Ericsson announced the creation of a new joint venture on Thursday to market network software in collaboration with a dozen telecom operators, including Verizon, Deutsche Telekom, and Reliance Jio.
The venture focuses on a network application programming interface (API), which can be utilized to prevent credit card fraud, provide glitch-free entertainment, deliver instant speed boosts for gamers, and enable businesses to develop hundreds of different features.
Ericsson will hold a 50% equity stake in the joint venture, with the remaining 50% owned by the telecom providers. The new company aims to help businesses deploy network APIs that can operate across different countries and telecom networks, much like international mobile roaming.
Other major telecom players involved in the venture include América Móvil, AT&T, Airtel, Orange, Singtel, Telefonica, Telstra, T-Mobile, and Vodafone. Additionally, Vonage and Google Cloud will provide access to their extensive ecosystems of millions of developers.
Vonage CEO Niklas Heuveldop highlighted the significance of this collaboration, stating, "The recognition that service providers need to agree on common ways of exposing these APIs is a tectonic shift in the market. We haven't seen anything like this since the forming of GSMA 30 years ago." The GSMA is a global coalition of telecom companies.
Ericsson initially ventured into network APIs by acquiring Vonage for $6.2 billion (RM26.7 billion) in 2021. However, the company has since faced impairment charges totaling $4 billion.
While some telecom operators have experimented with network APIs, integration across hundreds of individual operators has been challenging. "We have set up this venture to accelerate the market and overcome the challenge," said Deutsche Telekom SVP Peter Arbitter, adding that late-joining telcos would not face any disadvantages.
McKinsey estimates that the network API market could generate up to $300 billion in revenue for telecom operators over the next seven years. The banking and financial sectors are expected to be early adopters of these APIs due to their potential for fraud detection. For instance, a bank could boost 5G speeds to locate a customer's phone in a store during a transaction to prevent fraud.
"We have a fully-funded business plan for three years, with all investors committed to initial funding and ready for Series B funding if needed," Heuveldop added.
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