“Telecom operators don’t have the DNA to develop these kinds of applications. In this new world we build the network, but the service is built by someone else. We have to share monetisation…
First, [telcos] are more focused on their infrastructure business and are not as strong in applications; second, this ecosystem of applications is developed in smaller companies… in another environment to that of the classical telco. So what the infrastructure companies have to do is develop the ‘socket’, the ‘plug-in’ for these type of applications, which make the digitalisation and the network a kind of working ecosystem.”
Timotheus Hottges, Deutsche Telekom CEO at MWC14.
Hottges also went on to say, “Over the top services are available and every single year tons of innovation is coming to the market – but I’m not worried that this market is going to develop. There will be useless applications but there will be the $10 billion application coming. Working with partners is the name of the game for telco operators.”
There’s no doubt that Telco providers need to provide the frameworks, be it APIs, sockets, plug-ins, whatever, to support and profit from the long tail of application development by smaller companies. Hottges is right that for all the applications that don’t get widespread acclaim, there will be a few that become highly successful and profitable. If he is implying that there’s a need to work with selected partners, I’m not sure this is quite the right model.
The problem is, nobody has found a precise science to be able to predict which apps will fly and which won’t. Hence the need for telcos to prosper from supporting all, knowing that there will be a few winners for the hundreds of less successful apps.
Also, there is little doubt that the market is going to develop, particularly as the Internet of Things (IoT) ramps up, providing app developers with more sensors to collect data from. All the more reason for telcos to foster application development and prosper from the long tail.
Looking beyond their infrastructure only, telcos and their OSS providers alike will have to strengthen their DNA with respect to customer-facing API to deliver on this ambition of a symbiotic infrastructure / service.
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