DSPs make good money from APIs -- you can too!

10 Dec 2015

Money has always been thought of as the source for all evil, but without it not much good happens either. For CSPs the perennial battle to maintain revenues means they have to keep coming up with new ways of generating it, and that is not always easy or without evil.

We all know voice revenues are declining even though voice traffic itself is probably increasing thanks to VoIP apps on smartphones and via social networks, none of which translates to money for the carriers that handle that traffic.

Oh yes, that’s now data traffic that customers pay for, usually in one lump sum for one great lump of data each month. What the data comprises is of little interest because the cost of tracking it or billing separately for different types of traffic is hardly worth the effort, or the cost – presuming it is even legal under pending net neutrality rules.

So the logical alternative is to attract more customers and/or provide as many products, services or bundled add-ons as possible to increase revenue per user. Increasing revenues always seems to imply getting more money from customers, but there is a limit to what they can afford to pay, and if you squeeze too much out of them, they either stop paying their bills or find a cheaper option.

Some enterprising networks operators have looked into peering arrangements with digital service providers, or DSPs (a.k.a. OTT players), offering prioritized traffic for services like video. These have since fallen foul of the net neutrality nincompoops who claim that this disadvantages other network users that have to settle for plain old internet speeds, whatever those are.

Telecommunications must be the only industry that cannot differentiate prices for different services. Everybody is, according the new rules, entitled to Ferrari speeds and quality at Hyundai prices.

Telco CEOs are now publicly questioning the tightening of internet rules that only seem to apply to those providing the networks, and not those using them. For DSPs there is no restriction on what level of service they provide over the networks to their customers, no restriction on the bandwidth they take up and certainly no restriction on what they can charge for their services.

So why aren’t CSPs acting more like those DSPs and looking more closely how they make money, unfettered by regulations? Better still, why not emulate some things they do to make money that may avoid any regulatory policing?

In a recent article, Jouko Ahvenainen pointed out that “successful internet giants, like Salesforce, Amazon, Google, Twitter, and Facebook, have been active to offer APIs to third parties. Salesforce has earned more than half of its revenue through APIs, not from its own user interface. Twitter, Netflix, and Google handle billions of transactions through APIs daily.”

He goes on to say that “we are moving to a new era of the API economy when APIs are no longer the territories of internet and mobile companies alone, and instead are implemented in basically any industry.”

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