New Apps Ecosystem Initiative Opens Developers’ Path to SPs

Jeff Cortley, VP, product & solution management, Alcatel-Lucent

Jeff Cortley, VP, product & solution management, Alcatel-Lucent

May 11, 2010 – Network service providers may finally be ready to remove the bottlenecks to doing business with applications developers that have kept them from exploiting the types of opportunities that have transformed many aspects of the mobile business.

Over the past year carriers and even some MSOs have moved from fence-sitting attitudes about whether building efficiently operating app storefronts makes good business sense to widespread recognition that there’s a huge opportunity in this arena, says Jeff Cortley, vice president of product and solution management at A-L. “Once the iPhone app store phenomenon took hold the conversation shifted to where carriers began announcing developer programs and roadmaps for exposing their APIs (applications program interfaces) for developers to use in building applications for carriers’ app stores,” Cortley says.

A-L, whose Applications Enablement group started out a year ago trying to evangelize the idea at a strategic level, soon found customers were ready to talk about the specifics of how to capture “the long tail of developers and drive their applications through to carriers,” Cortley says. “We’re having an amazing amount of interactions with carriers at every level about how we can support their application stores through our API exposure and bundling concepts.”

These concepts represent the core of the apps enablement business A-L has developed apart from its traditional product and services portfolios. The company says its comprehensive, pan-carrier approach to engaging developers eliminates the tedious, costly process of going from one carrier to the next to build reasonable exposure for their apps. A-L does a lot of that heavy lifting by negotiating with carriers to make their valuable data resources available to developers through a bundle of A-L developed APIs that integrate with the vendor-specific APIs surrounding various data bases within each carrier domain.

“Alcatel-Lucent has found an elegant way to help service providers and application and content providers benefit from the new model of application development – merging network capabilities with the agility and ingenuity of thousands of Web developers,” says Elisabeth Rainge, a director at IDC. “The company’s holistic end-to-end approach to application enablement can help service providers to reassert their value proposition in the Web 2.0 value chain and beyond.”

This is something new from the perspective of a major supplier taking on such an effort with the aim of serving network service providers’ requirements across all service categories. “We are helping service providers find new ways to fully exploit their resources, including location, presence, preferences, address book, quality of service and payment, by exposing such capabilities in a managed and controlled way,” says Kenneth Frank, president of Alcatel-Lucent Solutions and Marketing.

“Our Open API Service eliminates the inconsistent policies, practices, requirements and capabilities across multiple networks that make application development a costly and lengthy process,” Frank adds, noting that all this is done “while protecting the integrity and reliability of the network.”

A-L has been bringing various components of its initiative to market over the past several months through a series of announcements, the latest of which points to the bundling of the APIs along with a new revenue sharing model that allows developers and service providers to quickly set terms of engagement that are beneficial to both sides. The app development platform unlocks network resources and functionality for use in cross-platform environments much as smartphone app stores have done for the device world, Cortley says.

“Carriers have a wealth of information, their crown jewels, really, that can be used to create value-enhancing applications and services for customers, but getting to that information has been extremely difficult owing to carriers’ understandable desire to control how it’s used,” Cortley says. “Subscriber profiles, transaction histories, contextual information about where and when subscribers are accessing services – these are tremendous assets which carriers want to make better use of than they have in the past.”

The traditional approaches to making such information available have been intimidating and costly to developers, who find it much easier to focus their efforts in the Web domain, resulting in lost revenue and service-enhancement opportunities for network service providers, Cortley notes. “The carriers have put a lot of impediments in front of developers in terms of the upfront costs of utilizing those capabilities,” he says.

“For example, if I’m a developer and a carrier chooses to open up an API there’s a licensing fee which might cost me $2,000, and then there’s a certification fee I have to pay the carrier for demonstrating I’m doing everything right, which might cost me another couple of thousand dollars,” Cortley explains. “So if I’m a developer with a cool app targeted to a special niche and I have to go through a multitude of such transactions to get to a large segment of my targeted audience, I’m going to be drawn to the over-the-top venue.”

A-L’s first vertical API bundles include three social bundles supporting the creation of new mashups in the rapidly growing social gaming, advertising and virtual goods markets. Collectively, the APIs included are SMS, advertising, location, virtual goods, credit card and billing. These bundles target the two fastest growing app markets, mobile advertising, projected to exceed $3 billion by 2013, and virtual goods, which already is generating $4-$6 billion annually worldwide, according to A-L.

“Any one API may have value, but it’s limited if you can’t combine the information accessible through that API with other information through other APIs,” Cortley notes. “For example, I can obtain location information for my app, but that’s only worth so much. If I can combine location information with other subscriber data and match that up with data from enterprise catalogues [listing a particular suppliers’ goods and services], I have the pieces I need to put together compelling apps for multiple niche markets. And when you add the third leg to this, which is the monetization APIs you need for advertising, couponing, direct sales, etc. you’ve created a lot of value for the developer and for the consumer.”

Other key elements to the applications marketplace A-L is putting into place are the virtual sandbox where develops can access the API bundles for non-commercial use in a non-commercial environment and the dashboard through which developers can perform real-time analysis of application activity and revenue potential.

“We’ve created an end-to-end horizontal platform that goes into carrier networks to expose APIs, manage interactions with developers, license APIs, manage onboard apps and do billings and settlements,” Cortley says. “We eliminate the upfront fees and provide the mechanisms for participants to prorate percentages based on which APIs are generating the most transactions.”

The transformative potential of an application distribution ecosystem that operates in this manner was illustrated in a recent conversation Cortley had with executives at a large pharmaceutical company. “They have a lot of information relative to their product catalogue which they could leverage in applications for care givers and consumers in highly specialized niche areas,” he reports.

“For example,” he says, “if they could know where asthmatic patients are they could send out alerts about factory emissions in specific locations or which trails not to hike when pollen counts are high. Or maybe they want to give diabetics access to information about which items on restaurant menus are suited to their dietary requirements, possibly with interfaces to reviews. And to reach as many people as possible within these types of categories they need to be sending out this information for access on all devices.”

At this early stage in the emergence of a carrier application ecosystem there are many barriers to reaching the level of ubiquity and granularity represented in the pharmaceutical example. For example, because carriers have yet to work out how they want to share subscriber information, most of the early applications in play around the A-L app enablement platform are tied to use of location-based information, which, given the GPS phenomenon on mobile, is considered more or less a commodity-level data resource.

A typical case in point involves a developer, Agent 511, specializing in municipal government services, which has created an app that can identify the location of people who text messages to authorities reporting on broken parking meters, bad potholes and other problems. “As another example, we have someone offering an airline concierge app, which tracks people who sign up so that it can deliver messages to people in proximity to a given airport telling them there will be someone waiting for them with a boarding pass or meeting them at their arrival gate to help them with local information,” Cortley says.

“We also have a bunch of retailer couponing apps,” he adds. “They ask people on their customer lists to join a service that lets them know they can get information or a discount by going in to buy something when they’re in proximity to a store.”

A-L’s Applications Enablement team is putting a lot of its efforts into educating developers on the opportunities that come with engagement with network service providers. “We’ve dedicated considerable resources to calling on developers over some period of time,” Cortley says. “Some of the people we’ve recruited in the past few months come from companies who are in this field, and they’re leveraging their contacts to recruit developers into the program.”

By going to conferences like South by Southwest where carriers don’t normally interact with developers the A-L team is uncovering a wealth of valuable information about the possibilities that might otherwise go unnoticed in the telecommunications world, he notes. “Talking with developers at ideation seminars we’ve come away with thousands of ideas, some good, some not so good,” he says. “Publicizing and advertising what the possibilities are to both constituencies is part of the value chain we’re helping to address.”

Beyond uncertainties over how to mete out more sensitive subscriber information, a huge barrier to app ecosystem development is the limited degree to which network service providers have managed to aggregate their data internally to make it easily accessible for multiple uses. “When I have a conversation with a CIO one of the first questions I ask is, who’s your data architect?” Cortley says. “Often the answer comes back that all the data is still silo’d. There’s no one person with overall responsibility for consolidating and logically integrating data resources.”

Subscriber preferences, their service profiles, what type of access network they’re on and at what data rates, data from IDAP directories and relational data bases – the list of disjointed resources is long. “All this information needs to be aggregated into a composite record and offered with the right restriction so you don’t compromise subscriber privacy and you expose only the information you want exposed for any given internal or external use,” Cortley says.

A-L has made considerable progress toward facilitating such aggregation through its subscriber data management solutions, which it says have been deployed with more than 200 customers to manage more than one billion subscribers worldwide. Of course, not all these customers have achieved complete integration of all elements, but there’s clearly an accelerating trend in this direction, as attested in revenue projections for subscriber data management systems issued by various research firms.

For example, Frost %26 Sullivan reports that in 2009 total world SDM market revenues reached $1.73 billion, representing a 31 percent increase over 2008. The researcher projects SDM revenues will top $2 billion this year and reach $2.78 billion in 2012.

“I think carriers realize now that if they rely on their own innovations they’ll be left in the dust,” Cortley says. “They have to be in a position t ride the wave of innovation that’s going to occur out in the Internet ecosystem.”