CSPs and the AI productivity opportunity

There is a general expectation that artificial intelligence (AI) and generative AI (GenAI) will help boost the economy. Goldman Sachs speculates that widespread adoption of GenAI could drive a 7% (nearly US$7 trillion) increase in global GDP and lift productivity by 1.5 percentage points over a ten-year period.

On a national level, growth opportunities apparently abound. According to data cited by the British government, 10-30% of jobs in the UK are "automatable" with AI. This should open the door to potential increases in productivity and the creation of new "high value" occupations.

One of the pressing questions for Light Reading is how big the AI/GenAI potential is for communications service providers (CSPs) to boost their top lines. In which parts of a CSP's organization is there most scope for AI-fuelled growth?

Omdia, a Light Reading sister company, addresses these issues in a recent report titled "AI productivity gains for CSPs: Assessing the AI opportunity across business functions" (subscription required). Leaning on methodologies developed by Edward Felten (Princeton University), Manav Raj (University of Pennsylvania) and Robert Seamans (New York University), Omdia has developed a ranking of AI opportunities in the telecoms sector.

The analyst firm does this by combining Artificial Intelligence Occupation Exposure (AIOE) scores (based on work done by Felten et al.) with workforce composition and average annual pay rate data supplied by the US Bureau of Labor Statistics. 

"As AI offers opportunities across many parts of the organization, CSPs should prioritize activity around roles within each business function where AI productivity benefits intersect with payroll contribution," says Stephen Myers, the report's author and an Omdia principal analyst (strategy and regulation). The report can be read as a CSP management guide on where to direct AI/GenAI efforts.

Key report findings

According to Myers, most workforces within service provider enterprises will benefit from adopting AI solutions. Opportunities are most plentiful in IT (computer and mathematical occupations), customer service (personal care and service occupations), management and financial administration. These four functions represent approximately 50% of the CSP workforce and 60% of the total payroll. Only field workforce roles will have little exposure to AI-addressable tasks. "Exposure" is when occupations can either be replaced or augmented by advances in AI. The AIOE methodology makes no distinction between the two.

From Light Reading's coverage of AI developments, there is arguably a tendency among CSPs to first view AI as a way to shave opex (and replace employees). It's the low-hanging AI fruit. "AI in the near term will likely drive operational efficiencies as those are the use cases easiest to identify and quantify," explains Omdia in its report "State of Play of AI in Telecoms." This narrower approach, however, is not the way to maximize the AI opportunity.

"AI solutions are not solely directed towards workforce replacement but should be viewed as productivity tools available to large parts of the workforce," says Myers. "Organizations adopting a broadly scoped AI strategy will need to focus on encouraging staff to identify opportunities where AI can improve their performance and build the skills for implementing these opportunities."

The search for increased productivity

According to Omdia's Telco AI Contracts Tracker, the number of AI partnerships and contracts that service providers have entered has steadily increased through 2023. The main focus of these deals, primarily using vendor solutions, has been customer service and network operations.

While increased operational efficiencies are a priority in both areas, Light Reading coverage shows growing industry enthusiasm for top-line growth. But it is early days. Vodafone, an AI/GenAI enthusiast, is trialing ways to assist contact center agents in accurately summarizing calls with upset customers – something agents can be found wanting when filling in online forms. This hinders proper analysis.

"We don't really see [AI] as a replacement for customer care," insists Vodafone CTO Scott Petty. "We see it as a virtual assistant to take away some of the drudgery work." If AI/GenAI allows Vodafone to offer a better-quality service, Petty adds, it might be able to charge more.

Moreover, Vodafone has put GenAI to work on software engineering. Petty describes it as a "virtual assistant" for writing code, boasting a 30% and 45% productivity gain during trials conducted with about 250 developers.

Greater network automation, courtesy of clever AI algorithms, is another way CSPs can boost productivity (over and above greater operational efficiencies). Nokia, for one, is working closely with many of its broadband operator customers to expose large datasets that can be used to train deep neural networks and allow CSPs to achieve much higher levels of automation in service provisioning, monitoring and network management.

"AI automation is expected to boost productivity in telecom, in much the same way as it's doing for other industries," says Filip de Greve, product marketing director at Nokia. "AI can make operator systems more intelligent and automated, enabling predictive and near-real-time actions. It's about detecting network behavior that humans may not detect and making links, associations and correlations that people wouldn't easily make."