing APIs (application programming interfaces)
that give access to all the rich communications capabilities that they have to offer. By
using those APIs, third parties, developers, and partners can enhance their own
services by using carrier-grade rich communications enablers. An example of this
model has been a recent offering from a Chinese operator, launched in partnership
with a domestic insurance company. Instead of sending an onsite insurance agent for
every single accident happening on the road, carrier-grade video call capabilities
provided by the operator give the insurer a way to resolve the situation remotely,
generating huge savings and shared value with the telco partner. The creation of
vertical value is the key benefit of API opening.
On the device side, CaaS is about distributing a communication software development
kit (SDK), which can be thought of as a group of communication building blocks,
such as codecs and authentication, in devices that are not natively built for
communications. An example here involves IP cameras, as these devices once had
connectivity capabilities but no communication capabilities. By embedding an RCS
SDK, they become reachable devices, with a user experience as simple as a voice call.
Instead of calling a person, you call your camera to see what’s happening remotely.
Expanding your customer base is the value proposition in this case.
CaaS, whether through value creation and sharing for vertical markets with API
exposure or through customer base expansion (including M2M) via SDK distribution,
is about better utilizing network investment, at least directly. Beyond that, operators
also have a great opportunity to enhance their corporate social responsibility by
enabling use cases that will impact people’s lives far beyond the telco industry.
Key success factors
All of this sounds nice on paper, but the devil is in the details. Three key success
factors have been learned from past successes and, more importantly, past failures.
Sharing – The right business model needs to be defined with the partners; namely,
sharing the value with the partners instead of charging them for using your network.
This model has been successfully implemented by Telefónica in their BlueVia
initiative; it is simply the right thing to do.
Simplicity – API exposure should be as simple as possible, but hiding a carrier’s
network complexity is no easy thing. Exposing APIs in RESTful languages that can
be easily used by most developers is mandatory, requiring platforms that have an
abstraction capability for all network features. Huawei has partnered with companies
that have been successful in bridging the telco and developer worlds for several years.
Getting started – Identifying who to partner with at the beginning is critical. Instead
of launching a game-changing partnership program from the beginning, it is important
to focus on a limited number of “mid-tail” partners who will truly deliver value. The
aforementioned vehicle insurance case is a great example of the low-hanging fruit out
there. Quick wins like these will ensure internal buy-in at the management level,
enabling patience during the slow expansion towards long-tail partnership.
Huawei is fully committed to the long-term strategic success of our customers and is
developing integrated solutions that enable those strategies. Integrated solutions are
now maturing, both for the retail communications services and for CaaS. From
network transformation solutions to rich services for consumers or enterprises,
Huawei’s communications solution portfolio includes API gateways, SDKs, and all
the necessary BSS/OSS adaptation solutions that enable the quick and safe delivery of
CaaS. Consulting and integration services that help make these services turnkey (for
the operator) are also available.
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