Ericsson forms company with 12 telcos to sell network software

By Supantha Mukherjee and Anna Ringstrom

STOCKHOLM (Reuters) -Ericsson said on Thursday it has created a new company for selling network software tools it has created a joint venture to sell software with a dozen telecom operators, including Verizon, Deutsche Telekom and Reliance Jio.

The software, network application programming interface (API), can help prevent credit card fraud, provide glitch-free entertainment, instant speed boost for gamers, and allow businesses to create hundreds of different features.

Ericsson will hold 50% of the equity in the venture while the telecom providers will hold 50%.

The new company will allow businesses to deploy network APIs that could work in different countries with different telecom networks, similar to how international mobile roaming works.

América Móvil, AT&T, Airtel, Orange , Singtel, Telefonica, Telstra, T-Mobile and Vodafone have also joined the venture. Vonage and Google Cloud will provide access to their ecosystems of millions of developers.

"The recognition that service providers need to agree on common ways of exposing these APIs ... is a tectonic shift in the market," Vonage CEO Niklas Heuveldop said in an interview.

"We haven't seen anything like this since the forming of GSMA 30 years ago." GSMA is a global coalition of telecom companies.

Ericsson bet on network APIs by agreeing to buy Vonage for $6.2 billion in 2021 but since then has taken impairment charges of $4 billion.

While some telecom operators have worked with network APIs, it has been impractical to integrate them across hundreds of individual telecom operators.

"We have set up this venture to accelerate the market and to overcome the challenge," said Deutsche Telekom SVP Peter Arbitter, adding that there would be no disadvantage for telcos joining later.

McKinsey estimated network API market could reach as much as $300 billion in revenue for telecom operators in the next seven years.

Banking and the financial sector would be early adopters of the network APIs due to fraud detection capabilities, the executives said.

A bank can boost 5G speed when it needs to locate a customer's phone in a store when a transaction is taking place to prevent fraud.

"We have a fully funded business plan for three years where all the investors have committed initial funding and also Series B funding if needed," Heuveldop said.

(Reporting by Supantha Mukherjee and Anna Ringstrom, editing by Stine Jacobsen and David Evans)