Quarterly Insights on Bridge Member Operators: 2Q2024

 

Hi everyone!

It’s our edition of 2Q2024 quarterly updates on Bridge Member Operator (BMO) activities, which means that we’re already into the second half of the year – and that means preparations for our Bridge Alliance CXO Forum 2024 are now in full swing. Looking forward to meeting some of you on 17 October to celebrate our 20^th anniversary!

A look at what went on in the past quarter: discussions at TM Forum’s annual landmark event Digital Transformation World (DTW) in Copenhagen in late June showed clearly the optimism in the potential of AI. The telecoms industry is moving to keep pace with the rapid adoption and development of GenAI – with a rapidly increasing number of implementations, both as a productivity tool and in customer-facing systems. Perhaps one of the key questions for telcos amid the AI hype is the challenge of getting the right skills and processes in place to take more AI use cases from ideation to implementation, within a reasonable timeline. With AI everywhere these days, we have devoted a section of this newsletter to it. 

There was also quite some focus on Network APIs. Many telcos have already prioritised and launched their APIs, but a big question mark concerns when and how network APIs will start to generate some much-needed cash. In other news, 5G penetration in emerging markets in Asia Pacific is still rare, but there is an interesting development in India where operators like Airtel have proven that rapid migration from 4G to 5G is possible. Indeed, 5G accounted for 14% of mobile connections in India as of December 2023. Perhaps the two critical reasons for the success of Indian telcos include investing in the infrastructure to cover all major towns and, most critical, the availability of affordable 5G devices and 5G plans. The ever-overarching theme of Digital Transformation examined how operators are adapting to new partner ecosystems, leveraging synergy and agility to remain competitive in a marketplace, dominated by shifting customer needs and the erosion of core telco business.

We still hear about room for further market consolidation in selected Asian markets. In Sri Lanka, Airtel and Dialog Axiata signed for Dialog to take over Airtel Lanka. There has been also a merger move in Indonesia between the owners of XL Axiata and Smartfren, and rumblings in Thailand and Singapore – let’s see.

By the way, we worked with friends at Kearney to deliver a white paper revealing the opportunities for selected industries when deploying 5G Private Networks! Download it here.

Best,

Bridge Alliance Research and Analysis Team

 

AI

As promised, the lowdown on AI. Our friends at STL have helped unpack how telcos are implementing GenAI, behind the hype. Just a fifth are actual deployments; the rest are trials. Chatbots and other use cases (speech-to-text analysis and digital assistants) in customer service dominate telcos’ early adoption of GenAI. Most implementations are done by larger operator groups across their groups’ footprints.

Notably, the Global Telco AI Alliance (GTAA) comprising Deutsche Telekom, e&, Singtel, SK Telecom and SoftBank Corp., inked a Joint Venture agreement with the objective of co-developing and launching a multilingual Telco Large Language Model (Telco LLM) tailored to our industry’s needs.

SK Telecom is already set to launch a Telco LLM developed in collaboration with AI companies such as OpenAI and Anthropic, SK Telecom said adding that it is developing the model by applying it to multiple LLMs such as SK Telecom’s LLM A.X, OpenAI’s LLM GPT and Anthropic’s LLM Claude. China Telecom, too, released a LLM, which can simultaneously recognise and understand more than 30 Chinese dialects.

Indeed Singtel and SK Telecom were among the most active BMOs in AI (with the latter receiving the ISO/IEC 42001 certification, an international standard for AI management systems!) Singtel and Hitachi Digital announced a new collaboration that will pair Hitachi’s deep AI expertise with Singtel’s Paragon platform.

SK Telecom announced that it has upgraded call-related features of its personalized AI personal assistant, “A.” (pronounced “A dot”), and made features such as “A. Call Translator” available for Android device users. It now offers not only basic AI-based phone features such as call recording and call summary, but also A. Call Translator, a real-time call interpretation service and “AI Spam Indicator”. Separately, SKT also launched ‘Transtalker’, an AI simultaneous interpretation solution that supports 13 languages and will be useful to tourists. For a start, the popular Lotte Department Store is implementing this service.

SKT also launched ‘ASUM 2.0’, an AI-based integrated advertising platform, through cooperation with Moloco, a machine learning company. It also inked an MoU with with animation-specialist OTT Laftel for cooperation in providing AI-based content and marketing. SKT will invest $10 million in Perplexity, strengthening their cooperation in the generative AI search engine business.

SoftBank has come out strongly too in the push for AI. It reportedly has plans to invest US$960 million in the next two years, in particular in Nvidia chips, to bolster its computing facilities to develop a Japanese language specific GenAI model. SoftBank has also partnered Microsoft Japan to further enhance its call centre services by using Gen AI, which is expected to reduce customer wait times and standardise responses.

Over in the Philippines, Globe has created a new group to lead the company’s adoption of AI to enhance business operations, service delivery and customer experience. Its AI Development and Enablement Group (AIDE) formally started work on 1 June. Globe also appointed its first Chief AI Officer to lead the team.

In Taiwan Mobile’s case, it is tapping on AI technology for anti-fraud applications and identifying counterfeit websites, while CTM Macau has rolled out an AI chatbot for tourists in collaboration with the Macau’s tourist office and Chinese Internet company Baidu. It is Macau’s first software to integrate big data, algorithms and AR technology to support multilingual translation.

In India, Airtel is leveraging Intel’s latest AI accelerator solution to enhance its AI capabilities and turbo charge the experiences of its customers.

 

5G and Innovation

As telcos experience pressure on their financial performance and KPIs, new revenue streams need to be identified that surpass their core offerings. Telcos are investing, going beyond telco apps and fixed mobile convergence offerings.

In this quarter, the announcements by the BMOs reflect a broad range of innovation. AIS Business unveiled its business plan under the concept of “AIS Business Digital Evolution: Sustainable Business for a Sustainable Nation”. One key thrust of the plan is the launch of the “AIS EEC” Business Innovation Center, a new landmark in the heart of Thailand Digital Valley in the Eastern Economic Corridor (EEC). It will serve as a hub for technological solutions for businesses.

In May, China Telecom launched direct-to-phone satellite connectivity in Hong Kong, the first station to start the internationalised overseas operation service of Tiantong satellite.

In Japan, SoftBank and KDDI agreed to expand scope of their collaborative initiative for jointly building 5G networks through their JV 5G JAPAN Corporation. Also in SoftBank news: the company’s Advanced Research Group has successfully deployed AQtive Guard cryptography management platform to detect potential cryptographic vulnerabilities in IT infrastructure.

In Macau, CTM launched the Dr.Easy medical platform. The system, which operates with the support of AI, integrates several digital management functions and services for healthcare institutions and service users.

AIS together with other BMOs including China Unicom, csl. and 1O1O, CTM Macau, Globe, Maxis, MobiFone, Singtel, Taiwan Mobile and Telkomsel have entered into a partnership with Central Department Store Group, a leading Thai retailer which will offer tourists who roam on AIS’ networks exclusive lifestyle privileges. There will be more rewards across the region by our BMOs for this ongoing campaign—an example of what we see as ‘differentiated roaming’-value-added innovative roaming services which Bridge Alliance is facilitating among our operators.

Singtel has partnered cloud communications provider Vonage to help enterprises and telcos to innovate and scale their services and solutions through Singtel’s orchestration platform, Paragon.

Meanwhile in Taiwan, Taiwan Mobile announced its approval for membership in EV100, a global initiative committed to accelerating the transition to electric vehicles. Under the “Telco+Tech” strategy, the company is integrating zero-emission initiatives into the mobility market while incentivising its employees to purchase electric vehicles through subsidy programmes.

Airtel Africa partnered with WebEngage to drive its digital customer base management. The partnership will enable Airtel to monitor user service activities in a highly personalized manner, while retaining customers and improving engagement.

 

Private Networks

Private networks are moving forward, but perhaps not so fast. Clearer thinking is emerging here as telcos are focusing on small, specific use cases with “lighter-weight solutions” coming onto the market, which could yield returns on investments within six to twelve months.

As highlighted– we collaborated with Kearney to launch a 5G private networks white paper, which incorporated valuable inputs from BMOs! Find out more about the opportunities there for telcos and the sectors which could benefit from private networks.

AIS, China Unicom, Huawei and Chinese appliance maker Midea have jointly implemented the first 5G fully-connected factory in Southeast Asia in Thailand, setting a new standard for smart manufacturing in the region, supported by a dedicated 5G private network. Over in the Middle East, Stc has picked Celona as its provider of private networks to serve the mining, manufacturing and logistics sectors.

 

IoT

The need for loT connectivity to operate effectively and securely anywhere on the planet is increasing – on land, sea and air. Beecham Research is forecasting IoT revenue to grow at about 15% per year to 2030, from US$334bn in 2023 to US$865bn by 2030; annual growth rates in fast developing countries and regions are now much higher than in developed regions.

In Asia, China continues to hold the largest share in IoT spend in 2023, followed by South Korea and India. Countries with the fastest IoT spending in 2023 are China, Singapore, and HK. The advent of Smart Factories and Industry 4.0, along with government-led IoT programs, is speeding up IoT adoption across Asia-Pacific.

Among the BMOs, SK Telecom and Swift Navigation – a US headquartered firm in precise positioning technologies for automotive, IoT, and mobile applications – are partnering to expand the availability of Swift’s precise positioning solutions in Korea, accelerate the deployment of AI-powered, location-based products and also boost the solutions that SKT can offer in its AI/IoT portfolio.

SoftBank Corp. announced that Cubic Telecom Ltd, a Dublin-headquartered provider of software-defined connected vehicles became a subsidiary, with its 51.0% equity stake. In addition, SoftBank launched new sales initiatives to expand the sales of Cubic Telecom’s global connectivity platform, mainly in the APAC region with customers like Honda, and to develop new services.

 

Enterprise

On the enterprise side, most announcements point to an acceleration in terms of telcos’ efforts to find a compelling value proposition that allows them to play a greater role in the “beyond the core” space.

Our BMOs were rather proactive with several announcements in the quarter:

Singtel’s Nxera, the regional data centre arm of its Digital InfraCo unit, has partnered TM in a joint venture to develop data centres in Malaysia. This strategic partnership aims to serve the needs of hyperscalers, next-generation AI application providers and enterprises pursuing accelerated digitalisation and cloud in the region. 

Singtel, ST Telemedia Global Data Centres and KKR, announced the signing of definitive agreements under which a KKR-led consortium of KKR and Singtel will invest S$1.75 billion (~US$1.3 billion) in STT GDC. This transaction is the largest digital infrastructure investment in Southeast Asia this year.

In Australia, TPG Telecom and Optus signed network-sharing agreements to increase TPG’s coverage and cut capital spending;

In Sri Lanka, Airtel’s operations in the country have been 100% acquired by Dialog Axiata through a share swap agreement.

Stc Bahrain signed a deal with HPE Aruba Networking as part of its efforts to enhance Wi-Fi and networking technology offerings in Bahrain. Meanwhile, stc Group has forged a partnership with PLDT Global, the international unit of Philippines’ telco PLDT Inc., to enhance the latter’s international voice services for Filipinos.

Airtel has unveiled affordable international roaming packs covering 184 countries for customers travelling abroad, which offer enhanced data benefits, in-flight connectivity and 24×7 contact centre support.

In Japan, SoftBank Corp. has finally closed the curtain on 3G services in Japan this April, 22 years after 3G was launched.

 

Cloud

Over in the cloud space, according to the latest research, the global telecom cloud market size was valued at US$22.3 billion in 2022 and is expected to expand at a 20% CAGR during the forecast period, reaching US$65.7 billion by 2028.

Airtel and Google Cloud entered into a long-term collaboration to deliver cloud solutions to Indian businesses. The strategic collaboration will offer a suite of cutting-edge cloud solutions from Google Cloud to fast-track cloud adoption and modernisation for Airtel’s customers.

In Japan, SoftBank subsidiary BBIX and True Internet Data Center Co., Ltd, a leading full-service data center and cloud service provider in Thailand, announced a partnership agreement to utilize the Open Connectivity eXchange in Thailand through a joint venture, marking OCX’s first overseas expansion. OCX is a cloud-based network service developed jointly by BBIX and BBSakura Networks, Inc.,a network solutions provider and subsidiary of BBIX.

In China, China Telecom’s Shanghai branch and AI solutons provider SenseTime formed a strategic partnership to create the first city-level cloud network in China as a “cloud for whole city”.

 

UC/CPaaS

On the unified communications (UC) front, the CPaaS market is evolving at a rapid rate. CPaaS solutions and APIs have given companies an excellent way to enhance customer experience with omnichannel communication strategies and innovative integrations.

However, telco APIs are becoming more advanced with the rise of 5G, developers are embracing new standardization strategies, and demand for flexibility in the contact center is growing.

Some of the most significant trends to watch in 2H2024:

• messaging solutions still reign supreme in the CPaaS market;
• AI is making major rapid inroads in the CPaaS market; providers are keen to take advantage of the rising demand for AI and offer innovative solutions to businesses;
• As regulatory guidelines and expectations continue to change, CPaaS providers are under increasing pressure to take extra steps to boost security;
• Focus on “Network as a Service” as a new CPaaS offering. Network as a Service providers, offering access to mobile connectivity and advanced verification APIs, can help contact centers tackle fraud and improve customer experience. This quarter, Nokia established a partnership with Infobip to cross-market their respective API portfolios to developers. The deal will broaden the reach of Nokia’s Network as Code platform, while helping the developer community create new and compelling applications;
• More consolidation in the CPaaS market, e.g. Belgium’s Proximus Group completed the acquisition of a majority stake in Route Mobile.

In Kuwait, stc Kuwait is partnering omnichannel CSP CEQUENS for A2P, P2P, P2A, Flash Calling, and RCS messaging services, with the goal of enhancing customer experience, paving the way for new business models, and effectively monetising international A2P SMS traffic.

 

Web3

On the Web3 front, even though the previously buzzy metaverse continues to face significant headwinds, top brands and telcos continue to invest to harness its potential to create unique immersive virtual experiences. From a customer services perspective, the metaverse will become an important new touchpoint, and the integration of blockchain is critical when it comes to secure payments.

SK Telecom remains a major driving force in the metaverse, with several announcements made in this quarter. SKT opened ‘K-POP Hotel’, a new metaverse fan community that immerses users with the unique group concept of each K-POP idol using the 3D and XR characteristics of the metaverse, enabling them to meet on SKT’s metaverse platform ifland, which the company plans to expand globally.

SK Telecom is expanding its metaverse business to Southeast Asia through partnerships with CelcomDigi in Malaysia; Agate, an Indonesian game publisher; and Philippine-based Cherry and Cosmic Technologies. It also signed an agreement with global XR solution company HTC to expand the global media business of ‘AI XR Virtual Studio’.

Aptos Labs, a blockchain startup, forged partnerships with SKT, Microsoft and hedge fund management firm Brevan Howard to build out Aptos Ascend, its digital asset management platform for financial institutions;

In the Middle Esat, stc Bahrain continues with its Web3 push, cooperating with Ava Labs to facilitate the implementation of an Avalanche Subnet, Subnet performance and flexibility are key to stc’s Web3 launchpad initiative that aims to establish a regional ecosystem consisting of a range of decentralised Apps – all while maintaining high performance and security.