Mixed messages for the future of SDP

Vendors and operators recently met in London to discuss business models and the future of Service Delivery Platforms (SDPs) and how these can help the latter increase revenues without growing organically. The topic of SDP has been evolving in parallel with IMS and in some cases their evolution is similar. While both have been referenced as a way to implement new services and generate new revenue streams, neither have reached critical mass and in most cases are regarded as a “utility” rather than a premium enabling technology.

App stores and developers

The discussion on SDP circled around app stores, network APIs and how operators can attract developers to create new applications based on their networks. Although in most cases the primary function of a SDP is to attract developer attention through an operator app store, there were hardly any developers in the SDP conference, confirming the erratic relationship between operators and developers.

A primary function of SDPs is service exposure to third parties and a topic of great discussion was how operators can attract developers to their networks through SDPs. The opinions were highly polarized and a clear representation of market reality: operators care but cannot understand or adapt to the developer mindset. On the other hand, the majority of developers sees operators as an access utility provider and only cares about revenue potential and a route to the mass market. There was even a suggestion that operators should pay developers to come to their networks and develop, but this may be an unproven argument since developers are likely to care about longer-term revenue opportunities rather than a welcome fee.
Operators have traditionally been used to the telco world where they deal with large enterprises and long, complex business agreements. On the other hand, developers are used to the open culture of the Web and responsive services are a de facto standard. Unfortunately for the operators, Apple and Google have now set the standard for app stores and developer communities, making it extremely hard for an operator to establish a community that can go against Android Market and Apple’s app store.

In a way, SDPs have failed to attract developers and deliver successful, revenue generating app stores to mobile operators. However, there are other market segments where SDPs can be – and in several cases are already – successful.

Several operators, including Vodafone, have created app stores targeting enterprise customers and vertical segments rather than individual subscribers. By doing so, mobile operators target the premium segment and do not have to form relationship with small developers or change culture. Targeting these segments have several advantages compared to consumer app stores: preferred partners can develop high quality services and applications which can even adhere to SLAs; clients can customize mobile services according to their needs and operators can further penetrate existing enterprise clients to increase revenues without organic growth. This usage model for SDP is proving more lucrative to mobile operators and is meeting with more success compared to the app store model.

Operators: Where’s the money?

Mobile operators can arguably enjoy several benefits after deploying a modern SDP: expose services and network functionality, attract developers and create new services rapidly and being ahead of competing operators. However, as with all infrastructure components, there are incompatibilities between different vendors, proprietary interfaces and not every standards-based protocol implementation is similar between all vendors. This causes concerns for mobile operators who may not want to be tied in with a single vendor due to the volatility and rapidly changing nature of the services market. Nevertheless, the most successful SDP references are presented by operators that deploy SDP services in a single country, in order to address specific market segments and user requirements. These operators have the experience to grow their SDP offerings across their international footprint and address a much larger subscriber base. Mobile operators in this category include Telefonica, TMN, Vodafone, Telenor and Orange.

Operators argue that the Return of Investment (ROI) of a SDP is difficult to calculate because it is not clear what services or applications will be successful. Moreover, app stores and service exposure may not justify the cost of a new platform, a potential barrier for the adoption of SDP within an operator. Nevertheless, SDPs are most suited to satisfy subscriber segments where legacy solutions are either not cost efficient or applicable. In these cases, SDPs can provide quick ROI and a serious competitive advantage against other mobile operators that cannot provide similar services.

Opportunities for SDP in mobile

Informa expects that the SDP market will become a long-term strategic objective for mobile operators and vendors will continue to evolve their product lines but implementing semi-proprietary protocols. Mobile operators argue that deploying a multi-vendor SDP across different markets can’t be discussed before the SDP service business model is proven. Moreover, vendors have started promoting SDPs that run from a cloud but operators were also skeptical of this.
Overall, Informa expects the following list to be the main interest of operators in SDP in the short term but there will be several cases where mobile operators deploy such a platform to cater for specific segments or user groups.

App stores: Niche, specialized app stores are more likely to be successful. These include enterprise or vertical segment app stores where SLAs may be available.

Service exposure: Network APIs for preferred telco-grade partners are more likely to be successful compared with developer communities due to the culture of the operator.

Policy control and subscriber data management: A SDP can act as a service enabler for both policies and subscriber data. For example, a SDP can be used to optimize data for a user that is about to exceed a monthly allowance or enable a new service for a premium user in realtime.

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