To effectively tap into the transformative power of AI, telecom providers must undergo a fundamental shift in their thinking and adopt innovative business models geared towards driving growth.
The emergence of ChatGPT has sparked considerable interest in AI, drawing attention from various stakeholders, ranging from board members and vendors to analysts and event organizers. In this age dominated by digital transformation, artificial intelligence, with a particular emphasis on Generative AI (GenAI), stands out as a potent force poised to spearhead a revolution in the telecoms industry.
Communication Service Providers (CSPs), like all other solutions providers, are exploring how AI can reshape their operational landscape. Whether it is to help improve network operations, employee and customer experience, or retention and average revenue per user (ARPU) growth – CSPs are standing at the forefront of this transformation. However, as the industry explores the vast possibilities of AI, a crucial insight comes to light — depending exclusively on AI is insufficient to tackle the revenue challenges currently afflicting the telecoms sector.
AI Alone is Not the Answer
Over the past decade, the profitability of major CSPs has been on a downward trajectory, with the pandemic, supply chain disruptions, and broad-based inflation being key disruptive factors. Accenture states that CSP revenues are only expected to grow at a compound annual growth rate of 1.7% from 2021 to 2025. Returns on capital globally are in a multi-year decline, and debt loads are approaching their limits.
Traditional growth drivers for CSPs, such as increasing ARPU, expanding into new markets, and attracting new subscribers, are encountering escalating challenges due to market saturation, technological disruptions, evolving consumer preferences, and regulatory restrictions. This has led many CSPs to place their hopes on AI as a potential ‘silver bullet’ to overcome these obstacles, increase profit margins, and address their debt challenges.
While AI presents unparalleled opportunities to augment human capabilities, the mere adoption of this technology alone will not yield the novel and lucrative revenue streams urgently required by CSPs. Ineffective business models are bound to impede the progress of AI.
The Role of Business Models in AI Adoption
To effectively tap into the transformative power of AI, CSPs must undergo a fundamental shift in their thinking and adopt innovative business models geared towards driving growth. By embracing the role of ecosystem orchestrators and working closely with partners to address customer pain points, CSPs can substantially expand their growth prospects. By opening up their networks to partners who can integrate and market their applications to customers through a B2B2X model, CSPs can collaboratively develop groundbreaking industry solutions that were previously inconceivable.
Integrating AI into Ecosystem Orchestration Platforms
With this collaborative approach in place, CSPs can seamlessly integrate AI into their ecosystem orchestration platforms to enhance efficiency and effectiveness in a multitude of ways. Some key use cases include:
- Data-Driven Collaboration: AI can empower CSPs and their partners to make data-driven decisions, leading to more informed strategies and a deeper understanding of customer needs.
- Predictive Collaboration: AI can forecast customer demands, enabling more proactive and responsive business decisions within the ecosystem.
- Personalized Services: AI can analyze vast datasets to provide tailored offerings that cater to unique customer needs and industry-specific requirements.
- Enhanced Resource Allocation: AI can optimize resource allocation, ensuring that network resources, storage, and computing power are efficiently distributed among ecosystem partners.
Why Adopting A Digital Marketplace Will Help Accelerate AI Adoption
The integration of inventive business models will help CSPs move from traditional, centralized structures to embrace dynamic, multi-faced ecosystems. And existing within a digital marketplace is a core facilitator in enabling these multi-faceted ecosystems.
CSPs like Telekom Deutschland are already leveraging these platforms, such as its B2B2X Marketplace, to showcase their capabilities and services. Digital marketplaces allow CSPs to not only tap into a rich network of potential partners and clients but also foster collaborative solution-building that can expand their business portfolios and drive scalability. A prime environment to foster innovation and solution diversity, digital marketplaces position CSPs strategically to adapt swiftly to evolving industry trends – especially AI.
Collaborating partners can integrate their distinct digital expertise and capabilities, crafting entirely personalized solutions tailored to meet specific customer requirements. For example, integrating AI services into a pay-as-you-go manufacturing solution opens up the tangible prospect of applying AI-driven enhancements throughout different stages of the manufacturing process. This approach allows CSPs to provide dedicated solutions that are easily upgradable and scalable, fostering ongoing customer engagement that nurtures trust, intimacy, and a sense of community.
AI-Powered Solutions for Specific Needs
Recent reports show that AI implementation rates and spending are set to grow exponentially. Within two years, GenAI adoption in the telecoms industry is expected to reach 48%, with spending to increase as much as six times, according to AWS.
Numerous CSPs have initiated the integration of AI into their operational frameworks. Just recently, Nokia solidified its dedication to exploring AI by unveiling its new Open Innovation Lab, where AI and ML remain a key focus of investment. Alternatively, SK Telekom, Deutsche Telekom, E& and Singtel also established an AI alliance earlier this summer aimed at collaboratively enhancing customer experiences and business opportunities.
While the telecommunications industry acknowledges the transformative power of AI, CSPs need to rethink their approach to AI implementation. By embracing an ecosystem orchestration model and leveraging digital marketplaces, CSPs can rapidly engage in collaborations with partners to create and promote solutions on a larger scale. This strategy enables CSPs to accelerate portfolio expansion and effectively harness AI’s potential to enhance services and drive revenue growth.
With a backdrop of increasing competition and declining profit margins, AI has the potential to reshape the telecoms industry. However, its success hinges on the adoption of an appropriate business model that can strategically position CSPs more favorably within their respective markets.