The turning of the calendar and preparation for a new year is often accompanied by the annual ritual of reflecting on the year that was and offering predictions for what is to come. There’s little debate that the story of 2023 centered on Generative Artificial Intelligence, namely ChatGPT, and its impact on virtually all industries. While AI will likely continue to dominate the landscape as we head into next year, it’s not the only issue at play for CSPs seeking to monetize 5G investments and businesses eager to accelerate growth in the face of persistent external challenges. With this as the backdrop, we offer our thoughts and views on what to expect as 2023 fades into 2024.
#1: Calming the AI hype
It’s hard to believe it’s only been a year since ChatGPT, the free-to-use AI system, was formally thrust upon the world. In the time since, it seems there isn’t a business or industry sector not attempting to leverage GenAI and incorporate some form of it into their respective business processes and operations. Communications service providers are no exception. With billing inquiries among the leading drivers of incoming calls to customer service centers, CSPs are eagerly seeking to adopt GenAI-powered solutions to automate and more efficiently manage customer inquiries in the hopes of reducing costs and freeing CSRs to allocate their time to more pressing service issues. The buzz around GenAI will likely subside somewhat moving into 2024 as companies of all types begin to realize its limitations and accept that, in some cases, it may not be applicable within their business environment. But even with reduced hype, expect GenAI to continue to be a major part of the conversation in the CSP universe and elsewhere across the business spectrum.
#2: True public cloud to drive digitization
Many CSPs seeking to modernize and digitize their networks to capitalize on massive investments in 5G networks remain hamstrung by their inflexible existing back-office technology platforms. These systems were primarily built to support legacy voice and data lines of business. They are unable to adapt or scale to support the new landscape CSPs are attempting to create, which includes selling a broader array of products and services to existing telco subscribers and engaging in partnerships with a wide ecosystem of non-traditional providers. Some have learned the hard way that retrofitting existing BSS platforms is not an option.
In recent years, more progressive CSPs have turned to cloud platforms to support these new lines of business. In the process, however, many have been sold a bill of goods by legacy vendors peddling private cloud services that offer few additional benefits and advantages beyond existing on-premises solutions. CSPs are slowly but surely getting better at understanding the world of cloud, and in particular, the difference between private and public cloud solutions. As they do, they will opt for public cloud solutions that offer agility, elasticity, lower total cost of ownership, and a much easier and more seamless path to deployment. Expect this CSP cloud epiphany to gain steam in the year ahead, leading to increased adoption of pure public cloud solutions across the industry.
#3: CSPs must adjust and adapt
As mentioned earlier, CSPs have invested heavily over the past several years in building modernized 5G networks to move away from reliance on commoditized connectivity as their primary source of revenue. Shareholders and investors now expect CSPs to leverage the full capabilities of these new networks to drive revenue growth through the introduction of new products and services, in many cases re-sold through partnerships and via participation in the growing number of online marketplaces. But so far, it's not happening.
A prominent telecommunications industry observer recently noted that while “billions of dollars have been invested in 5G…there has been little or no discernible impact on telco sales.” This reality is no doubt setting off alarm bells in CSP C-suites around the world. For many telcos, the main impediment to growth and expansion comes down to a failure to upgrade the structure and composition of the organization. To successfully market and sell products that fall outside the typical telco suite of offerings, CSPs need to think, act, and function more like their service provider partners who already have that expertise based on years of operating in that business. Whether it is home security monitoring, insurance products, or fitness trackers, evolving into a multifaceted provider of non-telco products and services means procuring expertise and right-fitting their organizations accordingly. It could be an ugly year ahead for those who attempt to conduct business as usual.
#4: A shift is afoot in the cloud markets
Amazon Web Services (AWS) remains the most widely adopted cloud computing solution, offering hundreds of features and the functionality enterprises of all shapes and sizes need to quickly and securely develop and host applications. AWS’ hold on the market has been aided by the fact that many companies are reluctant to endure the headache of changing cloud providers. Even as AWS prices have risen, their customers have chosen to stay on board rather than risk disrupting business operations. The cloud competitive landscape, however, is evolving. A whole host of cloud providers are now offering features and benefits with the same level of robustness as AWS, yet at a fraction of the cost. In the year to come, AWS’ continued market dominance could see significant pressure from existing and newer market entrants whose offerings could entice customers to pull the trigger on a cloud provider switch.
#5: Embracing the new normal in pursuit of growth
For quite some time, CSPs and enterprises across all industries have battled multiple environmental and macroeconomic challenges that have stymied growth. Continued economic pessimism, stubbornly high inflation, elevated interest rates, and geopolitical unrest are some of the prominent factors that have caused businesses to pause or delay growth investments. Many are now accepting that a return to some degree of normalcy is likely not in the offing, at least not in the near term. Companies seeking to move into new geographic regions or expand product portfolios are no longer able to sit idly by and wait for these external challenges to dissipate, prompting a resumption and resurgence of business investment activity in the year to come.
