Arguing about “who owns the customer” or that “our customers expect a certain level of service” is so far behind the curve it’s laughable and service providers simply can’t derail innovation by imposing expensive and exhausting procedures. But to be clear, this is a competitive market and service providers will lose more ground unless a contemporary model for collaboration is adopted.

The Amdocs OTT Monetization Solution allows service providers to leverage network assets to create value for OTT providers and monetize service collaborations. Layer 7’s API Management Suite of products defines a new methodology for telco APIs, bringing interface, identity and developer management together in a cohesive platform that can serve mobile, enterprise and internal applications equally. Layer 7 and Amdocs will be working together to deliver a best-of-breed solution, addressing the full lifecycle of telco API needs.

This new approach will yield great results. We have already seen Spotify implement a flat-rate service with T-Mobile Germany. Also, network-enhanced enterprise tools (e.g. AT&T Business Services) are becoming commonplace as LTE networks expand. APIs are the fabric that ensures these collaborations are possible and can be brought to market quickly and efficiently.

Why did  the “disintermediated” direct-to-buyer model win? Simple: it was simplicity. The problem with multilateral exchanges is complexity. They require members to buy in completely and never hedge with alternative paths to consumers; they require the exchanges to always be subservient to the members; and they require 100% participation and 100% consensus. That’s why they keep failing despite the best efforts of organizations like GSMA, the UN, OASIS and others. They require a rigid web of multilateral agreements, subjugation of individual corporate needs to ephemeral collective goals and universality. Just because the broker is a for-profit entity like Apigee doesn’t change anything so long as success or failure depends on universal cooperation and comity. To repeat an oft-used metaphor: putting lipstick on failed efforts like WAC and OneAPI won’t make them any more attractive. They will never have the agility and directness of an over-the-top direct-to-buyer/consumer/developer service. That’s why giant operators keep getting beat by three-person Y Combinator start-ups.

Does this mean aggregation is dead? Of course not! Aggregation models can work but only if the “broker” has the independence and freedom to go off and negotiate unilateral agreements as needed. The aggregator must have the freedom to be run like a self-interested business where the wishes and hopes of the underlying providers don’t factor in. As evidence look at the growing disparity between Netflix and Hulu. The latter emerged as a deliberately-crippled response to the growing power of Netflix. However, the need to accommodate multilateral interests has made it irrelevant. ISIS is fairing no better in the payments arena.

For operators, there is a similar lesson. Be the broker or sell to the broker. Each model has clear economics and places success or failure in the hands of the operator. If an operator wants to offer non-geo-specific services to buyers, it should partner with over-the-top providers or get the capacity from other operators one-to-one. If an operator would rather wholesale its services, be promiscuous and enable every broker/aggregator to consume its services, fine. Then let them be your buyers. The beauty of both models is that they are non-exclusive and don’t require consensus, universality or other impracticalities.

I give Apigee credit, the API Exchange is an improvement over the failed WAC. However the problem was never just technology. Some business models just don’t work in practice.

Still, with Web and mobile technologies creating competition from outside the telco sector, carriers need ways to quickly adapt to technological change – and APIs provide the perfect solution. APIs allow telcos to open up their services for efficient repurposing by internal developers and partner organizations, creating opportunities for being quick to market with innovative new offerings.

Layer 7’s latest eBook 5 Ways Every Telco Can Benefit from APIs provides an overview of how carriers can realize these opportunities. If you visited the Layer 7 booth at MWC, you might have picked up the print version of this handsome document. If not, don’t hesitate to download the electronic version.

I’m particularly excited about a very ambitious EU-funded project to map an IoT reference architecture. Whether it will really become the reference architecture or simply a collection of best practices is subject to debate but I think the simple fact of trying to pull together all the different knowledge domains into one set of documents is bound to be interesting.

Forbes recently published an article by Alex Brisbourne called The Internet of Things Isn’t as New as It Seems. The article offers some really fascinating insights into the renewal rates for built-in 3G services in iPads and OnStar. Reflecting upon my own positive experiences with a 3G Kindle, I have to agree with Alex that, for connected devices to really reach their potential, connectivity must be simply built-in without requiring a separate subscription.

Another indication of this trend is the fact that car manufacturers are apparently switching from built-in mobile connectivity (requiring the owner to carry a subscription) to tethering off the driver’s existing smart phone. This highlights the challenges telco providers are facing – as summarized in a recent blog post on telco2.net.

Alex Bassi has provided another look at the way IoT is affecting business models, making the point that technology is enabling us to use things without having to own them. In my humble opinion, we’ll see this service-based model, which we normally associate with SaaS and the cloud, extending more and more into the domain of physical “smart” things. We can already see this usage pattern emerging in the automotive sector: car sharing a la Zipcar; limo service from Uber; electric car solutions from Better Place. FastCompany calls this the new “self-service” economy in an article that explores these issues in depth.

To get a good overview of the Internet of Things, I suggest heading over to ZDnet, which regularly posts articles on IoT and M2M. Postscapes, meanwhile, is completely dedicated to tracking IoT – I particularly like this site’s (currently incomplete) directory of companies in the space. There’s also a good collection of relevant essays gathered together on Bundlr.

Finally, here are a couple of links for the technically inclined. First here’s a presentation on the impressive set of open source building blocks developed as part of the m2m.eclipse.org project. Second is a piece that touches upon some technical aspects of the semantic Web that have a good deal of relevance to IoT. This is an area I’m personally very interested in and it might be a good topic to explore in a future post.

In any case, I expect to have plenty of interesting things to report on after Mobile World Congress. If you’re attending the show, be sure to stop by the Layer 7 booth for a chat. We’ll be at booth  #8.1A47 in the App Planet zone.

As usual, we’re likely to see a very broad sweep across various areas of telco innovation and mobile strategy but there are some fundamental questions facing the community and these will dominate many conference sessions, seminars and exhibits:

1. Connected Living
   As the Internet of Things gains momentum, how can the service provider community deliver the kind of enriched connectivity the broader ecosystem increasingly demands?
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2. Mobile Commerce
   For years, mobile has been a key banking and commerce tool for certain markets. With the rise of NFC (near field communication) and success stories like the Starbucks mobile payment app, will mobile become the preferred payment instrument for us all?
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3. Next-Generation Communications
   The world of communications moves quickly – too quickly even for service providers at times, with the runaway success of technologies of iMessage, WhatsApp and – next – WebRTC. In this ever-innovating world of mobile communications, can service providers regain some ground and demonstrate their value?

Layer 7 has answers to these questions and will be at MWC, demonstrating a variety of solutions that can help service providers address the challenges ahead. For example:

1. We have been collaborating with AT&T and have planned an M2M solution that will capture anonymous information about visitors as they move around the exhibition halls. This information will be presented as intelligent APIs via the Layer 7 platform.
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2. Security and authentication are very familiar terms to Layer 7 and we’ll be showing how mobile payments can be easily and securely integrated with a mobile app without compromising the user experience.
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3. “Communications as a Service” opens many opportunities for service providers and the new partnership between Layer 7 and Voxeo Labs will show how easy it can be to capitalize on these opportunities.

Come and meet the team at booth 8.1A47 in the App Planet zone or email info@layer7.com to schedule a meeting. See you there!