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 that was fully subsidized by France Telecom and distributed in 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 in which 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; case studies have to be carefully scrutinized to make certain that the key success factors are still valid today.

The communications industry is obviously very different from 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 conference) 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 that 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 building blocks for communications 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 Blue Via initiative; it is simply the right thing to do.

Simplicity – Exposed API 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 & safe delivery of CaaS. Consulting and integration services that help make these services turnkey (for the operator) are also available.