TELECOM REVENUES: INCREASING UNCERTAINTY 17 DEFINING THE SERVICES LAYER 23 WHY NETWORK / WEB APIS MATTER TO OPERATORS 27 MARKET SURVEY RESULTS 30 CASE STUDY LEARNING 38 TELEFONICA 38 ETISALAT 41 API STANDARDIZATION 42 RECOMMENDATIONS 43 BUSINESS REQUIREMENTS ARE AN ESSENTIAL PREREQUISITE: WITHOUT THEM DO NOT ATTEMPT A SERVICES DOMAIN PROJECT 44 PEOPLE (IN BOTH THE OPERATOR AND VENDOR) ARE CRITICAL TO PROJECT SUCCESS 44 UNDERSTAND THE 4 MAIN BARRIERS, AND FOCUS ON OVERCOMING THEM 45 TALK TO OTHER OPERATORS: OUTSIDE OF THE VENDORS’ CONTROL 45 OTHER PROJECT RECOMMENDATIONS 46 PROCESS RECOMMENDATIONS 47 SERVICES DOMAIN FUNCTIONALITY / TECHNOLOGY RECOMMENDATIONS 48 API RECOMMENDATIONS 48 A FINAL NOTE 49

INTRODUCTION AND BACKGROUND 50

STRATEGIC CONTEXT 50 DEFINING THE SERVICES DOMAIN 53

APIS AND WHY THEY MATTER TO OPERATORS 57

WHERE’S THE MONEY IN NETWORK APIS? 59 OPERATOR ADVANTAGES WITH NETWORK APIS 61

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MISCONCEPTIONS AND HOME TRUTHS 62 RECOMMENDATIONS ON ENGAGING DEVELOPERS 63

SERVICES DOMAIN MARKET SURVEY RESULTS 66

ANALYSIS OF RESPONDENTS 66 OPERATOR ANALYSIS 66 SUPPLIER ANALYSIS 68 SERVICES DOMAIN PROJECT STATUS 70 VENDOR RATINGS 72 ROLE OF SERVICES DOMAIN 75 BARRIERS TO THE SERVICES DOMAIN 79 BUSINESS DRIVERS FOR THE SERVICES DOMAIN 80 SERVICES DOMAIN PRICING 83 OTHER ISSUES 86 STRATEGIC QUESTIONS 87 ARE SERVICES TRENDING AWAY FROM THE NETWORK AND INTO THE CLOUD? 87 SERVICES DOMAIN IN THE CLOUD? 92 IS THE SERVICES DOMAIN TOO LITTLE TOO LATE? 93 IS LTE IMPACTING THE SERVICES DOMAIN? 95 CAN SERVICES LAYER OR SERVICES DOMAIN BECOME AN ACCEPTED TERMS TO BREAK WITH THE PAST SDP? 96 HOW DOES IMS FIT IN THE SERVICES DOMAIN? 96 API ROADMAP AND WAC (WHOLESALE APPLICATION COMMUNITY) WHAT’S WORKING WHAT IS NOT? 97 IS THE MULTI-LAYER MULTI-COUNTRY SERVICES LAYER THE ANSWER FOR MOST OPERATOR GROUPS? THAT IS USING SOA TO IMPLEMENT A DISTRIBUTED SERVICES LAYER ARCHITECTURE TO NATIONAL, REGIONAL AND GLOBAL CAPABILITIES? WHAT ARE YOUR EXPERIENCES WITH SUCH DEPLOYMENTS? 98 IS SOA (SERVICE ORIENTED ARCHITECTURE) OR WOA (WEB-SERVICES ORIENTED ARCHITECTURE) THE RIGHT APPROACH FOR AN OPERATOR'S SERVICES LAYER? SHOULD OPERATORS FOLLOW THE LEAD OF ENTERPRISES OR OF WEB-BASED SERVICE PROVIDERS LIKE AMAZON? 99 PROJECT QUESTIONS 100 WHAT IS THE PROJECT SIZE? WHAT IS THE SPLIT IN CAPEX / OPEX? IS IT A SINGLE PROJECT, OR A NUMBER OF PROJECTS? 100 WHAT IS MOTIVATING THE PROJECT SPEND? 102 WHAT IS THE TYPICAL RETURN ON INVESTMENT 102 WHAT ARE THE ISSUES / BARRIERS IN GETTING A SERVICES LAYER PROJECT STARTED? 103 ARE THERE SPECIFIC EXAMPLES ON WHERE IMPROVEMENTS ARE NEEDED TO ACCELERATE MIGRATION TO A SERVICES DOMAIN? 104 WHERE ARE THE SERVICES DOMAIN PROJECTS: ONE TRACK, STALLED, ACCELERATED? 104 SERVICES QUESTIONS 105 DOES THE SERVICES DOMAIN DEAL WITH COMMUNICATION SERVICES LIKE UNIFIED COMMUNICATIONS, PUSH TO TALK, HD VOICE, VIDEO COMMUNICATIONS, RCS, M2M, IPTV, ETC. OR IS THAT LEFT TO A SEPARATE PLATFORM? IF SO WHO MANAGES THAT? WHY IS THE SERVICES LAYER NOT INCLUDING ALL SERVICES OFFERED BY THE OPERATOR? 105

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IS THE OPERATOR’S APP STORE STILL RELEVANT? ARE YOU USING THE SERVICES DOMAIN TO IMPLEMENT AN OPERATOR SPECIFIC APP STORE? WHAT IS ITS FOCUS AND DIFFERENTIATION COMPARED TO THE OVER THE TOP APP STORES? 106 WHAT DO YOU CONSIDER TO BE THE BIGGEST DIFFERENCES BETWEEN DEVELOPED AND DEVELOPING MARKETS ON THE SERVICES DOMAIN REQUIREMENTS? ARE TECHNOLOGIES DIFFERENT, ARE THE SERVICES DIFFERENT, ARE THE PRICE POINTS DIFFERENT, IS THE LEVEL OF AUTOMATION DIFFERENT? 107 WHAT IS YOUR VIEW ON RCS? 107 KEY POINTS FROM THE MARKET SURVEY 110

CASE STUDIES 121

INTRODUCTION 121 TELEFONICA CASE STUDY 123 TELEFONICA BACKGROUND 123 TELEFONICA AND AGILE DEVELOPMENT 124 GLOBAL TELEFÓNICA UNICA SDP 125 RECAPITULATION OF SOA 127 INTEGRATION WITH THE IT DOMAIN: ESB FEDERATION 132 BLUEVIA AND THE LONG TAIL 134 WHY BLUEVIA IS GETTING IT RIGHT 139 APLICATECA: ENTERPRISE STORE 139 KEY POINTS 142 ETISALAT SDP 146 ETISALAT BACKGROUND 146 ETISALAT STRATEGY 146 ETISALAT SDP 150 KEY POINTS 152 OI BRASIL CASE STUDY 154 OI BACKGROUND 154 OI STRATEGY 154 OI SDP 155 KEY POINTS 159 OPENCLOUD AND SOFTBANK AND TELKOMSEL CASE STUDIES: ROLE OF THE SERVICE BROKER 160 SOFTBANK MOBILE MULTIPLE NUMBER, SINGLE PHONE/SINGLE IDENTIFY SERVICE 160 TELKOMSEL CHARGING SENTINEL & LOCATION SERVER 162 SAUDI TELECOM GROUP SERVICE DELIVERY FRAMEWORK 164 BACKGROUND 164 APPROACH 165 SERVICE DELIVERY FRAMEWORK BUSINESS CASE 166 CHALLENGES 166 KEY POINTS 168 MOBILY SDP 169 BACKGROUND 169 APPROACH 170 KEY POINTS FROM MOBILY CASE STUDY 175

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HSENID MOBILE: ETISALAT ROLLS OUT WORLD’S 1ST CLOUD ENABLED TELCO APPLICATION PLATFORM 176 BACKGROUND 176 SUCCESS MEASURES OF APPZONE 178 REVENUE MODEL 179 ENGAGING DEVELOPERS 180 HSENID’S CLOUD TELECOM APPLICATION PLATFORM (TAP) 180 KEY POINTS 181 RANCORE TECHNOLOGIES: OPEN SOURCE IN THE SERVICES DOMAIN 183 VODAFONE WEB SERVICES ORIENTED ARCHITECTURE 185 KEY POINTS 189 TELENOR SDP 191 KEY POINTS 195 NETWORK API SUCCESS: TELECOM ITALIA 197 NETWORK API SUCCESS: AIRCEL 199 NETWORK API SUCCESS: VERIZON 201 VOXEO: OVER THE TOP AND COMPLEMENTARY REAL-TIME API ECOSYSTEM 205 HUAWEI CASE STUDIES 207 BACKGROUND 207 MEGAFON 208 TELEFONICA 210 CHINA MOBILE 211 AMERICA MOVIL 213 TATA DOCOMO 214 API STANDARDIZATION 216 OMA (OPEN MOBILE ALLIANCE) 216 GSMA ONEAPI 218 M2M AND THE SERVICES DOMAIN 223 BACKGROUND 223 OPERATOR IT BATTLE IN M2M 224 FINAL NOTE ON ENTERPRISE AND THE SERVICES DOMAIN 228 KEY POINTS FROM THE CASE STUDIES 229 TELEFONICA 229 ETISALAT 232 OI (BRASIL) 233 SOFTBANK AND TELKOMSEL CASE STUDIES: ROLE OF THE SERVICE BROKER 234 SAUDI TELECOM 235 MOBILY 236 ETISALAT SRI LANKA 236 RANCORE 236 VODAFONE 237 TELENOR 238 TELECOM ITALIA 239 AIRCEL 239 VERIZON 240 VOXEO 240 HUAWEI CASE STUDIES 240 API STANDARDIZATION 241

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MACHINE TO MACHINE 242

RECOMMENDATIONS 243

BUSINESS REQUIREMENTS ARE AN ESSENTIAL PREREQUISITE: WITHOUT THEM DO NOT ATTEMPT A SERVICES DOMAIN PROJECT 244 PEOPLE (IN BOTH THE OPERATOR AND VENDOR) ARE CRITICAL TO PROJECT SUCCESS 244 UNDERSTAND THE 4 MAIN BARRIERS, AND FOCUS ON OVERCOMING THEM 245 TALK TO OTHER OPERATORS: OUTSIDE OF THE VENDORS’ CONTROL 245 OTHER PROJECT RECOMMENDATIONS 246 PROCESS RECOMMENDATIONS 247 SERVICES DOMAIN FUNCTIONALITY / TECHNOLOGY RECOMMENDATIONS 248 API RECOMMENDATIONS 248 A FINAL NOTE 249

APPENDIX 1: SERVICES DOMAIN QUESTIONNAIRE 251

SDP (SERVICES DOMAIN) QUESTIONNAIRE 2011/2012 251 STRATEGIC QUESTIONS 251 PROJECT QUESTIONS 251 SERVICE QUESTIONS 252 OTHER QUESTIONS 252 GENERAL QUESTIONS 252

APPENDIX 1 – ACRONYMS 257

APPENDIX 2 – COMPANIES INTERVIEW 264

OPERATORS 264 SUPPLIERS 266

TABLE OF FIGURES

Figure 1. The Network, IT and Services Domains (plus the Customer) ...... 10 Figure 2. The Network, IT and Services Domains (plus the Customer) ...... 16 Figure 3. Estimates of Compound Annual Growth Rates for 2013 are Becoming Increasingly Uncertain ..19 Figure 4. Time Frame for when Voice Will Become ‘Just an App’ on the Network ...... 19 Figure 5. Time Frame for when SMS will become ‘just an app’ on the Network ...... 21 Figure 6. Optimistic View of Total Telecom Revenue ...... 22 Figure 7. Pessimistic View of the Total Telecom Revenues (ignore VAS) ...... 23 Figure 8. The Three Components of the Services Domain ...... 25 Figure 9. Simplified Diagram of the Functions and Technology Supporting the Services Domain ...... 26 Figure 10. Comparison of Voice MINUTES (not revenue) for all international Phone Traffic and Skype (source TeleGeography) ...... 51 Figure 11. Example of Apple’s iMessage’s Impact for one iPhone Customer (source Neven Mrgan) ...... 51 Figure 12. Estimates of Compound Annual Growth Rates for 2013 are Becoming Increasingly Uncertain 52 Figure 13. The Three Components of the Services Domain ...... 55 Figure 14. Simplified Diagram of the Functions and Technology Supporting the Services Domain ...... 56 Figure 15. APIs and the Industries Using Them (Numbers from 2011, source Programmable Web) ...... 58 Figure 16. How Twilio Presents its API to Developers (source Twilio) ...... 58 Figure 17. Example API Business Models (source Programmable Web) ...... 59 Figure 18. Operator Geography ...... 66 Figure 19. Role of Operator Respondent ...... 67 Figure 20. Operator Respondent View on OpCo’s Economic Zone ...... 68 Figure 21. Supplier Type ...... 69 Figure 22. Role within Supplier ...... 69 Figure 23. Operator Responses to the Question on Services Domain Project Status ...... 70 Figure 24. Supplier Responses to the Question on Services Domain Project Status...... 71 Figure 25. Worldwide SDP Revenue (source Infonetics August 2011) ...... 71 Figure 26. Top Application Drivers for the SDP (source Infonetics August 2011) ...... 72 Figure 27. Vendor Ratings (Reverse Alphabetical) 4-Good, 3-Average, 2-Poor ...... 73 Figure 28. Vendor Awareness (Percentage of times vendor was rated) ...... 74 Figure 29. Magic Quadrant Markey Survey from 2010 on Group SDP ...... 75 Figure 30. Role of the Services Domain Across Operators in Developed and Developing Markets ...... 77 Figure 31. Operator Responses to Application of their Services Domain Deployments (Data for Figure 30) ...... 78 Figure 32. Barriers to the Services Domain ...... 79 Figure 33. Data for Barriers to the Services Domain shown in Figure 32 ...... 80 Figure 34. Operators’ Drivers for the Services Domain ...... 81 Figure 35. Data for Operators Drivers for the Services Layer shown in Figure 34 ...... 82 Figure 36. Top Business Drivers for SDP (source Infonetics) ...... 83 Figure 37. Pricing Structure for Services Domain Projects...... 85 Figure 38. Reasons for Project Overrun ...... 85 Figure 39. Reasons for Difficulty in Funding the next Round of the Project ...... 86 Figure 40. Time Frame for when Voice will become ‘just an app’ on the Network ...... 88 Figure 41. Time Frame for when SMS will become ‘just an app’ on the Network ...... 90 Figure 42. Optimistic View of Total Telecom Revenue ...... 91 Figure 43. Pessimistic View of the Total Telecom Revenues (ignore VAS) ...... 91 Figure 44. Frequency of Existing Project Approval Process Inadequacies ...... 101 Figure 45. Factors Motivating Project Spend ...... 102 Figure 46. Barriers to Getting the Project Started ...... 104 Figure 47. Time Frame for when Voice will become ‘just an app’ on the Network ...... 114 Figure 48. Time Frame for when SMS will become ‘just an app’ on the Network ...... 115

Figure 49. Optimistic View of Total Telecom Revenue ...... 116 Figure 50. Pessimistic View of the Total Telecom Revenues (ignore VAS) ...... 117 Figure 51. Telefonica Operations (source Telefonica)...... 123 Figure 52. Telefonica’s View on the Changes in the Telecoms Industry (source Telefonica) ...... 124 Figure 53. Service Availability Across the Telefonica Group (2009/2010)...... 126 Figure 54. High Level View of the Global SDP Interfaces (source Telefonica) ...... 127 Figure 55. Why SOA (in fact most IT) Projects Fail ...... 129 Figure 56. Before and After SOA Vision ...... 130 Figure 57. Conceptual View of a Typical SOA Implementation (source TIBCO) ...... 131 Figure 58. Example SOA Implementation ...... 131 Figure 59. High Level Architecture of the Global SDP (source Telefonica) ...... 132 Figure 60. Enterprise Service Bus Federation between the Services domain and IT Domain (source Telefonica) ...... 133 Figure 61. UNICA Project recommendation on ESB Federation (Source Telefonica) ...... 134 Figure 62. Blue Via Process (source Telefonica) ...... 136 Figure 63. BlueVia Approach in Sharing Revenues with Developers (source Telefonica) ...... 137 Figure 64. BlueVia Developer Segmentation (source Telefonica) ...... 138 Figure 65. twitea.me Service (source Telefonica) ...... 139 Figure 66. Aplicateca Marketplace User Interface (source Telefonica) ...... 140 Figure 67, High Level View of Aplicateca Marketplace (source Telefonica) ...... 140 Figure 68. Support Model behind Aplicateca (source Telefonica) ...... 141 Figure 69. Etisalat Countries of Operation ...... 146 Figure 70. Etisalat Marketing Vision (source Etisalat) ...... 147 Figure 71. SDP Business Drivers (source Etisalat) ...... 147 Figure 72. More Details on the Business Drivers (source Etisalat) ...... 149 Figure 73. SDP Revenues (source Etisalat) ...... 150 Figure 74. High Level View of the Etisalat SDP (source Etisalat)...... 152 Figure 75. SDP is implemented with Ericsson (source Etisalat) ...... 152 Figure 76. Oi’s Network Strategy (Source Oi) ...... 155 Figure 77. Oi SDP, High Level View (source Oi) ...... 156 Figure 78. Oi SDP Architecture (source Oi) ...... 157 Figure 79. Emergency SMS Request Case Study (Source Oi) ...... 158 Figure 80. Dynamic SIM Card Allocation Case Study (Source Oi) ...... 158 Figure 81. SoftBank’s Multiple Number, Single Phone/Single Identify Service ...... 161 Figure 82. Telkomsel Charging Sentinel and Location Server Implementation ...... 163 Figure 83. Saudi Telecommunication Group Operations (Source STC) ...... 164 Figure 84. STC’s Business Objectives (Source STC) ...... 165 Figure 85. STC’s Approach to Raising Revenue (Source STC) ...... 166 Figure 86. STC’s SDP (Source STC) ...... 167 Figure 87. Mobily’s Data Evolution (Source Mobily) ...... 169 Figure 88. Mobily Account Management Application (Source Mobily) ...... 170 Figure 89. Mobily’s Applications (Source Mobily) ...... 171 Figure 90. Mobily’s Cross-Platform App Store (Source Mobily) ...... 171 Figure 91. Drivers for Mobily’s SDP (Source Mobily) ...... 172 Figure 92. SDP Project Timeline (Source Mobily) ...... 173 Figure 93. Mobily’s SDP Interfaces (Source Mobily) ...... 173 Figure 94. Services based on User Preference (Source Mobily) ...... 174 Figure 95. Lean Operation via the SDP (Source Mobily) ...... 175 Figure 96. App Store Template...... 177 Figure 97. USSD Screen Sample ...... 178 Figure 98. Etisalat Mobile Application Forum ...... 180 Figure 99. hSenid Cloud Telco Application Platform ...... 182 Figure 100. Types of Services (source Vodafone) ...... 185

Figure 101. API Distribution (source Vodafone) ...... 186 Figure 102. Internet Service Dilemma (Source Vodafone) ...... 187 Figure 103. Network, IT and Services Domains (source Vodafone) ...... 188 Figure 104. Target Architecture (source Vodafone) ...... 189 Figure 105. Telenor Group ...... 191 Figure 106. How the Old CPA Worked (source Telenor) ...... 192 Figure 107. Telenor CPA Website (source Telenor) ...... 193 Figure 108. Telenor CPA Renewal (source Telenor) ...... 194 Figure 109. CPA Renewal Main Suppliers (source Telenor) ...... 194 Figure 110. Breadth of Service Exposure Models (source Telecom Italia) ...... 197 Figure 111. Breadth of Capabilities Exposed (source Telecom Italia) ...... 198 Figure 112. Telecom Italia’s SDP 2.0 Architecture (source Telecom Italia) ...... 198 Figure 113. Pocket Apps Experience (source Aircel) ...... 199 Figure 114. Aircel’s APIs (source Aircel) ...... 200 Figure 115. Verizon Service Control Gateway Architecture (Source Verizon) ...... 202 Figure 116. Location‐enhanced Call Center and IVR Applications ...... 203 Figure 117. Hosted IVR Platform Vendors (Source Ovum) ...... 205 Figure 118. Huawei Software Division’s Approach to Innovation ...... 208 Figure 119. MegaFon Core Communications Roadmap ...... 209 Figure 120. China Mobile’s Strong Position within China’s Content Industries ...... 211 Figure 121. Role of SDP within China Mobile ...... 212 Figure 122. Business Impact of SDP ...... 213 Figure 123, America Movil’s Multi-Screen Video Situation ...... 214 Figure 124. Business Impact of Tata DoCoMo’s SDP ...... 215 Figure 125. GSMA OneAPI Version One Capabilities (Source GSMA) ...... 219 Figure 126. GSMA OneAPI Version Two Capabilities (Source GSMA) ...... 219 Figure 127. M2M Addressable Devices ...... 223 Figure 128. Main M2M Components and Market Segments ...... 224 Figure 129. Simplified M2M Solution ...... 225 Figure 130. M2M Pricing Challenge: Value per bit varies Greatly (source Deutsche Telekom) ...... 225 Figure 131. M2M Pricing Challenge: Requirements vary Greatly (source Deutsche Telekom) ...... 226 Figure 132. Components of an M2M Solution ...... 228

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