This software, known as network application programming interface (API), is designed to combat credit card fraud, enhance entertainment experiences, provide gamers with instant speed boosts, and enable businesses to develop a wide array of features.
Ericsson will retain a 50% equity stake in the venture, with the telecom operators collectively holding the remaining 50%.
The new entity will facilitate the deployment of network APIs that can function across various countries and telecom networks, akin to the concept of international mobile roaming.
Other participants in the venture include América Móvil, AT&T, Airtel, Orange, Singtel, Telefonica, Telstra, T-Mobile, and Vodafone, while Vonage and Google Cloud will contribute by granting access to their extensive developer ecosystems.
"The acknowledgment that service providers must agree on standardized methods for exposing these APIs represents a significant transformation in the market," stated Vonage CEO Niklas Heuveldop in an interview.
"We haven't witnessed anything of this magnitude since the formation of GSMA three decades ago."
GSMA is a global alliance of telecom companies. Ericsson's commitment to network APIs was underscored by its $6.2 billion acquisition of Vonage in 2021, although it has since recorded impairment charges totaling $4 billion.
While some telecom operators have previously engaged with network APIs, the integration across numerous individual operators has proven challenging.
"We have initiated this venture to expedite market growth and address these challenges," remarked Deutsche Telekom SVP Peter Arbitter, noting that there would be no penalties for telecom companies that choose to join at a later stage.
McKinsey has projected that the network API market could generate up to $300 billion in revenue for telecom operators over the next seven years, with the banking and financial sectors expected to be early adopters due to the technology's fraud detection capabilities, according to the executives.
A financial Institution can enhance 5G velocity when it requires locating a customer’s device within a retail establishment during a transaction to mitigate fraudulent activity.
“We possess a fully financed business strategy for a three-year period, with all investors having committed initial funding as well as Series B funding if necessary,” stated Heuveldop.