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Pekka Lundmark, Nokia's boss, says it's not a 'one-player-takes-it-all market' when asked if he would work with his rival's new joint venture.
No developer who dreams of international stardom wants to write an app that's restricted to a few of the world's networks. Appreciating this, the telecom industry coalesced around CAMARA, a Linux Foundation initiative, to harmonize the application programming interfaces (APIs) between networks and apps. That still left the problem of too many API aggregation platforms between telcos and developers. The recent setup of a super aggregator, involving Ericsson and 12 of the world's biggest operators, is an attempted fix. But it doesn't include Nokia, the other big vendor of mobile network products outside China. And it probably never will.
"Everybody has been saying, including all these joint venture partners, that this will be a non-exclusive market, and we all need to do our best to accelerate the API economy," said Pekka Lundmark, Nokia's CEO, when asked if he would join it. "I do not believe at all that it would be a one-player-takes-it-all market."
Nokia's involvement as a stakeholder had always seemed unlikely and perhaps even impossible. Ericsson holds a 50% share of the joint venture (JV), with the rest split between the participating telcos. But Google has signed up as a platform customer and Ericsson clearly hoped Nokia would follow.
"I think today they are positioned as an alternative aggregation platform as well," said Niklas Heuveldop, who runs Vonage, Ericsson's platform subsidiary, and spearheads the APIs push, during a recent interview. "And I guess the jury's out if they want to try to build a competing platform or if they join forces with us and use this as the go-to-market vehicle for APIs, including their own APIs."
Just the two of us?
But the alternative aggregation platform looks there to stay, threatening Heuveldop's efforts to make the Ericsson-led JV "the go-to place, the preferred marketplace, for the big developer platforms." Two rival super aggregators would, by definition, bifurcate the market, potentially forcing the developer platforms and the telcos to commit additional resources to integration. And if Nokia is not the only company promoting an alternative aggregation platform, the entire project could fragment.
At the very least, competition between multiple super aggregators would obviously thwart the Ericsson-led JV's attempt to provide a single plug-in for developer platforms and telcos. "The JV is doing lots of integrations but if it is doing 800 with telecom operators and 50 with aggregators that is 850 as opposed to if all 800 operators were integrating with 50, which would be 4,000," said James Crawshaw, a principal analyst with Omdia, in explaining the rationale.
The JV includes a necessary part of Vonage, which Ericsson bought for about $6.2 billion in 2022. Since then, however, it has booked impairment charges against Vonage of about $4 billion, prompting an equity analyst on an earnings call this year to accuse it of "value destruction." Lundmark emphasizes the contrasting approach Nokia has taken.
"We chose a slightly different strategy," he said. "First of all, we have developed our solution organically. It's all part of the R&D [research and development] investment that we have been making, and the progress is really, really good." Nokia has 20 companies on its platform today, including 16 service providers, many of which are also part of the Ericsson-led JV, said Lundmark. "We also have ecosystem partners like Infobip and Google that have signed up to our API approach." BT, Deutsche Telekom, Orange and Telefónica were subsequently identified as some of the telcos using the Nokia platform. All except BT were also named as partners in the Ericsson-led JV.
Core fortunes
Even so, despite appearing to distance Nokia from the Ericsson-led initiative, he also described it as a positive move. "I think it's a good thing for the market because it is one step toward the acceleration of programmable networks," he said. The remarks came in the same week Nokia reported an 8% year-over-year drop in third-quarter sales, to about €4.3 billion (US$4.7 billion), in tough market conditions.
Sales at the company's relatively small cloud and network services business group fell just 4%, on a constant-currency basis, to €702 million ($762 million), and Nokia also managed to grow the unit's net profit by 81%, to €65 million ($71 million). Its development of software functions for the core network, whose features APIs are designed to expose to developers, has been a strong point for Nokia, insisted Lundmark.
"That's clearly a segment where I believe that we are leading the market at the moment," he said. "Why is this important? You need to make the core network functions cloud native in order to be able to automate them in an efficient way. And full automation is a prerequisite for helping operators to lower their operational costs, make it easier for them to launch new services and also open up the network for API programmability."
If the presence of Nokia as a platform counterweight to Ericsson requires telcos to work across two super aggregators, it will also ensure there is competition in the market. "We believe there is no exclusivity," said Laurent Leboucher, the group chief technology officer of France's Orange, at a recent press roundtable, in commenting on the Ericsson-led JV.
"We want to work with this platform to make it extremely scalable but at the same time we will work with other partners. We are still working with Nokia, for instance, and with other players," he added. "It is important there is competition as well." Bruno Zerbib, Orange's chief technology officer, said it was important the JV does not "create a lock-up situation for customers."
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