Leveraging AI to transform telco’s commercial models

AI is reshaping the commercial landscape for telecom companies. It offers innovative solutions that empower telcos to operate with heightened efficiency and precision. In this Viewpoint, we explore how leveraging AI optimizes individual transactions, can boost customer engagement by over 15%, and reduce operational costs by up to 30%. As telcos embrace AI-driven tools, the potential to accelerate growth and gain a competitive advantage becomes increasingly evident.

AI is a rapidly evolving field that encompasses a variety of techniques and approaches to create intelligent systems capable of performing tasks that typically require human intelligence. AI is fueled by advancements in various subfields, including:

Natural language processing, which enables computers to recognize, understand, and generate text and speech
Computer vision, which enables computers to interpret and understand visuals such as images and videos
Predictive analytics, which allows for predictions based on historical data, statistical modeling, data mining, and machine learning
Generative AI (GenAI), which focuses on creating new content, such as images, text, code, simulations, and audio, among others

By seamlessly integrating various subfields, telcos unlock a diverse range of promising AI use cases, tailored to the maturity of the company and industry, the complexity of the desired solution, and the practical applicability of the use cases. In customer engagement, in particular, AI excels at personalized approaches, proactive service enhancement, sentiment analysis, and churn prevention. Core processes benefit from automated knowledge management, enterprise-wide search, and dynamic content generation.

On the technology front, substantial improvements come via demand forecasts, infrastructure monitoring, legacy code analysis, and software development. These applications demonstrate AI’s versatility and impact across multiple facets of telco operations and promise enhanced efficiency and innovative solutions.

A study conducted by Arthur D. Little (ADL), comprised of 70 chief experience officers (CxOs) from world-class communications service providers (CSPs), identified the main benefits leveraged through daily use of AI (see Figure 1):

71% emphasized improved customer experience (CX) as a primary AI benefit, including the customer-facing side of personalized sales and as an active tool for agents to improve customer support.
63% use AI to enable intelligent network optimization and predictive maintenance, leading to improved service quality and reduced downtime.

These benefits come primarily from GenAI. These AI models hold immense potential for various industries, with commercial applications for sales, marketing, and customer relationships, among others. As GenAI goes beyond automating tasks, it introduces innovative solutions that companies can use to accelerate opportunities to cut through complexity in customer support.

show modal — Figure 1. Main benefits of AI

ENHANCING DIGITAL ADOPTION

Many telecom operators worldwide still lag in understanding the significant impact of digital channels on the evolution of channel mix and in understanding the methodologies required to seamlessly apply AI to enable such digital adoption by telecom operators. According to a recent ADL Blue Shift Report based on in-depth research, market experience, an online expert survey, and interviews with leading players, only 16% of the 49 organizations surveyed had large-scale investments in GenAI in 2023; 22% had limited investments in the area, with the rest having no investments or no awareness of any investments within the organization.

Attitudes toward GenAI are also a barrier, as documented in Blue Shift:

51% of surveyed experts and organizations had limited familiarity with the subject.
18% had strong familiarity with AI use cases within their organization.
20% of the surveyed organizations had no familiarity with the technology.
4% were aware of technology but refused to implement it.

Efficient utilization of these new technologies and digital formats can yield significant benefits, particularly in three key areas of value:

Operational model and cost structure. Digital channels significantly reduce the need to maintain multi-format physical channels, as well as remote call centers and commissions with third parties. Consequently, the investment made would be directly offset by the savings and cost efficiencies produced. For example, ADL analysis shows that 30% more customers can be served by a single agent, and customer response waiting time can be reduced by 20% through a well-developed AI digital channel where customers are greeted by a hybrid AI-agent profile first.
CX. AI can enhance engagement and improve CX at every stage of the lifecycle, from initial contact through the sales process and quality assurance to the management of existing customers to reduce churn probability. Our studies show that SMS/email content and visuals adjusted, based on consumer lifestyle/microsegment, generate a 15% higher positive response, increasing the net promoter score (NPS) faster than with traditional mechanisms.
Commercial efforts. The availability of richer information and insights can assist in personalizing and adjusting the value proposition, promotions, pricing, and conducting more effective cross-selling and upselling efforts. For example, ADL analysis indicates that a text-to-image model creates custom “apparel” that can be tailored to a “unique” service, resulting in a 40% increase in platform browsing and attention from customers.

The AI revolution has the potential to help telco’s commercial channels evolve from personalized sales to proactive service. Yet bridging the gap between potential and profit requires more than just technical expertise. A strategic roadmap is key to ensuring that the company does not fall behind and successfully implements AI commercial capabilities, as they must become part of daily operational routines. We propose an effective and seamless three-step approach to activate and enhance these capabilities. As we illustrate later in this Viewpoint, this approach focuses first on laying the proper foundations for AI adoption, followed by strategic implementation and development, and ends by optimizing the engine for continuous improvement. By following this roadmap, telcos can transform AI from a futuristic ideal to a potent engine for innovation and commercial success. But first, let’s examine how AI affects the sales pro