The worldwide telecommunication and network API market is expected to generate $6.7 billion in revenues by 2028, according to a new report from IDC, which should increase the competitive positioning of telecom operators, hyperscalers, platform providers and application aggregators in carving out their own piece of that significant revenue pie.

The IDC forecast calls for the market to surge at a 57.1% compound annual growth rate from the approximtately $700 million in revenues generated last year to that $6.7 billion figure in 2028. This will take advantage of the growing shift of those networks toward supporting more digital- and platform-based capabilities that can serve high-value industry segments.

The IDC report noted that this opportunity has put additional pressure on telecommunication service providers to be more aggressive in positioning themselves against more technologically advanced and focused industry segments that have historically taken most of this revenue opportunity.

“While the telecom industry has a mixed history of API monetization, its latest focus on novel network APIs is being championed by all leading telecom service providers to include global support from key API aggregators, such as the hyperscale cloud providers and leading [communication platform-as-a-service] entities,” Patrick Filkins, research manager for IoT and telecom network infrastructure at IDC, noted in the report. “Even so, the long-term success of these efforts is expected to largely fall to the broader ecosystem consisting of API aggregators and systems integrators that can generate the value propositions required for market education and adoption to take place.”

Telecom API market opportunity

IDC’s numbers align with what Juniper Research recently forecast in a similar report. That prediction stated that telecommunication operators need to embrace enterprise efforts around APIs and IoT if they want to maximize their 5G networks, adding that those efforts will be part of a $900 billion global telecommunications market in 2024.

The research firm specifically cited the use of cloud technologies to support APIs that adhere to the open source Camara project and industry work around the GSMA Open Gateway initiative.

Operators are very much aware of this market opportunity and are increasing their focus on these efforts, with most of that work based around the Camara project and the GSMA Open Gateway initiative. But analysts noted that operators have historically been unable to gain a financial foothold in cloud-based opportunities to monetize their network investments.

“From a technology stack perspective, from a cultural perspective at the telcos, from a talent and operation model perspective, institutionalizing and monetizing network APIs is really hard for telcos. We’ve seen this. They’re struggling to get the developer community to pitch in,” Chris Antlitz, principal analyst for telecom at TBR Insights, explained during a post-MWC Barcelona 2024 podcast.

Antlitz did note that there has been some progress toward these efforts, “but if you look at the big picture and where they need to go in terms of scaling, in terms of building business models around these, in terms of institutionalizing and changing their ways of working to make network APIs and enablement platform, we’re not seeing that. There’s what is being said and there’s what’s being done.”

Despite the doubt, operators are attempting to bolster their network API positioning.

U.S.-based operators announced the completion of an industry led cross-carrier API interoperability service.

Srini Kalapala, SVP of technology and product development at Verizon, explained in an interview with SDxCentral that this work was important to help align operator efforts and reduce redundancies.

“Let’s say there’s a global enterprise that requires simple SIM activation. If each one of us creates an API with our own custom specifications, then that particular partner will have to work with each one of us in our own specialized language. Which, for an automotive company that’s operating in 180 countries, they would need to talk to some 100 or 200 carriers and each one with their own interface, it’s very complex. It’s just not manageable.”

Are equipment vendors and hyperscalers helping?

Telecom equipment vendors and hyperscalers are playing a dual role of on one hand attempting to help these operators better monetize those investments but are also laying out their own foundations toward tapping into that revenue potential.

Nokia, for instance, has been evolving its network API strategy over the past several years in an attempt to help operators better monetize their network investments and make sure Nokia is a source of those monetization efforts.

“This is a fundamental problem in our industry that we’ve got to figure out a way to make sure that we are able to participate in this ecosystem and be part of the value chain of all this value that is getting created, and traditionally we’ve struggled with that approach,” Raghav Sahgal, president of Nokia’s Cloud and Network Services (CNS) division, recently told SDxCentral of past industry efforts.

The executive said that Nokia’s API efforts are focused on addressing a trio of audience segments: the industrial metaverse, enterprise IT and the consumer market. Sahgal said that the first two are starting to hit their stride while the third will take some time.

“We have a very clear strategy that we build a platform for all three, we build a platform that aggregates this ecosystem on it, so we facilitate that,” Sahgal said. “It’s going to be a journey, but I think the strategy we have chosen has been manifesting itself and creating value. And we’re making sure that we time the investment with the market opportunity. That’s very important.”

Chivas Nambiar, GM for AWS’s telco business unit, during a press briefing earlier this year explained that while these carrier-focused API initiatives “are good, but they’re not sufficient.”

“You have to have additional components,” Nambiar said. “You have to be able to take a workload or a use case, and that use case needs to run on some sort of compute, it needs access to storage and databases and machine learning capabilities at the edge. And all of those need to work together in a way that a developer can use it to create the solution and test it and see what works and what scales.”

Nambiar said that independent software vendors (ISVs) are currently best positioned as an API intermediary between network operators and end users.

“That is where I suspect longer term most of the revenue is going to come from: ISVs consuming the telco APIs to build differentiated experiences,” Nambiar said. “But it’s very early in the game. This year you have probably seen from the plethora of announcements happening right now. This is where that discussion is really starting to heat up, and I’m excited about in two years what the marketplace actually looks like.”