Since 2012, communications service providers (CSPs) have poured $3.6 trillion into building an infrastructure that is the backbone of modern communication. Cloud service providers, software companies and over-the-top (OTT) competitors have all built their own business empires, propped up on this colossal infrastructure.
However, for CSPs, the investment hasn’t paid off. Where broadband speeds have continued to climb upward, telco revenue has not seen any growth. Between 2014 and 2022, telcos’ annual revenue dropped from $1.99 trillion to $1.98 trillion, according to research from Alianza and Omdia.
Unrealized opportunities to capture market share
Telephone service remains the backbone of communication and there is ample opportunity to tap this resource. Yet, few new services have been developed by telcos to capture new markets or to significantly increase the value derived from their existing ones.
For years, CSPs’ business mantra has been to roll on predictable cycles that prioritize reliability over time-to-market and continuity over innovation. This continuous layering of new services on top of existing infrastructure and single-purpose network functions has created a significant amount of tech debt within CSP networks. Over time, this complexity has slowed innovation, increased operational costs, and made modernization far more difficult to achieve.
A host of macro issues are to blame as well. For example, market saturation in many regions has made it difficult for providers to acquire new subscribers. On top of that, the entry of new nontraditional competitors, from cloud-based services to satellite providers, has eroded CSP dominance across services delivered over narrowband, broadband, and mobile access, intensifying pricing pressure across the board. This is made worse by the rise of OTT services from behemoths such as Apple and Meta that have moved customers away from conventional telco services like telephony and SMS, causing a deeper dent in revenue.
Alianza sums up the situation well: “operators have built the roads, but others are collecting the tolls.”
However, now there is an opportunity to regain their competitive edge and reestablish themselves as key innovators in the digital economy. By embedding AI across their operations, they can unlock new revenue streams and finally close the long-standing monetization gap – but before that, they must modernize the network.
Change is underway
The technological, operational, and cultural barriers are slowly but surely coming down. Modernization work is already underway with telecom companies embracing hosted cloud services and cloud-native network functions for their core infrastructure.
Employing cloud methodologies allows telcos to easily integrate powerful technologies and tools like Kubernetes, Terraform, Ansible, and so on, which in turn enables them to automate infrastructure management tasks, expedite deployment, and better respond to market demands. In today's terms, that means instead of sitting on the sideline, there is now an opportunity for telcos to seize the value creation opportunities of the AI economy and turn things around.
The next step forward
AI presents many opportunities for CSPs to generate new revenue streams, by layering intelligent, high-margin solutions on top of their existing offerings or enabling others to do so.
In the voice arena, AI is particularly powerful, enabling applications such as intelligent call screening, fraud protection, transcription, translation, and so on. But that’s only the beginning. Fierce Network reported that British Telecom is working on a new voice technology that uses AI to detect breathing patterns in emergency services calls. If realized, this can help responders better able to prioritize calls and act on them.
A way around
An Intelligent Communications Fabric introduces a modern three-layer architecture purpose-built to help service providers simplify the development, delivery, and monetization of next-generation communications services, unlocking entirely new revenue opportunities.
As an industry-leading implementation, Alianza’s Intelligent Communications Fabric empowers CSPs to lead in the emerging era of AI-driven voice networks and services. The Infrastructure layer contains the foundational data plane, signaling network functions, and application servers, along with the operational and billing support systems on which all services are built. The Orchestration layer leverages real-time insights, abstracted APIs, and AI-driven optimizations, enabling CSPs to harness every element of their infrastructure and rapidly create differentiated communications services. This approach helps reverse years of accumulated tech debt. Lastly, the Experience layer is where the true monetization of the Intelligent Communications Fabric is unlocked for the service provider, helping CSPs leverage AI and other tech innovations to build new, revenue-generating solutions and experiences.
Representing the foundation for this transformation, Alianza’s Infrastructure Layer comprises a world-class portfolio of voice signaling and media network functions, application servers, and cloud service offerings. Alianza’s solution portfolio is organized into three product suites that address diverse service provider demands. Alianza Core delivers traditional telecom-grade network functions that the CSP deploys, owns and operates. Alianza Fusion enables operators to leverage the capability and functionality of the Alianza Core portfolio without the burden of purchasing, deploying, integrating, and managing platforms. Alianza One is a full-stack, cloud-native communications platform delivered as a service, enabling CSPs to focus entirely on their end-user offerings rather than the platforms on which they are deployed.
Get in touch to learn how the Alianza Intelligent Communications Fabric can help revive your stagnating revenues.