Telecom operators are positioning themselves as players in the AI field, targeting enterprise clients looking for AI services. Historically, telcos have primarily dealt with connectivity, but as demand for AI solutions surges, they are expanding their offerings to include AI infrastructure and productivity tools.
This move holds growth potential, especially as traditional revenue sources become less lucrative. In countries like France, South Korea, and the UK, telcos have begun to see significant revenue from AI offerings. These operators are transitioning from competing on network speed to acting as complete AI solution providers. Instead of merely providing connectivity, they now offer computational resources and platforms required for large-scale AI deployment.
Corporate demand drives this change. Many companies find the costs and intricacies of developing in-house AI capabilities prohibitive. Here, telcos can provide curated, ready-made solutions, minimizing both risks and time delays. Yet, many in the telecom industry face challenges with the sluggish pace of transformation. In the rapidly evolving AI landscape, this could be a disadvantage.
Telcos are testing various methods to monetize their AI capabilities. Some focus on providing raw computational power through AI infrastructure services like GPU-as-a-Service. This is particularly appealing to businesses with stringent security and compliance needs. Beyond infrastructure, these companies are collaborating with AI platform developers to offer enterprise-specific solutions.
Additional revenue can be derived from services that tailor large language models to better suit specific client needs. This capability allows companies to access customized AI without investing in extensive in-house expertise. Also, some telecom providers are offering productivity tools powered by AI, which target specific business challenges.
Telecom operators have distinct advantages over conventional cloud providers in the AI space. They possess the necessary infrastructure, including vast networks and data centers. This existing infrastructure allows them to provide AI services at competitive rates. Additionally, data sovereignty is increasingly vital to businesses, especially those in regulated industries. Telecom operators can offer local, secure solutions that keep data within national borders.
Key players in this space include Orange, which collaborates with French GenAI startup LightOn, and SK Telecom with its personal AI agent services. Swisscom’s partnership with Nvidia underscores its focus on high-performance AI infrastructure.
However, several challenges loom for telcos eager to scale their AI ambitions. Internally, breaking down silos and upgrading legacy systems represents a significant hurdle. The talent shortage in AI expertise also poses a problem, as telecom providers often find it difficult to offer competitive salaries. Finally, hyperscale cloud providers like AWS and Google Cloud present tough competition with their advanced AI capabilities and established customer relationships.
Despite these challenges, for telcos able to innovate and adapt, the AI-as-a-Service market represents a prime opportunity to secure a larger slice of enterprise AI spending in the near future.
