By Li Haifeng
CaaS is about opening carrier network capabilities to third parties so that the user base can be expanded with applications enhanced to meet the needs of enterprise and vertical clients through the integration of communication services into business processes. In such an ecosystem, carriers, enterprises and third parties will create and share value together.
Mobile business revenues for global carriers have finally exceeded one trillion U.S. dollars, but the market is far from stable; anything can happen.
Mobile operators have three revenue sources – voice & messaging, data traffic, and value-added services (VAS). Voice revenues are stagnant in developed countries. Data traffic revenues are growing, but so are costs and often faster. VAS has the most potential, but telcos face numerous competitors in the enterprise sphere, including Internet companies, vertical market players, and other telcos. Telcos have three roles to play in the VAS application market – pipe provider, E2E solution provider, or communication as a service (CaaS)-based enabler.
Unlike the consumer market, enterprise and vertical markets require professional development and business models that integrate communication services into business processes so that they are more efficient and automated. If telcos provide the pipe only (simple access service), not enough value is added. E2E provision is one option, but an individual telco can only focus on one or two industries at most, making the opening of network communication capabilities through CaaS preferable.
Innovation of software development and business models
At the terminal level, telcos can issue software development kits (SDKs) via CaaS. SDKs can be viewed as a group of communication construction modules, such as a codec or user authentication module, for a non-communication device. Through SDKs, carrier-grade communication capabilities can be embedded into various "terminals," converting various machines into network "users." This enables telcos to expand their subscriber base and penetrate the enterprise and industry spheres. SDKs should easily run on the mainstream operating systems such as Android, iOS, Windows, and Linux. They should also feature robust codec capabilities to suit different situations and latencies, along with HD audio or video communication.
CaaS drives innovation in traditional business and development models; meaning that telcos can bring their advantages into full play and make their outdated organizational structures and rigid business processes more flexible. CaaS also enables third-party developers to develop applications together with carriers, making for a collaborative cross-industry ecosystem, leading to better applications and more users. What's more, telcos will be able to adopt numerous business model innovations, including revenue sharing, commissioned development, and joint operation.
Successful CaaS depends on selecting the appropriate market. For telcos, enterprise and vertical markets are the best choices initially, as quick wins will boost the confidence of the management team so that long-term cooperation projects can go ahead. Instead of charging third parties for Internet utilization fees, carriers can cultivate partners with real potential, share value with them, and later leverage their channels and customer resources to make headway in different industries.
China Telecom Fujian (Fujian Telecom) is a CaaS pioneer. Since 2012, they planned to collaborate with upstream and downstream players in the mobile Internet industry that complement each other's advantages so that a profitable ecosystem can be built for the ultra-broadband era. Fujian Telecom and Huawei have worked together to build intelligent pipes and a complementary platform, monetizing Fujian Telecom's core assets through open communication and information service capabilities. By the end of 2013, 175 partners were brought to Fujian Telecom's open platform, producing over 110 collaborative products, with many industries involved.
Fujian Telecom and Grandstream Networks cooperated on developing new IP cameras, where the built-in SDK allows the camera, a device that can normally be connected but cannot communicate, to do both with other network devices, with the communication process itself as easy as a voice call. This service has been successfully deployed in home security and localized surveillance scenarios, with the number of users surpassing 300,000 in 2013.
Fujian Telecom also cooperated with a local car insurance company to launch a video-based service where information is collected remotely concerning accidents, without the need for insurance personnel on site, saving a lot of time & expense for all involved.
Third-party developers have also created other services that utilize Fujian Telecom's voice, multimedia, and cloud capabilities in the areas of messaging, assistance, and e-health, among others. Partners are very optimistic about them. "Jiaying Information (a Fujian Telecom partner) is very confident that in the next year, our application (conferencing software) will be used for over 120 million minutes, and involve over 30,000 enterprises." Another company, Cloud Computing Technologies, anticipates that its Tianyiqun UC&C service will attract over one million conference users in 2014.
In the LTE era, E2E all-IP-based VoLTE not only enriches telcos' communication capabilities, it also minimizes the difficulty in opening them. Mass VoLTE commercialization will pave the way for CaaS, which will monetize VoLTE capabilities in turn.
Telco communication capabilities will soon be integrated into enterprise business processes, making operations more efficient. By building a new ecosystem, carriers can achieve business success in new industries and secure new revenue sources, while partners can boost their competitive advantages through their newfound carrier-grade capabilities.