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Ryu Young-sang, the CEO of SK Telecom, a prominent South Korean telecommunications company, shared with CNBC that artificial intelligence (AI) is significantly enhancing operational efficiency within telecom networks.
During the Mobile World Congress (MWC) held in Barcelona, leaders from various global telecommunications companies emphasized their commitment to evolving from being seen merely as providers of basic internet services into more technologically advanced entities.
CEOs from several major firms elaborated on their investments in groundbreaking technologies. These innovations include advances in AI, the deployment of more sophisticated 5G and upcoming 6G networks, satellite internet initiatives, and the development of smart city projects. For instance, Makoto Takahashi, president and CEO of KDDI from Japan, outlined plans for a smart city project named Takanawa Gateway City in Tokyo, as well as collaborations with Elon Musk’s Starlink to introduce direct satellite internet access.
Additonally, Ralph Mupita, the CEO of MTN, which is Africa’s largest mobile network operator, discussed the company’s journey towards integrating wireless connectivity with fintech solutions like e-commerce, payments, lending, and insurance services. “The telco model has proven successful thus far, but we are shifting towards a platform-centric future,” Mupita noted, highlighting the company’s aggressive investments in areas beyond traditional telecom services.
Transitioning from ‘Dumb Pipes’ to Technology Companies
In recent discussions, the term “techco” has become popular within the telecom industry, symbolizing a shift towards operating like a tech enterprise. This concept focuses on the need for telecom companies to leverage their significant investments in technological advancements to provide innovative digital services that go beyond simple connectivity.
For many years, tech giants like Meta, Google, Amazon, Apple, Microsoft, and Netflix have thrived in an environment where digital content and communication can occur swiftly and seamlessly, enabling users to enjoy services without needing to manage complex infrastructures. This shift has placed telecom companies in a precarious position, often relegating them to the status of “dumb pipes,” merely facilitating data transfer without offering significant added value.
Industry leaders, such as Hatem Dowidar, CEO of UAE’s e&, reflected on the evolution of the telecom sector, recalling a time when services like SMS were revenue-generating staples. “The rise of over-the-top players has transformed the landscape, and many telecoms are now just conduits for data traffic,” Dowidar said, suggesting the urgency for these companies to adapt and innovate.
Adopting AI for Growth
According to Ryu Young-sang, AI is now pivotal for telecom firms in enhancing network performance and customer service. He emphasized that AI can serve dual purposes within the industry: improving internal operations and creating new business avenues. “As a telco, you can harness AI to optimize your network efficiency and customer engagement,” he explained, noting that as data centers expand, companies like SK Telecom will have an opportunity to play a significant role in supporting AI-driven applications.
While the dominant players in the data center market have typically been cloud computing leaders, SK Telecom is making strides to establish its own AI-capable data centers globally.
The Road Ahead for Telecom Companies
Many analysts assert that the notion of telecoms transitioning to tech players is not a new phenomenon. The telecom sector has long recognized the risks of obsolescence in the fast-evolving landscape of communications and media. Kester Mann, a director at market research firm CCS Insight, remarked that the concept of “techco” has gained traction particularly with the current advancements in AI technology. “AI’s potential to influence various sectors reinforces the need for telcos to expand beyond basic connectivity,” he noted.
Moreover, the development of “autonomous networks,” which can function with minimal human intervention, is rapidly emerging as a critical area of focus, according to Nik Willetts, CEO of the TM Forum. He indicated that advancements in AI are facilitating this shift from concept to reality, promising significant enhancements in efficiency and opportunities for revenue growth.
Jeetu Patel, chief product officer at Cisco, suggested that the surge in demand for bandwidth driven by AI will allow telecoms to retain their relevance. “AI will significantly increase the demand for network capacity,” Patel explained, predicting that as AI systems integrate into everyday functions, telecoms will be crucial in meeting this escalating need for network resources.
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