Generative Artificial Intelligence (GenAI) will have a significant impact on the global telecommunications sector, Analysys Mason said in a recent report.
The report sheds light on three scenarios designed to assist operators and vendors in understanding and preparing for the transformative effects of GenAI.
A McKinsey analysis said field and service operations account for 60 to 70 percent of most telcos’ operating budgets, so applying AI can offer real and rapid benefits. The industry has already faced a decade-plus of increasing cost pressure, and the returns on necessary infrastructure investments are barely outpacing the cost of capital.
One telco with several thousand call center agents built core AI models for forecasting and schedule optimization, with the resulting dashboards enabling 10 to 20 percent improvement in overtime costs and more efficient use of staff, as well as enhanced customer experience.
Additionally, the time required by workforce management to manage forecasting and scheduling was cut in half, and the company saw 30 percent greater flexibility in worker allocations across locations and job types through centralized scheduling that spanned multiple business units, McKinsey said.
Investment in GenAI will assume 30 percent of traditional marketing’s mundane tasks such as SEO, content and website optimization, customer data analysis, segmentation, lead scoring and hyper-personalization, says IDC report.
Analysys Mason said one of the central focuses of this technological advancement in telecoms has been the potential replacement of service agents within customer service teams by GenAI-powered chatbots. Presently, even the integration of GenAI to support customer service teams could result in a substantial productivity surge of up to 14 percent, a recent study indicated.
However, the ramifications of GenAI extend far beyond customer service roles. Tom Rebbeck, an analyst at Analysys Mason, emphasized its potential impact on diverse areas such as regulation, service offerings, industry structure, value chain, employment, and skills within the telecoms sector.
Although several major telecom operators have initiated experiments with GenAI, these endeavors have primarily been restricted to internal applications, such as meeting summaries. Few operators have fully embraced its broader potential, especially in customer-facing activities.
Among the most ambitious adopters is SK Telecom, actively engaging in internal GenAI projects, investing in Anthropic, and developing a telecoms-specific version of Claude, Anthropic’s AI model. SK Telecom’s initiatives indicate the technology’s future use in generic business areas like finance and legalities and telecoms-specific domains like customer service and networks.
The report highlights notable instances of operators already leveraging GenAI:
AT&T is partnering with Microsoft on Ask AT&T for use cases like coding, software development, language translation, network optimization, and customer service enhancement. AT&T in Q3 2023 reported operating expenses of $24.6 billion versus $24 billion in the year-ago quarter.
BT is focusing on internal applications to enhance customer experience, introduce products/services, and boost operational productivity. BT reported 5 percent drop in profit to £844 million during the first half ended 30 September, 2023.
Charter Communications’ Spectrum Reach is using GenAI for cost-effective TV advert production for local businesses.
Comcast’s GenAI-centric startup mentoring program, LIFT Labs, is resulting in partnerships or deals for all participating companies.
SK Telecom is utilizing ChatGPT and its custom language model (LLM) within its ‘A dot’ customer services app and investing in Anthropic to develop a telecom-specific LLM.
However, the impact of GenAI will transcend individual departments within telecom operators. The report emphasizes that new products developed with GenAI support will influence sales, marketing, and support teams. This could lead to changes in roles and a reduction in call center staff, impacting human resources departments and beyond.
GenAI’s broader influence might reshape the industry structure, predominantly affecting service divisions within operators, potentially reducing employment in customer services, sales, and marketing while maintaining relatively stable teams in network infrastructure. This could lead to a paradigm shift towards leaner, highly competitive service providers and a smaller number of wholesale network operators, altering the traditional vertical integration of operators.
However, the extent of GenAI implementation within the telecom sector might be contingent upon regulatory frameworks. The report highlights the White House’s Blueprint for an AI Bill of Rights suggesting customers should have the option to ‘opt out’ of AI interactions, which could impact GenAI usage. Divergent regional regulatory paths could emerge if rules are only enforced in select regions, potentially shaping the evolution of the telecom industry differently across various locales.
Baburajan Kizhakedath
