This article discusses some findings from a research programme conducted by STL Partners, in partnership with FutureNet World and Nokia, between December 2020 and February 2021, comprising a survey of 100 individuals and 15 in-depth interviews with leading operators about their automation journeys. The report gives an overview of global trends in automation and shows how operators’ automation progress is impacted by differentiating factors such as operator ambitions, geography, and market maturity. The full 20+ page report can be downloaded for free here. 

For most telecoms operators, AI and automation is a critical part of their transformation. But it’s important to understand what is driving this. What is the end goal and how, and when, can AI and automation be an enabler of this?

We surveyed more than 100 telco executives and asked them about their ambitions. While there are many flavours of aspiration, we identified two main buckets that operators fall into:

1. Growing connectivity: Telcos that believe that the network is their most important asset and differentiator and that this will continue to be the case into the future. This leads them to see future growth in increasing the number of subscribers for their key telecoms services (e.g. voice, message, connectivity) and doing so in an efficient and low cost manner.
2. Moving beyond connectivity: Telcos that believe that, while the network is an important asset, increasingly they will need to offer new products and services in order to grow revenues. This means an increasing move to offering SaaS applications and platforms to customers and requires a significant departure from the operating models, skills, capabilities and ecosystems that operators take part in today.

Considering the departure from what they have successfully delivered for the last hundred years and more, it was notable how many operators believe that moving beyond connectivity must be their future aspiration. More than 70% of those surveyed identified this as their ambition.

Figure 1: Changing ambitions in the telecoms industry bring automation to the fore

Source: STL Partners telecoms survey, March 2021, 100 respondents

Different priorities and requirements: how ambitions impact AI and automation

So how does this shift in operators’ ambition impact their investment in AI and automation technologies?

Our survey indicated that the one key driver, over and above anything else, in investing in automation is to reduce the operating costs of existing / legacy networks and services. While this driver is the same across those whose ambition is to grow connectivity and those that wish to move beyond, there are differing reasons why this is crucial for them:

• Growing connectivity: The only way that telcos will succeed to increase their revenues with networking products and services, is if they become highly lean and efficient. To do this, to reduce their operating costs in order to increase their margins, operators are looking to automation. Being more highly automated means fewer manual processes, reduced headcounts, fewer errors and faster provisioning – all of which should reduce operating costs and enable operators to differentiate based on superior customer experience.
• Moving beyond connectivity: While these operators see their networks as being only one of their key assets for the future, they too, need automation to reduce operating costs. In order to invest the resources required to enter new ecosystems, build new services and platforms and create new partnerships, operators will need to reallocate resources from elsewhere. Reducing operating costs for existing and legacy networks provides a route to doing this.

Figure 2: Regardless of ambition, reducing cost of existing networks is the one key driving force for automation for operators

Source: STL Partners telecoms survey, March 2021, 100 respondents

In comparison to reducing operating costs, some of the other key drivers align more strongly with one ambition than the other. Those trying to move beyond connectivity see automation as a means to reduce time-to-market on new services and increase innovation. In comparison, those focused on growing connectivity are looking to reduce complexity and enable new services that are closely tied to their networks such as networking slicing.

Automation and innovation: a new dynamic

This desire by over 70% of operators to move beyond connectivity, creates new demands. In particular, operators need to become more effective innovators. To be truly innovative (and achieve the growth that comes with this), operators should look to create a fast fail environment. Among other things, this means that the designing, provisioning and scaling of a new service needs to be as low an investment and as rapid a time-to-market as possible. Automation of orchestration and provisioning is essential to drive this agile economics.

Automation will also be critical for managing the new partners and ecosystems that will be required by operators to offer applications and platforms. Today, our survey showed that partner management and onboarding is the least automated part of the service and networks domain. Improving this, including API exposure to external parties (partners and customers), will be critical to operators success in moving beyond connectivity.

Conclusion: what this means for operators

Operators wishing to move beyond connectivity must think and behave like technology companies and build automation into products and services from inception. Previously, operators have often taken the viewpoint of getting a service up and running and then automating in order to scale it. To reap the full rewards of network and service automation, this approach will not be helpful.