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Verizon, Reliance Jio, Deutsche Telekom joins new venture

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Ericsson will hold 50% of venture, rest by telecom

providers

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Ericsson says venture has fully funded business plan for 3

years

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Investors committed initial funding, Series B funding if

needed

By Supantha Mukherjee, Anna Ringstrom

STOCKHOLM, Sept 12 (Reuters) - Ericsson said

on Thursday it had 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 ( T ), Airtel,

Orange , Singtel, Telefonica,

Telstra ( TTRAF ), T-Mobile and Vodafone ( VOD ) 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.