Telefónica: In APIs We Trust

Telefónica SA (NYSE: TEF)'s Jose Valles wants to make one thing very clear about his company's new mobile payments Application Programing Interface (API) program, which has already attractedTelenor ASA (Nasdaq: TELN) as a partner: This is not WAC version 2.0.

There are a lot of similarities between the aspirations of BlueVia -- the unit of Telefónica Digital that Valles leads -- and those of the now defunct Wholesale Applications Community (WAC). Both aim (or aimed, in WAC's case) to provide applications developers with a quicker route to mobile users and make it easier for those users to access and purchase apps.

WAC, which was always closely associated with the GSM Association (GSMA) , was pulled down by having too many companies trying to steer the ship and lacking a specific focus on certain capabilities, says Valles.

The GSMA, which is now managing WAC's legacy initiatives and programs, "are good guys but there were 42 operators around a table trying to get a consensus. ... We have the same agenda and the same focus, but we are going to build it from the basement up, not from the roof down," Valles says.

Valles adds, during a media briefing in London late Wednesday: "We don't need 42 operators to make this work. We will start with a few and build it slowly. We're trying to create an industry standard and change the industry's dynamics. Telcos can become trusted providers of [not only] their own services but also of approved products and services from third parties. We won't be chasing everyone to join. We'll talk to those who are interested and bring new partners on board as our bandwidth allows. But we're not going to have 42. ... WAC tried to do everything."

And in terms of focus, Telefónica and Telenor are targeting the development of a standard API that enables direct-to-bill payments (allowing people to buy all sorts of apps, services and goods using their mobile bill/credit). "This is a major pain point and the low-hanging fruit," notes Valles. "It's that focus that attracted Telenor. We're going to put all our attention on this and prove some stuff. I know of one operator that talked about opening up 72 different APIs. We're starting with one."

But it's important that other operators beyond Telenor share the BlueVia vision, explains Valles. "The developers want multiple operators involved. We, Telefónica, tried initially on our own, but one operator is not enough."

Valles isn't identifying any other potential carrier partners just now, but there's a group of mobile operators that are natural prime candidates. That's because a key ally for Valles is Apigee Corp. , BlueVia's API management platform partner and the company that acquired the WAC technology assets.

Among those technology assets was the WAC payment API, which has been adopted by a host of major operators in addition to Telefónica and Telenor. Those operators include AT&T Inc. (NYSE:T), Deutsche Telekom AG (NYSE: DT), the South Korean trio of KT Corp. , LG Telecom , SK Telecom (Nasdaq: SKM) and Smart Communications Inc. of The Philippines.

Working out a roadmapValles says BlueVia is holding a workshop next week with Telenor to try to "pin down a roadmap for where we need to go."

A key part of that roadmap will involve highlighting the potential benefits to those involved in the payments ecosystem -- operators, direct-to-bill payment partners such as Facebook , Google(Nasdaq: GOOG), Microsoft Corp. (Nasdaq: MSFT), and developers -- apart from the obvious financial gains from increased customer traction.

A key potential benefit is a greater understanding of user behavior and hard data about the popularity of apps. Valles says the focus on direct-to-bill capabilities will enable BlueVia to "analyze [transaction] data and see the hot users trends. We don't know yet how we are going to work with the data but we'll be focusing on that."

It's one thing having the data, and another making use of that data -- mobile operators are sitting on a pile of gold, he notes, but their Service Provider Information Technology (SPIT) systems were not designed to have their data extracted and analyzed. He'll be looking to his Telefónica Dynamic Insights colleagues for assistance in digging into the data at BlueVia's fingertips.

Making sense of data is just one of the many challenges facing BlueVia, though. Probably the greatest challenge is developing an environment that will encourage apps developers to turn their attention away from Apple Inc. (Nasdaq: AAPL)'s APIs for a moment and create new services that hook into the BlueVia direct-to-bill interface.

Encouraging the developer community to engage with mobile operators has long been an issue and one that BlueVia has already been striving to address. (See BlueVia Tackles the App Gap.)

Again, Valles is looking to do things differently than before. Instead of appealing to apps specialists directly, BlueVia will "engage with the developers through the ecosystem," by which he means the payment platform partners such as Facebook. If BlueVia gets the model right, the developers need not even know that the telco initiative is involved.

In addition, there are the technical issues surrounding security, identity management and enabling access to payment interfaces via multiple access technologies (for example, Wi-Fi as well as mobile).

And after payments? Valles wants BlueVia to focus on one thing at a time but hints that future developments will likely focus on areas of strength for telcos -- communications. Apps with integrated, high-quality and secure multimedia communications capabilities could be a focus for the future, especially as Telefónica Digital has in-house smarts from its 2009 acquisition of Jajah. Those capabilities (from Jajah) have already been put to use in the development of the Tu Me unified communications app.

Will BlueVia get that far down the road? That might depend on whether the payment API focus delivers on its potential.
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