How generative AI is reshaping telecommunications
- Silvia Candiani, VP Telecommunications, Microsoft
- Prajakt Deotale, Sr. Digital Advisor Telecommunications, Microsoft
Generative artificial intelligence (GenAI) is already changing telecommunications. That’s better for the industry, but is it better for each telecommunications company? We say yes, but only for the companies who embrace it forcefully. We’ve studied the available opportunities for generative AI and identified the use cases that promise the most benefit. Our full analysis will be available soon in a white paper on Microsoft for telecommunications, but we’ll give you an early summary here.
How big is generative AI?
AI is very big. Industry-changing, in fact. Bloomberg Intelligence recently reported that the generative AI market will blossom to a staggering US$1.3 trillion in the next 10 years. McKinsey & Company agrees. They project a telecommunications productivity increase of US$60B-$100B in customer service, marketing, and sales, as well as app development, network insights, and operations.
Many forces drive generative AI’s growth, including AI-enabled smartphones, on-demand hyperscale computing, and large language models (LLM). Over time, it will evolve with training infrastructure expansions, inference devices for LLMs, digital advertising, specialized software, and services.
Generative AI defines the future of telecommunications
Generative AI empowers telecommunications to work with vast amounts of data, identify patterns, and generate novel solutions, promising to transform traditional practices and foster industry-wide innovations. By embracing generative AI, telecom companies can overcome challenges, unlock new revenue streams, improve operational efficiency, and deliver exceptional customer experiences. We see six primary reasons to aggressively adopt generative AI:
1. Telco to “Techco”
A recent PwC Global CEO Survey reveals that a staggering 46% of telecommunications CEOs believe their companies will not survive another decade on their current path. Technology can reverse this fate. With generative AI, a technology-forward company – a “Techco” – can drive innovation, reduce cost, create new revenue streams, and deliver exceptional customer experiences.
2. Cost imperative
About 60% of most telecommunications companies’ costs are in personnel, energy, external services, leases, and capital expenditures, all of which are rising. Inflation will chop at least 3-5% off most telecommunications’ EBITDA margins, according to Bain & Company. However, generative AI can optimize operations, automate processes, and reduce inefficiencies, leading to significant cost savings and improved financial sustainability.
3. Escalating customer expectations
The 2022 State of Customer Churn in Telecom report shows that customer loyalty to telecommunications providers is down 22% post-pandemic due to poor customer experience. Generative AI-powered solutions, such as chatbots and AI-assisted customer care, enable telecom companies to enhance their quality of experience (QoE) with efficient and personalized customer support.
4. Network complexity
As the rollout of 5G accelerates and LTE networks are refreshed, networks are expected to grow by 73% in the next five years. That’s more than five times the rate of the last five years. Generative AI helps by optimizing network planning, resource allocation, and maintenance processes, ensuring efficient and reliable network performance.
5. Fraud mitigation
In 2021 alone, telecommunications fraud resulted in an astonishing $39.9 billion in global revenue loss, equivalent to 2.22% of total industry revenue. Generative AI-powered fraud detection systems can analyze vast amounts of data, identify anomalies, and proactively mitigate fraudulent activities in real time, safeguarding revenues and customer trust.
The industry’s energy consumption accounts for approximately 3% of global energy consumption and, according to Boston Consulting Group, could rise to a staggering 14% by 2040. Generative AI helps optimize energy usage, reduce carbon footprints, and instill sustainable practices for a greener and more environmentally conscious future.
Where should you start with generative AI?
Generative AI will revolutionize so many facets of the telecommunications industry. But where to start? With so many potential applications, it is important to identify the most impactful and promising use cases. We and our teams at Microsoft tackled that question through a rigorous evaluation of the 11 top use cases along five important parameters: business value, technological feasibility, market demand, scalability, and ethical and legal considerations.
Our analysis showed three use cases with the greatest promise to transform the industry and drive substantial value:
- AI-powered chatbots to improve customer experience.
- Virtual assistants or copilots to enable and enhance self-service.
- Knowledge management to empower employees and improve productivity.
You’ll find our full analysis in our white paper, with charts and data to help you apply the findings to your environment.
Accelerate your generative AI journey with Microsoft
Partner with Microsoft Azure OpenAI Service to transform your telecommunications organization with AI-driven solutions for enhanced operations, innovative services, and exceptional customer experiences. The service offers many opportunities to explore AI-driven solutions for your organization, including these:
- Envisioning workshops bring experts together to ideate and identify use cases and create a clear roadmap.
- Hackathons and innovation challenges put your team with AI experts, developers, and data scientists to build proof-of-concept solutions that use generative AI.
- Strategy briefings and value analysis dive into technical aspects, industry best practices, and potential business outcomes, providing clear ROI insights.
- Rapid prototyping applies pre-built AI models, development tools, and secure cloud infrastructure to create proof-of-concept applications.
Microsoft has been collaborating with TM Forum on AI for several years and contributed to their Deploy AI at Scale playbook, an excellent resource for plotting your AI journey. A key theme for the TM Forum Digital Transformation World 2023 event is AI at Scale, where Microsoft and our partners will be sharing successes, best practices, and technology innovations across many stages.
Your future with generative AI starts today
The question of generative AI is not “when,” but “how.” How will you use it to transform your business? Generative AI is already revolutionizing the telecommunications industry with intelligent automation, predictive analytics, and optimized decision-making. The industry needs this now to enhance its speed, efficiency, and adaptability.
It’s clear that generative AI holds immense promise for opening new avenues of growth and innovation. Microsoft wants to help you keep that promise for your organization to pave the way for a future in which your intelligent systems drive efficiency, enhance your customer experiences, and shape the way we all communicate.