Global AI adoption presents communication service providers (CSPs) with a rare opportunity to transform and unlock new growth. In my latest report, The Dawn Of AI-Powered Telcos, I examine how leading telecom operators are responding to current trends by entering the AI infrastructure race and becoming AI‑powered from the core. They’re achieving this by pushing AI into their network, engineering, IT, business, service, and marketing operations. The report unpacks these developments and provides rich examples from operators in various regions.
Picks, Shovels, And Wires: CSPs Making A Big Play In AI Infrastructure On Their Terms
Many CSPs admit having missed prior opportunities during the rise of OTT (e.g., streaming services) and cloud computing and feel concerned that their traditional value proposition anchored in network connectivity (e.g., voice and data) is too commoditized. That’s not something they want to repeat during the AI boom. In fact, dozens of well-known CSPs around the world are boldly entering the AI infrastructure race, challenging the established AI “picks and shovels” companies (e.g., chipmakers and hyperscalers). Leading CSPs are realizing their unique advantages in domestic markets where local regulations over data residency and data sovereignty affect the use and distribution of AI (solutions), especially in highly regulated fields like government, healthcare, life sciences, financial services, energy, and utilities.
Many CSPs have already made major infrastructure investments to build up their data centers, GPU compute power, and network capacity to power the local AI economy in their core markets. Early signs of success — judged by how fast they sell that capacity — are fueling the momentum. This momentum will continue to build as long as supply-side shortages remain, evidenced by current customer waitlists and contracted revenue backlogs.
New Income Streams And Delivery Methods
Owning the underlying AI infrastructure is an asset to adjacent value realization, enabled by distribution of industry-specific AI solutions to the edge (i.e., AI as a service). CSPs are springing up AI factories — often in partnership with chip manufacturers — to provide AI model companies, cloud providers, and enterprise software companies with specific industry pedigree. Then, through contracts with original equipment manufacturers and end-user device manufacturers (e.g., personal electronics, smartphones, wearables), CSPs distribute those solutions to buyers and consumers on the edge (e.g., industrial IoT fleets, smart factories, businesses, consumers) by using their transport networks for two-way connectivity (via fiber-optic cables, 5G, DCI) and charging fees for each call.
To optimize and allocate the network capacity for the so-called “AI highway” and ensure that AI inference traffic doesn’t jeopardize the voice and data traffic and CX quality, CSPs are implementing multipurpose, convergent AI-RAN (AI-radio access networks) or O-RAN (open radio access networks). In the future, CSPs may transition to AI-native and AI-only networks and ultra-fast 6G.
The New Age Of AI-Powered Telcos Requires A Transformation
Besides the new and exciting commercial opportunities, CSPs are also changing from within by deploying AI in internal functions and operations. Along with the human workforce that must be upskilled and taught to work with AI, internal data foundations and fragmented systems must also be “upgraded” and restitched. To unpack this and obtain examples of how CSPs are driving tangible outcomes, we interviewed dozens of telecom domain experts and current executives in charge of IT, AI, strategy, operations, transformation, and procurement. A view that most of them share is that “the time for AI experimentation is over; the time for production has come.”
Notable AI-led telecom transformation initiatives and outcomes include:
Network & Engineering
Optimized energy consumption and hardware utilization
Predictive fault detection (at cell level) and prevention
AI‑driven network capacity planning
Digital twins (replicas) of transport networks
Autonomous, self‑healing networks
Business & Operations Support Systems
AI copilots for field technicians and service agents
Agentic AI workflows across domains and functions
Hyperpersonalized interactions across digital channels
Proactive issue detection and resolution (pre-complaint)
Enterprisewide agentic operating models to run, orchestrate, and govern AI agents
CSPs Are At A Pivotal Inflection Point — Don’t Delay At The Start Of Your AI Voyage
AI is changing the economics of telecoms at a rapid pace. Those that successfully scale AI across their business will be best positioned to capture new growth and remain relevant in an increasingly intelligence-driven economy. Our latest report helps telecom digital, business, and technology leaders validate ideas, get inspired, and get started.
To help Forrester clients on their AI voyage and guide cross-functional impact, we’ve dedicated an entire content library housed in our AI research hub and collated over a thousand known business use cases for AI in Forrester’s AI Use Case Catalog.
Feel free to get in touch with me or schedule a guidance session by using this link.
Forrester clients can access the full report here.
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