Artificial Intelligence (AI) offers telecom operators a sizeable opportunity to transform operations. However, given inherent technology risks, early, accessible use cases will be mostly constrained to the back-office in customer services, marketing, sales, and network support. Furthermore, telcos face significant deployment challenges, making adoption slower than in other verticals. According to a new report by global technology intelligence firm ABI Research, competition, ecosystem partnerships, and, eventually, standardization will unlock telco AI value.

Although networking use cases will create value, and some will be deployed, the technology and telcos are not (yet) ready to make this jump. The back office aligns closely with AI use cases and has human touch points to mitigate its risk profile. In addition, compared to the network, back-office deployment offers a better commercial model with cross-vertical shared innovation and a more apparent return on investment model (time saved, headcount reduced, lower customer churn).

Reece Hayden, senior analyst at ABI Research, explains, "Back-office use cases make most sense, but it does not mean that they are simple for telcos to deploy. Telcos have highly siloed internal structures, significant knowledge gaps, and data challenges that will stand in the way of effective implementation.”

Early telco market leaders have developed partner-led solid strategies to navigate AI. Among these are e& (formerly Etisalat), who support their three-step GenAI integration strategy with Netcracker and DataRobot as partners.

However, the rest of the market remains in the very early stages of deployment and still faces significant commercial and technical questions. Hayden points out, "Most telcos still need to figure out who to partner with. Three key players are building strong telco value propositions. OSS/BSS vendors are rolling out GenAI capabilities built on their strong telco expertise, hyper scalers are relying on their AI expertise and market-leading models, and AI leaders like Anthropic are playing a more niche role as they try and define their commercial proposition.”

Telco planning, preparation, and implementation should be underway already, and securing strong partners will help open doors quickly and enable a long-term operational transformation. ABI Research expects that hyper scalers offer the best long-term proposition. Still, Operations Support System (OSS)/ Business Support System (BSS) vendors will undoubtedly compete, especially if they continue to develop their GenAI platforms. Beyond commercial partnerships, coop-etition will be a powerful force as it solves data availability and accessibility challenges for specialized use cases.

“However, the result will not be achieved through coop-etition and partnerships alone. Instead, as with most telco opportunities, ABI Research expects standardization to be key (like those defined in 3GPP). This process will help overcome the cost and deployment challenges, which are all too familiar to telcos,” concludes Hayden.

These findings are from ABI Research’s Defining Telco Strategy for BSS/OSS Artificial Intelligence Transformation report. This report is part of the company’s AI and Machine Learning research service, which includes research, data, and ABI Insights.