Telcos missed the boat on open applications. Will they get another chance?

February 12, 2010

3 Min Read
Telcos' App Problem

For those seeking the ultimate proof that telcos have completely missed the boat on open Web application programs, there's no better site to visit than the aptly named Programmable Web.

The site currently lists 1,700 application programming interfaces (APIs) that enable an ever-widening range of applications to be created, and 30 APIs a week are now being added to the list. Many have a strong communications flavor; others exploit data (e.g., location) that at one time telcos were supposedly going to exploit themselves.

It's just one piece of evidence among many that demonstrates how the Web has mutated at light speed, from a more or less passive information store to an open, manipulable, and infinitely extensible Web of resources of all kinds, enriching the way Web users communicate.

The Programmable Web is, of course, only one part of it. Even more visible evidence of the increasing irrelevance of telcos can be found in the device app stores, which have created a billion-dollar industry more or less from scratch in less than two years.

Not so much a boat that the telcos missed, then – more a fleet of liners. But the fact is, telcos didn't see them coming, and, as we found in research for Heavy Reading's new report, "Telco App Stores: A Bridge Too Far?," they still don't really get how the world has changed. Although a few telcos – notably Salt SA – have tried to create an appealing applications ecosystem for developers and made APIs available in an increasingly Web-friendly format, it's simply not enough right now to make a real difference. More worryingly, there still seems to be a fundamental lack of conviction that open application programs are a workable business for telcos.

So is it all over for network operators in the applications space? Is there going to be another boat to catch?

Perhaps – but a lot needs to happen if telcos are to get on board. In our new report, we note some basic principles that they will need to follow, if they are to stand any chance of playing a major role in the applications value chain. Space precludes a full discussion of what's required, but three principles stand out.

First, telcos need to create open standards that challenge the dominance of proprietary device app stores. The GSM Association (GSMA) 's OneAPI program is a good start, but a lot more is needed here.

Second, board-level support – CEO backing – is required if existing programs are really to get anywhere. Resources matter, and for the most part, open applications programs simply aren't a high enough priority inside network operators.

Third, telcos need to engage much more proactively with developers themselves, find out which telco assets are really valuable to third-party developers, and then work out what's required to make those key resources available in the most Web-friendly way possible. Right now, subscriber profile information may be the most valuable resource telcos own, but unlocking that data and making it available in a common format, in a way that customers accept, is a big and challenging task.

Make no mistake: Telcos do have valuable assets. But it won't be long before they are rendered irrelevant by the accelerating pace of development on the Web proper. Supplying reliable connections and bandwidth will always be a good utility business. But if telcos want to be more than that, they need to act fast – and act now.

— Graham Finnie, Chief Analyst, Heavy Reading

For more information about Heavy Reading's "Telco App Stores: A Bridge Too Far?," or to request a free executive summary of this report, please contact:

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