Telecom companies are adopting generative artificial intelligence (AI) and driving a shift in the industry. Initially focused on efficiency, this technology is set to change operations, customer service and market positioning.
According to a PYMNTS Intelligence report, “Rerouting the Telecom Industry: Generative AI’s Impact on Communication Services,” in collaboration with AI-ID, as new AI applications emerge, telecom operators face both opportunities and challenges.
Telecoms are deploying generative AI to cut costs, focusing on automation and streamlining operations. According to the report, 67% of telecom executives believe that generative AI can significantly enhance IT service provision. More than half of communication service providers (CSPs) are exploring AI solutions like chatbots and virtual assistants to optimize customer service and internal operations.
Despite this efficiency drive, telecom leaders may be overlooking the potential for AI to spark broader industry transformations. Consider just 18% of telecom operators have implemented generative AI across multiple company processes, while 70% have pilot programs underway.
Over time, the value of these AI applications is projected to increase dramatically, from $350 million today to an estimated $20 billion by 2030, signifying the long-term growth potential of AI integration in telecom.
Generative AI is already reshaping telecom operations, driving new levels of network performance and customer interaction personalization. Telecom providers are integrating AI to enhance service offerings and streamline complex operations.
For instance, a telecom operator in the Asia-Pacific region deployed AI-driven customer value management systems, achieving a 10% reduction in customer churn and a 20% increase in cross-selling.
Given these promising results, AI adoption is spreading, with 87% of telecom executives seeing high potential for AI to positively impact both customer experience and relationship management.
But concerns about privacy and security risks remain. Consider 80% of telecom leaders express concerns about the security implications of generative AI, particularly regarding cyberthreats and large language models (LLMs). Despite these challenges, 53% of telecom companies have created centers of excellence for AI initiatives.
Telecoms are focusing on localizing AI solutions to better serve regional markets. NTT, for example, introduced Tsuzumi, a generative AI platform tailored to the Japanese market with advanced language processing capabilities.
This trend is not unique to Japan — global partnerships like that between SK Telecom and Deutsche Telekom highlight the importance of developing AI systems suited to multilingual and diverse regional needs. As telecom companies implement these localized AI solutions, they are also managing a complex regulatory environment.
According to the report, 61% of telecom companies express concern about data security and governance issues, especially given the growing divergence in AI regulations between markets.
For instance, the European Union’s stringent AI regulations, including the EU AI Act, pose a challenge to telecom operators, who risk penalties for noncompliance. Meanwhile, U.S. regulators are taking a more developer-friendly approach, which adds to the challenge for global telecom operators, who must adjust to varying regulatory environments.
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