Tech Innovation Is Keeping European Telcos Alive
Main takeaways
- AI and cloud computing are empowering telecom companies to save time and money
- The upcoming EU Digital Networks Act (DNA) should abandon misguided assumptions about ‘network overload’ and ‘convergence’ between telcos and cloud providers
- The Commission should focus on fostering competitiveness, not over-regulation
Cloud computing and artificial intelligence (AI) are driving the transformation of Europe’s telecom sector. Digital innovation is helping telecom operators modernise everything from network management to customer support. AI adoption is already widespread: 90% of telecom companies use AI, according to Nvidia research, with 48% in the pilot phase and 41% actively deploying it.
Yet, some large telecom operators – ironically, those benefiting the most from digital innovation – claim that the very tech firms enabling their digital transformation are also those ‘exploiting’ telecom networks, and argue the two business models are converging.
In reality, this is a misrepresentation of a thriving customer-supplier relationship. That’s why the new European Commission should review the (flawed) assumptions of the previous Commission, and focus on fostering EU digital competitiveness instead.
1. How tech is supercharging telecom operations
From operational improvements to financial gains, there are countless ways in which telecom companies benefit from AI and cloud technologies. Let me share a few examples of how these technologies are making a big difference in practice.
Telecom operators are actively leveraging cloud computing technology to optimise their overall operations, just like other industry sectors that have embraced the cloud. By doing so they gain higher productivity, manage to lower data storage and processing costs, and achieve greater scalability. What is more, 80% of European telecom operators are using AI for Radio Access Network (RAN) automation and optimisation – which are processes used for improving the performance and efficiency of 4G and 5G mobile networks – according to Analyses Mason research.
Similarly, cloud-powered tools are helping telecom operators automate key parts of network management. AI, for example, has become instrumental in enabling telcos to cut outage analysis time and reduce related costs. In the past, engineers had to manually sift through multiple data sources to search for outage causes. Now, AI-powered tools help telcos to quickly pinpoint faults, speeding up service restoration for users at the same time.
When it comes to improving customer service, AI-powered virtual agents now provide fast and accurate support, while AI-assisted human agents resolve issues more efficiently than before. This means shorter wait times, quicker problem resolution, and happier customers.
These operational benefits are closely tied to cost reductions and increased profitability for telecom operators. McKinsey found that AI chatbots already help telecom firms to cut costs by 15-20%. According to the same McKinsey study, telcos leveraging AI have managed to significantly reduce costs in areas such as customer service and network maintenance, but this trend is expected to soon extend across all operational domains of the telecom sector.
2. The positive reality the EU Commission does not want to see
These examples highlight the collaborative and positive nature of today’s business relationship between telecommunications providers and technology companies. While some big telco CEOs continue to push a deceptive narrative that popular tech and content firms should compensate telecom operators for ‘overburdening’ networks, in reality these very same technologies are empowering telcos to reduce costs, boost profits, improve efficiency, and enhance the customer experience.
It’s also thanks to popular content from the creative sector, and innovative services introduced by digital and tech companies, that telecom companies can sell high-speed connections and that demand for their services continues to grow.
This positive reality, however, is not reflected in the ongoing debate about the EU Digital Networks Act (DNA), due at the end of this year, which tends to focus on misguided claims and concepts. Telecom companies are thriving in Europe in a competitive environment. They are able to offer new connectivity services thanks to demand for exciting online content and digital services – without which consumers wouldn’t pay for premium connectivity, while tech also keeps networks running smoothly. The EU should build on these successes, rather than risk undermining them.
3. Collaboration, not convergence: Why the Commission has it wrong
Unfortunately, there is a real possibility the Commission could decide to extend the European Electronic Communications Code (EECC) to cloud service providers in the upcoming DNA. The Commission’s reasoning appears to be based on the false assumption that there is cloud-telco convergence. But as has been explained extensively before: while cloud and telecom have a commercial relationship, the two remain fundamentally different.
There is simply no convergence between business models. Cloud computing services provide businesses with scalable, on-demand IT infrastructure – operating a horizontal model and offering building blocks for software development across multiple sectors. Telecom operators, like other industries, use these cloud services for their own AI-driven analytics, customer support, and operational efficiency. However, core network functions remain primarily on on-premise infrastructure. It’s the same story with content. Content helps drive adoption of telco services like 5G connectivity, but is not converging with telecoms either.
Conclusion
All of this begs a simple question (especially when everyone agrees that EU over-regulation is already burdensome): How would more regulation of cloud and digital services help EU businesses? The answer is very clear: it wouldn’t. The Commission aims for 75% of SMEs to adopt cloud and AI by 2030 to meet the Digital Decade targets, yet the DNA would weigh down these crucial technologies with extra costs and regulation – undermining the very progress it seeks to achieve for Europe.
There’s no point in subjecting cloud services, private networks, or content delivery networks to telecom regulation. Instead, the EU must recognise the distinct roles of telecom operators and cloud providers – acknowledging this will be instrumental to boosting EU digital competitiveness. The European telecom industry is thriving thanks to popular online content, digital services, and tech innovation in AI and cloud computing – not in spite of them.
