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((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
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Verizon, Reliance Jio and Deutsche Telekom partner on new venture
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Ericsson will own 50% of the company, with the remainder held by telecommunications providers.
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Ericsson says company’s business plan is fully funded for three years
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Investors have committed to provide initial funding, and Series B funding if needed
(New throughout, adds comments from interview with Vonage and Deutsche Telekom executives) by Supantha Mukherjee and Anna Ringstrom
Ericsson ERICb.ST announced on Thursday the formation of a new company to sell network software tools. It has formed a joint venture to sell software with a dozen telecom operators, including Verizon VZ.N , Deutsche Telekom
DTEGn.DE and Reliance Jio RELIB.UL.
The software, the network application programming interface (API), can help prevent credit card fraud, provide glitch-free entertainment, instantly increase speed for gamers, and allow businesses to create hundreds of different functions.
Ericsson will hold 50% of the company’s capital, while telecommunications 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 international mobile roaming.
América Móvil AMXB.MX, AT&T TN, Airtel BRTI.NS, Orange
ORAN.PA, Singtel STELO.UL, Telefonica TEF.MC, Telstra
TLS.AX , T-Mobile TMUS.O and Vodafone VOD.L have also joined the company. Vonage and Google GOOGL.O Cloud will provide access to their ecosystems of millions of developers.
“The recognition that service providers need to agree on common ways to expose these APIs … is a tectonic shift in the market,” Vonage CEO Niklas Heuveldop said in an interview.
“We have not seen anything like this since the GSMA was founded 30 years ago. The GSMA is a global coalition of telecommunications companies.
Ericsson bet on network APIs by agreeing to buy Vonage for $6.2 billion in 2021, but has since booked $4 billion in impairment charges on the site.
Although some telecom operators have worked with network APIs, it has not been possible to integrate them into hundreds of individual telecom operators.
“We created this company to accelerate the market and meet the challenge,” said Peter Arbitter, senior vice president of Deutsche Telekom, adding that there would be no downside to telecom operators joining the company later.
McKinsey has estimated that the network API market () could reach $300 billion in revenue for telecom operators over the next seven years.
Banks and the financial sector will be early adopters of network APIs because of the fraud detection capabilities, executives said.
A bank can boost 5G speeds when it needs to locate a customer’s phone in a store during a transaction to prevent fraud.
“We have a fully funded three-year business plan, in which all investors have committed to provide seed funding as well as Series B funding if required,” said Heuveldop.
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