Telco and network API spending to hit $6.7 billion by 2028 – IDC

New figures from IDC forecast healthy growth for telco API revenues, but it's unclear how much of the value can be captured by CSPs.

Nick Wood

June 6, 2024

3 Min Read

The research firm predicts that global spending on telecoms and network APIs will reach $6.7 billion in 2028, compared to a modest $700 million in 2023. This makes for a compound annual growth rate (CAGR) of 57.1 percent over the forecast period.

Some readers might find that figure a little uninspiring considering how desperate telcos are to spin up new revenue generators. Indeed, the real action concerns the opportunities for innovative – and potentially lucrative – new services that APIs can enable.

McKinsey's oft-quoted and eye-catching prediction of $300 billion worth of API-related revenue by the end of the decade refers not just to APIs themselves but the connectivity and edge compute-related revenue they promise to unlock.

When it comes to revenues generated directly by APIs, McKinsey's forecast lands roughly in the same neighbourhood as IDC's – it expects it to weigh in at between $10 billion and $30 billion.

As with so much of telecoms, the biggest share of value doesn't come from the technology, but the services that go on top of it, and here's where telcos might hit trouble.

A portion of IDC's research note serves as a quick recap of telcos' recent struggles to monetise connectivity when confronted by the rise of communications platform-as-a-service (CPaaS), cloud comms and similar.

Salvation could be at hand though, because IDC says the meshing of 5G networks and API exposure represents an opportunity for CSPs to reclaim their status as key connectivity providers with the ability to easily sell and scale customised, programmable connectivity underpinned by app developer platforms.

"While the telecom industry has a mixed history of API monetisation, 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 CPaaS entities," said Patrick Filkins, research manager, IoT and telecom network infrastructure at IDC.

Indeed, and Filkins notes it won't solely be telcos driving the network API market.

"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," he said.

These participants aren't working for free, and it raises an important point about how big a piece of the pie telcos can slice off for themselves, and how much will be guzzled by those around them.

Consultancy Kearney in March warned telcos that their position at the top of the network API value chain is by no means assured, and they could find themselves relegated to the status of 'secondary' participants, as external third parties drive aggregation and distribution, hoovering up the bigger share of the spoils.

Indeed, telco vendors – struggling under the burden of the capex crunch – are also keen to maximise the API opportunity.

Nokia recently teamed up with CPaaS provider Infobip to cross-market their respective API portfolios, including Nokia's network APIs. Then of course there's Ericsson, which is betting on its Vonage unit to help it bring in some API-related revenue.

While these efforts do benefit operators, it is an indirect benefit – it's not the operator becoming the go-to API portal, and forging close relationships with a flourishing community of developers, it's someone else. And that diminished role might come to be reflected in the amount of value an operator can derive from network APIs.

It's all to play for, but operators have their work cut out to secure their position in the ecosystem.

About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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