Artilium

Tuesday, June 08, 2010

Network as a Service (NaaS), escape from the walled garden?

The term Software as a Service (SaaS) is widely used. Network as a Service (NaaS) is a more recent term, originally used in the IT and cloud computing context but now being increasingly applied in the mobile world. With SaaS you don’t own the software, or even have to execute the code, you simply pay as you use the software which is hosted elsewhere. The NaaS model is not entirely new for network operators since they have been providing mobile virtual network operator (MVNO) access to their network as a service on a pay per use basis.  However, NaaS is really about opening the network to value added subscriber services, created by third party developers, and charging for the use of the service on a pay as you use basis.  Most operators still operate services strictly within their own walled gardens and have yet to embrace the more open Web 2.0 concepts.  However, some have opened APIs for services such as SMS and cell-ID, but the exposed functionality for developers is still limited. The real services that could add value are things like verified authentication, real-time call control, service billing direct to the subscriber account, real-time location and presence. When these types of network service are opened, then rich value added services (VAS) can be built and the additional value of the networks can be properly realised.

Operators wishing to avoid becoming the ‘dumb pipe’ in a market where traditional revenues are falling must instead provide the ‘smart pipe’. The smart pipe generates a revenue share of the value added services in addition to the traditional services.  Many new mobile applications are being developed and it is already big business, but with flat rate data services the operators will generate no new revenue from these unless they get smart.  By opening up some additional network functionality through secured APIs, a charge can be levied for the use of the VAS.  Instead of paying for each application the subscriber wishes to use, the subscriber will pay according to their consumption of the services.  The NaaS benefit for the subscriber is that they only pay for services consumed, they don’t have to buy applications or have a specific phone type.  The benefit for the operator is the generation of additional revenue via the revenue share with the developers of the services.

If the iPhone could not run applications it would just be a basic ‘dumb phone’, and if the networks cannot offer value added services they are just ‘dumb pipes’. The NaaS model offers operators the opportunity to become the ‘smart pipes’ and take a slice of the growing value added mobile services and applications market.