There was a time, not too long ago, when introducing a communications feature for businesses was a complex, tedious and expensive process. Platforms had to be built for each specific requirement and organizations had to approach each communication service provider individually. This meant lengthy negotiations and hefty bills. Exacerbating the situation was the limitations of these communications tools - companies had to alter their processes and workflows to suit the tool. Beyond being inconvenient, it was disruptive and impractical.

How it all began

The introduction of APIs (Application Programing Interface) in 2000 was a game changer. This trailblazing innovation facilitated connections between different software and even different devices. The 2009 launch of communication APIs enabled the easy integration of real-time communication features into existing software or applications, completely overthrowing the need to create specific platforms for each communication requirement.

By bringing together a range of communication APIs and Software Development Kits, Communications Platform as a Service (CPaaS) acts as a digital hub for enterprises and other organizations looking to integrate communication features into their applications. With direct access to the gamut of communication channels, from text messaging to voice and video messaging, and even chatbots, it comes as no surprise that, despite its relatively short history, communications APIs are now being used by almost all industries across the globe.

The demand for CPaaS was intensified during the pandemic, when more and more businesses turned to digital modes to improve customer communication. The growth in CPaaS adoption has been so phenomenal that Gartner has predicted that, by the end of 2023, 90% of organizations will be utilizing this cloud-based technology.

Current trends in telco CPaaS

• Mid and lower market focus

While the pandemic sparked a noticeable increase in CPaaS uptake across all market segments, it has been observed that the greatest demand stems from the mid and lower markets. The preference for virtual communication is growing exceptionally rapidly and so businesses are looking for faster and better ways to engage with their customers. As the mid and lower market segments have a very large customer base, their CPaaS requirement is also much higher. With the potential to considerably boost earnings, there has been a greater focus on offering telco CPaaS to the mid and lower market segments.

• Low-code / no-code platforms

A stumbling block for access to CPaaS was a lack of technical knowledge and skill. A majority of those who are a part of the mid and lower markets do not possess the kind of technical knowhow and coding ability needed to set-up and run CPaaS. Within this context, attention has turned to low-code and no-code platforms, making CPaaS available to anyone. The user-friendly nature of no-code and low-code platforms are increasing their popularity among enterprises in the mid and lower markets, drawing in a wider customer base for telco CPaaS.

• Security and compliance

Of course, opening up CPaaS in this manner creates vulnerabilities. One most obvious risk is the potential for hacking and security breaches. The propagation of unsuitable or harmful content is another serious concern. Preempting problems and disasters has become a high priority among CPaaS providers and security is constantly being evaluated and tightened. The approval process is being made more and more rigorous and content is closely monitored. Access to CPaaS dashboards is controlled based on role, with only admins being given admin dashboards while developers get developer dashboards. The evolving security procedures ensure that customer data is protected and that all applications and software comply with regulations.

• Omnichannel communication

With so many modes of communication out there, customer preferences too have become diverse. Some customers opt for one specific channel of communication, while others change the platform they use depending on their context. This kind of fluctuation has made omnichannel communication a must for CPaaS. Omnichannel communication is also driving innovation in telco CPaaS, with new options being rolled out regularly.

Looking ahead

CPaaS has come a long way since its inception. The future of telco CPaaS looks very bright, both in terms of its technical and financial potential. The accelerating pace of advancement in AI and machine learning is sure to expand the capacity of CPaaS. The functionality of CPaaS is bound to be enhanced with the creation of new communication channels. And APIs will continue to propel the growth of the developer marketplace.

The demand for CPaaS will certainly keep going up. According to Gartner, the CPaaS market, which was valued at USD 8.8 billion in 2021, is set to skyrocket to USD 23 billion in 2025. This means that telcos can boost their earnings just by offering CPaaS. On top of this is the potential to gain additional revenue by monetizing telco assets. The escalating popularity of on-demand content and the more pervasive usage of tablets and smartphones for streaming means that direct carrier billing too will increase - as Market Research Future predicts, the direct carrier billing industry is set to grow from USD 32.12 billion in 2022 to USD 29.6 billion in 2030.

Observing the trajectory of CPaaS makes one thing clear: by offering CPaaS telcos stand the chance to earn a whole heap of money from it.