A closer look at AI investment in the telecoms industry

Even before the emergence of the Coronavirus, there was an international increase in the demand for data. Mobile markets were becoming more saturated and there was strong opposition from legacy players, tech entrants, and startups. The global telecoms scene has been a battlefield for market share. Such pressures have consequently led to intense price wars for services and the result was the declining average revenue per user (ARPU).

This fierce competition comes from improvements in infrastructure and technology, meaning that telecoms can be compared, when looking at speeds in connection, pricing of services, and coverage. Companies have to transform their businesses if they wish to compete.

As already highlighted in our previous articles, having a substantial market share under the intense pressures of today and also planning for future operations means the significant investment in Artificial Intelligence. It is expected that the global telecoms industry will invest $36.7 billion on an annual basis in AI software, hardware and services within the next 5 years.

Because of its capabilities to deconstruct massive amounts of data, explain it in a contextual manner, provide requested information or analysis, and recommend necessary actions, Artificial Intelligence can help telecoms reduce costs and streamline by making their operations digital. This means leveraging the increasingly gigantic mine of data that is generated by customers and is passed through wireless networks. As an example, the amount of data that is transferred through AT&T’s wireless network has increased by a whopping 470,000% since 2007.

Reports from both Business Insider and Tractica focus on using AI to enhance the customer journey and more specifically, the main uses for AI deployments. Tractica’s report (which is free to download on their website) indicates that network operations, monitoring and management will account for 61% of the industry’s AI spending between 2016 and 2025. In then goes on to say that AI applications will include virtual assistance for customer service, marketing, intelligent customer relationship management systems, and cyber security.

“The telecom industry is ripe for AI-driven solutions, with their promise of lowering costs and boosting efficiencies through automation,” says Mark Beccue, principal analyst at Tractica. “Many telecom operators have begun to experiment and deploy AI-driven solutions in both customer-facing and internal organizations.” Business insider point out that $62 billion is lost by companies in the US every year as a consequence of bad customer experiences. Bad customer experience is an ongoing concern that has always plagued the telecoms industry. In 2018 the telecoms industry had the lowest average NPS (Net Promoter Score), a measure of how positively a company is viewed by customers, of any industry. Companies that are employing advanced analytics – accessed via AI – in an attempt to improve their image and the general customer journey, are witnessing revenue gains and perhaps more importantly, cost reductions within a few years of implementation. To maximise the impact AI has on their business, telecoms need to focus on and strategize a hybrid organizational model.