AI's Telecom Revolution

Telecom operators worldwide are facing a profitability crisis. After investing billions in 5G infrastructure with minimal revenue gains to show for it, the industry finds itself at a critical juncture where transformation is no longer optional but existential. Michele from Optiva brings over three decades of telecom software experience to illuminate how AI is becoming the industry's lifeline.

The conversation quickly establishes why this moment is different from previous technology waves. While neural networks have existed for decades, today's convergence of massive data availability, computing power, and industry necessity creates the perfect conditions for AI adoption. For telecom companies specifically, AI offers a two-pronged solution to their financial squeeze: revenue enhancement through hyper-personalization and cost reduction through autonomous operations.

What makes this transformation particularly fascinating is the concept of the "segment of one" – moving beyond traditional customer segmentation to truly individualized service offerings. As Michele explains, the data to make this possible already exists within telecom billing systems, capturing user behaviors, preferences, and patterns. When AI is applied to this rich dataset, it can create personalized offerings tailored to each customer at the right time, dramatically increasing conversion rates.

Perhaps most compelling is the practical impact already being realized. Vodafone's implementation of AI agents now handles 70% of customer interactions without human involvement, simultaneously reducing costs and improving customer satisfaction. Meanwhile, dynamic pricing initiatives are helping operators maximize infrastructure utilization through real-time rate adjustments based on network conditions and customer needs.

The challenges remain significant. Telcos' conservative approach to change stems from legitimate reliability concerns – as Michele notes, "95% accuracy is not good enough for the network" when service disruptions impact millions. Yet the financial pressures force a reconsideration of this cautious stance, with AI adoption becoming gradually more autonomous as systems prove their reliability.

Ready to discover how your organization can leverage AI to transform customer relationships while dramatically cutting operational costs? The telecommunications revolution is just beginning – and its lessons apply across industries facing similar disruption.

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• 14:04 (Cont.) AI's Telecom Revolution

Transcript

Speaker 1: 0:01

Hey everybody, Really excited for this guest and topic. Today we talk about the disruptive change that AI is making in telecom and much more, with an innovator in the field at Optiva Michele. How are you?

Speaker 2: 0:16

I'm doing very well. Thank you, ivan Well thanks for joining.

Speaker 1: 0:21

I'm glad to be here.

Speaker 2: 0:22

thanks for joining.

Speaker 1: 0:23

I'm glad to be here, I'm glad to have you. You guys do a really interesting work.

Speaker 2: 0:32

Maybe introduce that yourself but also who is Optiva and what's the genesis of the company over the years. Yeah, let me do that. Well, first of all, about myself I've been now more than 30 years in this industry that you can call it the telco software industry. So from day one in my career, I've always been focusing in selling software to telcos. If you know about telcos, you know USS or BSS different solutions. It's been fun and I've seen a lot of things evolve in that industry and, of course, I'll tell you all about it. But about Optiva Optiva has actually been in the market selling to operators billing and charging solutions since 99. It has evolved and it has acquired different assets In 2014, actually the BSS assets from Nokia Siemens at the time and again has been in the market selling worldwide successfully BSS solutions. You know billing and charging solutions.

Speaker 1: 1:46

Yes, fantastic. I go back 25 years in telecom, so you have me beat by a few years, but now is definitely the most exciting time in the industry. Ai is going everywhere right now. How are you seeing the shift from you know the lab and you know speculative use cases to really practical? You know the lab and you know speculative use cases to really practical. You know results-driven applications.

Speaker 2: 2:12

Yeah, well, let me tell you what I see in the industry first. I mean, the telco industry is exciting, but I must say it's not going through the best of times, right? I think they missed a few opportunities in the last decades, being one, of course, the OTT wave and having some serious return on the, if you will, the internet revolution. But more recently, what they have done, rightly so, is to invest quite a lot in their infrastructure and getting new technology deployed, as 5G more specifically, and that cost them quite a lot of investment and money and resources, but without necessarily a great return, right. So the cost went up while the revenue and nobody realizes that, but 5G has been seamless in terms of price Meaning as a user. In terms of price meaning as a user, I don't think you've seen anywhere in the world a premium price for 5G. So for the telcos that has been a problem because the investment was between the licenses and the infrastructure has been enormous and it has not finished, by the way, while there hasn't been a lot of return, so definitely, the margins have been going down and sometimes even the overall revenue. So there is a little bit of a challenge in the industry on trying to do two things Increase revenue on one side and decrease cost as much as possible, of course, to increase profitability overall. That has not been easy, but again, maybe AI can come to the rescue.

Speaker 2: 4:14

There's been already a strong adoption of the cloud and that has helped somehow, for for sure, in the efficiency and agility. But the AI side could really contribute. I believe in that. I mean AI will contribute in so many ways in so many industries, but telco for sure can take advantage of that. Of course, you know, to adopt AI and make it really work is not just about technology. There needs a mindset change and that will need to happen. But the reason why AI in general has been successful in the last few years you know, neural networks were there 30 years ago. I actually started in software development and I can tell you I was building neural networks 30 years ago. The problem is that at the time there were two things missing. One is the data, in terms of quality of data on one side, and then the amount of data that is available today and the computing capability to actually teach to those systems.

Speaker 2: 5:45

As you know, they're really in need of a lot of compute resources, right? I mean, all the AI companies are building their own nuclear plants right now to make sure that they can keep up with the energy consumption of these systems. But in any case so AI is booming at this time because of that and, of course, again, tech costs are there to reap the benefits and, of course, as we were saying, they need to get both sides of the coin one from a revenue perspective and the other one from a cost perspective. Now, from a revenue point of view, and that, sorry, I just made a lot of conversation Going back to your specific question.

Speaker 2: 6:47

Where do I see the actual benefits in practice and from a revenue point of view? There is the capability to bring new services to bear, specifically in the AI space. Meaning I've seen a lot of telcos stepping up and providing sovereign AI to the countries. They're in right Because, also, you know the usual data privacy and data issues and so on. So they are selling to the public sector or even enterprises that want their own AI in their own country and telcos are very credible in that space. They are usually a trusted partner, a technology partner. So that definitely is a potential new service that they can sell and I see a lot of infrastructure being built in that sense.

Speaker 2: 7:47

But specifically on the revenue side, what AI brings is the capability to personalize the services right. I mean with the right information in the real time. I mean with the right information in the real time. Ai could have an engagement with an individual offering specific services, this person or commercially being capable of understanding the person so that they can really engage and offer something that more than likely that individual would buy. And then being overall efficient in sales and marketing, and then being overall efficient in sales and market and on top of that, provide dynamic pricing. And that's where things you know Adoptiva. In that particular area we do two things. One, we have the so-called AI agents that can help. The so-called AI agents that can help. So that kind of interaction that I was talking about, where you can personalize offers or just being efficient in a conversation with customers but also bring dynamic pricing that can personalize on the spot or even during the has to be attractive for the individuals. So whoever in the telco space will be the first ones to be so focused in terms of understanding the customer behavior and needs and engage at the right time would get a lot of market share more out of the competitors. So in that sense, what I see is not necessarily a lot of new services can be enabled from AI, at least at the moment.

Speaker 2: 10:11

The good thing about AI good or bad thing about AI is for now we're pretty much telling AI what to do right and focus let's say, the intent of AI in areas where we think we can have an improvement again in revenue or efficiency and so on. But at some point the idea is that there's going to be self-improvement from an AI perspective so that AI itself will understand what to do on an efficiency point of view or on a services point of view or, in general, helping enterprises as an advisor, if you will, on things that we can't imagine right now, could be fruitful. So that's the future, but it's not very far off. We're talking about a few years. The future, we're talking about a few years.

Speaker 2: 11:18

Ai is evolving so rapidly and learning so rapidly that it will become more and more intelligent beyond what we can think right now. So it's going to be used right now in areas where we know it could be useful. But at some point there's going to be used right now in areas where we know it could be useful. But at some point there's going to be a direction where AI will tell us what could be the new creative ideas to do business in telco and other industries. Cost and efficiency. Ai can be applied and is already applied in so many areas in the telco environment. If you think of the concept of autonomous networks, that poses its challenges because on one side, operators have never been good at accepting a release of control. So it's going to be gradual network and do traffic management and resource management, so on, so that the cost of the infrastructure would drastically decrease without affecting the quality of service.

Speaker 1: 12:48

Yeah, that would be amazing to see. The challenge I see, as probably you do as well, is that many telcos are notorious for their rigidity and lack of flexibility, often wedded to the way they've done things, given their scale. I mean, you know, millions, tens of hundreds of millions of customers. So what has to change in the transformation of the network or the back office to enable or empower this opportunity?

Speaker 2: 13:57

given these entities are often pretty slow to change. Well, first of all, I think the attitude has changed because the situation has changed Meaning. I don't know if you go to some of these events or I talk to customers every day. They are really I'm not saying desperate, but they are in emergency mode, right. Okay, they do understand that right now, if something is not done, cost is going up, revenue is not going up and the margins will get to a level where something drastic needs to happen. So that conservative attitude could change just because of that.

Speaker 2: 14:46

But in any case, I believe the AI introduction can be done also gradually to make them comfortable that that's not going to be, you know, necessarily disruptive, and I can understand why. I mean right now AI can guarantee a 95 accuracy. Now 95% accuracy is not good enough for the network. You know that 5% could disrupt the network in a way that you know services could go down and things. You know Telco is usually the most reliable service. You know you usually have always the availability, except in emergency, of your connectivity and communication services. So that kind of disruption is not acceptable. So that needs to evolve from the AI side. But in any case, the way to gradually introduce. It is to have the human in the cycle right, so that there's more recommendations right now from AI that the human would accept or not, depending on the consequences that they could see. But it is true that sometimes, especially the low-level tasks which could be really impacting can be automated without a lot of disruption.

Speaker 2: 16:18

But again, it's a gradual introduction in the network. And also another important thing is really understanding the intent. Really understanding the intent. So what I mean is if you let AI go and you don't give the right level of intent on what they could do and should do to the network and they don't have the right targets and objectives, they could go into a direction that is not the right one. And of course, the intent is not always easy to define right. Of course it's customer experience yes, but you can't do the best customer experience without impacting cost or things like that. So there's a lot of variables that need to be tweaked that AI needs to understand before it can be autonomous. So autonomous network is achievable, but it will take a while before we're going to have a true autonomous network in a telco right now. But it is feasible and I'm sure it's going to happen.

Speaker 1: 17:35

So you know the area, the space you're in is a hugely important one, but you know, billing and charging and OSS systems really don't get the spotlight, but how critical are they to this transformation and monetizing AI services and driving some of the change that's happening?

Speaker 2: 17:56

Well, you know, in Optiva we do BSS systems. You know the BSS systems are the ones that are taking care, let's say, of the billing and charging. But what does it mean, billing and charging? But what does it mean? It means having the capability to go to market with the right price, with the right service and then engage with customers even after the service is instantiated, so that they're happy and they continue to be happy, so that customer interaction and the backend that allows for that happy, let's say, interaction is owned by the BSS systems. And that's where we're bringing innovation with AI, of course, in what I was mentioning before, like, again, true personalization of services, the concept of the segment of one right Meaning, you know, usually telcos and any industry. You know you have your segments that you're targeting and then you're doing your offers and in terms of products and services, according to those segments and you adapt them. Think, if you have the segment of one, so each individual would have its own offer and service because of what you know of the individual. And when you get to that level, you know you get the right service, the right price, a happy customer that definitely will more than likely buy from you and, funny enough, the data is there right and that's an important thing. In the billing system, in the BSS systems in general, of course, for the current customers, you usually have enough information to understand the user's behavior, the tendency of buying and different things. That would allow you to really tailor the service. But of course, if you look at the traditional BSS but of course you know, if you look at the traditional BSS very monolithic, very rigid, very difficult to change a pricing plan I mean six months. So this is a dream doing this both several years ago on the cloud side and now with AI we always try to be ahead of the curve. You can offer that. So the personalization of services, having an overall efficient sales and marketing interaction, that's another thing.

Speaker 2: 20:49

You have these intelligent agents. We have three. Actually now we have more than three, we have five. I think every day we come up with a different one because they it's so exciting actually even but um, the, the, the sales and marketing interaction with with customers. When you have an ai agent, again, they know a lot about you and can be very proactive, even in fixing issues, not just being proactive in selling new things, but even just understanding of the issue of the person and even again, if you let them take actions. You know this agentic AI capability right? You know you have three kind of steps or stages. You have the normal AI, then you have the gen AI, where you generate content, but then you have the agentic AI, where AI now is able to detect problems and actually then do actions themselves autonomously, and that's where we're using that.

Speaker 2: 22:03

We have the agents that I was talking about, and that is amazing because, again, the conservative attitude would not be conducive for that. But if you let an intelligent agent interact with a customer, they could have conversations both on the selling side or the customer care side, that they could be totally autonomous. Actually, I was reading Vodafone adopted an intelligent agent in their customer care and now 70% of the cases are without the human interaction. Wow, so you understand on their side, that's how much call centers and so on are heavy on cost. So less customer care and call center cost and happier customers, because things can be solved quickly right there on the spot.

Speaker 2: 23:16

And then, going back to Optiva dynamic pricing, we are doing a project called the Catalyst project I don't know in the, you know, TM Forum environment, which is, you know, one of the major influencers in the industry in terms of OSS and BNCS. So in that project, what we're doing is providing a dynamic pricing capability. This is with operators like AT&T, stc and so many others. But the interesting thing is, when you apply AI, you can really apply dynamic pricing. That could be, again, useful for the customer, but also useful for the operator, because it could be using resources that are usually dormant, so it's a more efficient use of the infrastructure and it's a better pricing proposition for the customer. So that's.

Speaker 1: 24:39

Yeah, that's amazing. I love the work that you do in the TM Forum. There's a big meeting in Copenhagen coming up. I'm sure you guys will be there as well. Unfortunately I can't make it, but you can't beat Denmark in the summer. But you know it is a tough time to be a telco. But it's also a great time to be a telco customer because you know there's never more choices, options. Pricing is amazing. You're seeing more niche players enter the market. We've always had MBNOs, but the choice variety is amazing. I mean, I have five eSIMs, three on my iPhone and two on my tablet, and wherever I'm traveling around the world there are different options. How are these new entrants, the niche players, the MVNOs, reshaping the whole competitive dynamic and what does?

Speaker 2: 25:30

that mean for your business? Okay, so basically what is happening is again, the customer behavior is changing and has already changed actually. I mean we are so used to have everything ready, user friendly, instantly available. You know, with the social media, whatever service you get, these days we kind of spoiled right. So telcos are well known again for not being too much proactive on trying to target different needs. So these NBNOs are filling some gaps in the market and it is true that for a telco that has millions of subscribers it's difficult to have again always everything available.

Speaker 2: 26:34

Going back to the segment of one, it's a really nice vision, but they already have so many plans that it's sometimes even confusing for a customer. These MVNOs, or new entrants in general, are very focused. They understand their segment and they understand exactly what their segment needs. So they go to market. They're nothing but really a very efficient sales organization. So it is good for the operator to have those MVNOs on their side because they are aggressive in getting new customers and at the end, yes, the operator might lose some margin but in return will get absolutely more subscribers than they would ever get with their own offering. So it is obvious that the MBO is becoming now more attractive proposition for the MNOs, for the operators. In the past they've seen as actually a problem, a challenge, because they could cannibalize against some of the margins. But the good operators that have a vision on vision especially the challengers, of course right, the guys that are trying to aggressively increase the number of subscribers. But in general, I've seen it in the US and I could say that T-Mobile is probably the most aggressive one and successful one in that sense whereby they understand that an NBNO is actually a channel, a very aggressive channel to market, that it is good to embrace them or even proactively trying to engage with them.

Speaker 2: 28:38

And I see operators now having their own sales teams to try to get NBNOs or even in general enterprises, large enterprises that are subscription-based, and go to them and say, hey, why don't you add the mobile service on top of your subscription services and we'll do everything for you. And that you know I don't know the Costco of this world in the US it could be millions of subscribers that you get instantly right. So it is an attractive segment. So it's an attractive segment and we understood that. So, as Optiva, we focused on both.

Speaker 2: 29:24

We focused on the operators, giving them a platform to entice MVNOs, make it easy for them to be onboarded and then giving them the agility to do everything they need to do with their pricing and go-to-market capability, and then helping directly some of the NBNOs that want to have their own BSS. Right, of course, you know, nbnos don't have necessarily the network, the radio access network, but some of the most aggressive ones want to have the agility to have their own BSS so that they can tweak prices in real time. And, of course, the MVNOs I think the most visionary ones are stopping from day one with the AI in mind, starting from day one with the AI in mind Because, again, being a very aggressive sales organization, ai is wonderful in helping you out in sales for all the things that I've said before.

Speaker 1: 30:34

Fantastic. Well, so much opportunity ahead. I wish we had more time, but I'm sure we'll see you at one of the many industry events, including Mobile World Congress etc. What are you up to this summer over the next few weeks, months, as we head into June, july, august?

Speaker 2: 30:54

Well, again, you know the TM4 event in Copenhagen for sure, but I'm definitely going to enjoy summer here in Italy, you know, and make sure I take some time off. It's been very intense In Octiva. We really closed some really important deals recently and that has been intense. So, yes, you'll see some of the announcements coming out Very exciting. So, taking a couple of weeks of a break, it wouldn't hurt to tell you the truth.

Speaker 1: 31:28

Absolutely Well. Congratulations on all the success and leadership in this space and onwards and upwards. Good seeing you. Look forward to meeting in person soon. Same here and thanks everyone for listening and sharing this podcast and, yeah, be sure to check out my new show, Tech Impact TV, now on Bloomberg and Fox Business. So beyond the podcast, so take care everyone, Thanks.