What Is a Network-as-a-Service (NaaS) Model and How Does It Work?

Learn the basics of NaaS and find out how it can unlock new revenue streams.
JANUARY 24, 2022. 8 MIN READ

Network-as-a-Service (NaaS) is both an architectural framework and a business model. It gives customers the ability to lease and manage a resource from a communications service provider, such as a multi-site virtual network. Application Programming Interfaces (APIs) enable the capability. APIs make it possible for external applications to control network elements. Customers control a part of the network for a period of time for a specific use case, like a prioritized video conference circuit, without intervention from the service provider. The customer doesn’t pay for different service changes or waste excess capabilities. They also gain more control, higher levels of quality, and predictability.

There are many avenues for service providers to explore when it comes to NaaS. Let’s look at how it works and see what providers can do to capture its full potential.

How NaaS works

NaaS follows the same principles as application development for iOS and Android operating systems. But, instead of creating apps for operating systems, developers create them for a network. Governance and revenue-sharing models vary — as they do between Apple and Google. This approach allows for creativity and innovation while maintaining security and regulatory compliance.

The Salesforce AppExchange works the same way. The Salesforce platform is API-enabled and open to developers so they can create applications that extend the technology to solve various business needs. Examples of these applications include e-signature, risk management, and project management.


NaaS follows the same principles as application development for operating systems. Developers create apps for the network with varying governance and revenue-sharing models.”

Developers securely access the network with standardized APIs. They use these APIs to create and co-create applications, functions, and features for the network. Any number of internal or external parties may provide them, including:

  • The original equipment manufacturer (OEM)
  • A network management provider
  • An application provider from a different domain, such as a billing provider
  • Service providers who create and use them for their own business purposes
  • A development provider who creates a new service, such as a “Contact-Center-as-a-Service” in which the third-party application manages queuing and voice prompting for callers
  • A third-party who creates a new application focused on an outcome, such as “Security-as-a-Service” so a business can subscribe to a service that includes surveillance drones, dynamic prioritization of 5G slices, and real-time notifications

Service providers may sell these apps or package them into solutions on a managed marketplace. Businesses can buy these apps for their own purpose or sell them to end users. Known as a B2B2X marketplace, B2B buyers or end consumers browse and select capabilities that meet their specific needs. However, B2B2X marketplaces are not exclusive to NaaS. They can also include things like hardware components.

An example is a subscription service for a 5G-enabled camera on a bicycle helmet. More than a fun way to document rides, the application offers an extra layer of safety in the event of an accident: Loved ones know the cyclist’s exact location and the authorities are immediately notified. It’s like how smart watch technology uses fall detection to send an alert if someone needs help.


The difference between NaaS and CaaS

Communications-as-a-Service (CaaS) is another business model that service providers may consider. Although related to NaaS, there are important distinctions between them. NaaS enables the control of network resources, such as managing a 5G slice. CaaS offers a business outcome, such as remote surveillance services for a refinery with 5G-enabled drones.

Consider the case of an enterprise that needs high-quality video conferencing. The enterprise can buy video conferencing services and have a separate contract for a communications infrastructure, such as a wide-area network (WAN). In this scenario, there is no coordination between the provider and the enterprise. That means employees may experience pixelation, low call quality, and delays. With CaaS, the service provider bundles the app with network management and agrees upon a high level of quality as part of the contract. This provides more predictability to the enterprise, who manages the outcome. Meanwhile, the provider increases the average revenue per user (ARPU) and reduces the likelihood of churn.

While there is a correlation, NaaS is not a requirement for CaaS. Likewise, not all NaaS implementations offer the outcomes-based model of CaaS.


The benefits of NaaS

APIs enable the operations and business support systems (OSS/BSS). These APIs give providers the agility and flexibility to respond to changing customer needs and market dynamics.
Implementing Network-as-a-Service: Beyond Anecdotal,” Heavy Reading and Ovum, 2019.

In fact, a communications industry survey found that 81% of respondents assessed NaaS as a vital piece of their cloud strategy — particularly when it comes to monetizing the 5G network. With NaaS, providers find new use cases for the network that unlock revenue growth opportunities and complement existing business models. This is critical as they struggle to overcome:


Use cases for NaaS

Service providers leverage the network in new ways with NaaS to serve more customers. Consider the following use cases:

An institution can scale up its network based on the number of enrolled students and those using it on campus at a given time. Instead of paying for peak volume, the institution can select a subscription-based model. This model allows them to manage the ebbs and flows in network usage, from holidays to summer breaks.

Or, a big university may choose to build its own private 5G network. It may work with the service provider to manage the network or manage it on their own. The latter involves coordinating applications such as security, lighting, and energy management.

Smart cities
City governments can partner with a service provider to bring smart cities to life. Consider street lighting. With NaaS, 5G, and the Internet of Things (IoT), streetlights detect an approaching vehicle or person in real time from their mobile device. When they are in proximity to the light, the intensity increases. After they pass, the lights dim again. This helps the city maintain safety, save money, and reduce energy waste.

Companies that manage a fleet of trucks can track their vehicles’ oil, temperature, and pressure with NaaS, 5G, and IoT. Compared to previous technologies, 5G increases the throughput and decreases the delay in data transmission. The enterprise is able to prioritize the monitoring of critical assets. It receives data in real time to stay ahead of maintenance issues and avoid costly future breakdowns.

Another use case is blockchain. Companies can use blockchain coupled with NaaS to control the monitoring of a product. This increases the frequency and precision at critical junctures of the product’s origin — from the shipping container on a vessel to the truck that takes it to the distribution center.

Public safety
Imagine a drone that continuously surveys a beach. It streams images back to an application running on a multi-access edge computing (MEC) node at the cell tower. The edge application analyzes the images. Whenever it detects a shark, it sends an alert to the lifeguard at the local beach. By saving seconds from previous architectures, this implementation can save lives.

How to get started with NaaS

Many service providers have already activated some form of NaaS in their business. Now, they want to further monetize these investments. To do this, providers need to take these important steps:
1. Overcome legacy thinking

Service providers unlock the true potential of NaaS when they open the network to a developer community and partners. But that means they have to change how they think, act, and work.

Cultural barriers often stand in the way. This is because service providers are used to having tight control over the network. The idea of building a platform is also elusive — they don’t think of the network as a platform. And some organizations would rather see others try it first.

That’s why service providers must identify a strong leader with a vision who can articulate the value of NaaS to everyone — from board members to employees with boots on the ground. This leader should create a safe space for experimentation and innovation. And, they should understand the importance of opening up the network to their own developers as well as third parties.

2. Find your niche
A service provider can be an aggregator of apps, an innovator of apps, or both. As an aggregator, they can resell existing services, like network management apps or collaboration tools. Internal developers can partner with OEMs to create apps or even extend their developer network to include an ecosystem of value-added developers.
3. Invest in cloud-native architectures
Cloud-native architectures are critical. They are containerized, agile, and modular with an extended digital BSS layer. This is what enables flexibility and innovation for application development. The BSS layer aggregates data and extends the network to developers to create applications that lead to new revenue streams.
4. Securely open the network

How is NaaS delivered? Service providers need to make network functions available through APIs. Consumption-focused, industry-standard APIs through associations like TM Forum expose the network safely and securely. These APIs include:

  • Service qualification API: This is a qualification check that determines if a network service can be delivered at a particular location.
  • Service ordering API: This API enables seamless ordering and provisioning of your service. A service order is automatically created and placed in your downstream network systems.
  • Usage consumption API: This API helps you retrieve and leverage customer insights based on their network usage data.

Governance and close management of these APIs are critical. Ensure your deployment strategy includes an API management layer to control and monitor access.

5. Stand up a self-service marketplace

To get the most out of NaaS, service providers need to stand up a marketplace. They can do this by creating a portal for partners or an ecommerce storefront for consumers.

But that’s not all. Digital self-service is essential. Service providers can use automation to streamline the commercial and provisioning processes. This makes it easy for customers to configure, price, and quote (CPQ) services. Once the order is placed, order management capabilities fulfill the service with zero-touch provisioning. Service providers should also embed chatbots, which use AI to answer common questions. If the chatbot is unable to provide an answer, they can escalate it to an agent to assist the customer. (Hint: It’s a good idea to connect service with commerce data to deliver the best customer experience.)

6. Recruit partners and educate developers
Don’t forget about continuous recruitment and education efforts. Nurture relationships with new and existing partners and developers by establishing an ecosystem. Spend time teaching developers about the value of the network, networking elements, and basics like 5G slicing. This is what Apple, Google, and Salesforce do to teach developers about the value of the platforms. The result is expanded product and service offerings.

Stay tuned for more on NaaS


Learn about Network-as-a-Service (NaaS)

A new industry report from TM Forum reveals:

  • The state of NaaS today
  • The opportunities for service providers
  • What to expect in the future

More resources

The Communications Service Provider’s Guide to Digital Commerce

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