Telcos Missed the Cloud Boom – 5 Steps to Ensure They Don’t Miss the AI Wave

In 2010, Cloud was a $24 Billion market. Today, it’s $600 Billion. AI is guaranteed to be even bigger.

The AI infrastructure boom is building—and telcos must decide if they’re buyers or sellers.

Cloud giants built their fortunes by leveraging infrastructure that telcos helped create. Yet, telcos saw only a fraction of the profits. Now, AI is set to transform industries on a scale even larger than cloud computing. Will telcos repeat their past mistakes and become low-margin suppliers, or will they stake their claim in AI’s trillion-dollar future?

Telcos already control two of AI’s critical pillars – connectivity and data. But owning infrastructure isn’t enough. Without a clear AI delivery strategy, telcos risk being sidelined while hyperscalers and startups seize the AI opportunity too.

In this article, we discuss five critical steps telcos must take to avoid another cloud-sized mistake and claim their rightful place in the AI economy.

Step 1. Learning from Telco Mistakes in the Cloud Battle – And What It Means for AI

When the cloud revolution began, telcos were in a prime position to capitalise on the opportunity (listen to this podcast with George Glass for his experiences as Chief Architect at BT). Telcos owned the infrastructure, had established enterprise relationships, had massive data centres / comms-rooms and held the trust of governments and regulators. Yet, they remained passive while hyperscalers aggressively built cloud businesses, capturing the lion’s share of value.

• Telcos remained infrastructure providers while cloud players built high-margin platforms and software services.
• Slow decision-making, doubt about the opportunity and regulatory concerns kept telcos from moving quickly, allowing hyperscalers to dominate
• Failing to invest early – AI is moving fast, arguably faster than cloud, so waiting too long will result in telcos falling into a follower role
• Not monetizing their vast data assets – Like cloud, AI thrives on data, and telcos must find ways to sell it securely.
• The result? Cloud computing grew from a $24 billion market in 2010 to a $600 billion industry today—while telcos saw only a fraction of that growth.

AI is already following a similar trajectory, but on an even larger scale. If telcos don’t act now, they risk remaining mere AI connectivity providers while others deliver the greater part of the value chain and reap the associated profits.

Step 2: Monetising AI’s $500 Billion Infrastructure Boom. What Strategic Advantages Do Telcos Have That Others Don’t?

AI’s rapid expansion relies on foundational elements including: compute, power, data, and connectivity. Telcos already own two of these, yet their monetisation strategies remain weak.

Despite missing the cloud boom, telcos have a second chance with AI. They possess unique strengths that hyperscalers and AI-native companies don’t:

• Network Ownership – AI services rely on high-speed, low-latency connectivity, which telcos control.
• Massive Real-Time Data – Telcos generate petabytes of network and customer data, a critical asset for AI models (they have the potential to collect far richer customer experience data than the hyperscalers, but typically allow this opportunity to remain untapped)
• Edge Computing Infrastructure – It’s yet to be truly seen whether AI applications that require real-time, low-latency decision-making (eg autonomous vehicles, smart cities, etc) will depend on edge computing. If ultra-low-latency networking of distributed compute and storage does prove to be important, telcos often already have a footprint close to the customer (via their underutilised / underleveraged exchange buildings). Similarly, if large power feeds are required in these distributed locations, these buildings were often designed to support the far more energy-hungry comms equipment of the past
• Established Enterprise & Government Relationships – Unlike AI startups or internationally headquartered hyperscalers, many telcos have deep-rooted customer bases and regulatory trust in their local geographies
• AI-Enabled Virtualised Networks and Network Management – AI-powered network slicing, predictive maintenance, and automated operations are potential building blocks upon which new service opportunities can be created

These assets give telcos a competitive advantage in AI – if they can find a way to capitalise on them.

Step 3: Buyers or Sellers: Why Telcos Must Become AI Providers, Not Just Users

Many telcos are already using AI internally for network optimisation, predictive maintenance, churn analysis, cross-sell / up-sell and customer support automation. But this is only the first step. The real opportunity lies in leveraging these skills and selling AI-powered services to vast telco customer bases. The following are just a few samples, but the real opportunities have the potential to go much deeper into meeting customer needs:

• AI as a Service (AIaaS): Telcos can monetise AI models, private AI infrastructure and APIs for enterprises.
• AI-powered Connectivity: AI-driven bandwidth optimisation and security features can be premium offerings.
• Industry-Specific AI Solutions: AI-powered fraud detection for banks, smart city infrastructure, and AI-driven supply chain analytics.
• AI Marketplaces: Telcos can create platforms for businesses to consume AI services, similar to cloud and API marketplaces.

By moving beyond internal AI usage and selling AI-driven services, telcos can generate new revenue streams and strengthen customer relationships. The first element of this step is to better understand the customer technology needs and problems than telcos tend to today. It also involves viewing customers as potential partners to add value to, not just clients to pull revenue from.

Step 4: Unlocking AI Revenue: Turning AI and OSS/BSS into a Revenue Engine

For telcos to truly monetise AI, they need modern OSS/BSS systems that go beyond automation and help to support AI-infused business models. These include elements of:

• Dynamic AI Billing & Monetisation: AI-driven capacity and utilisation awareness allows for AI-infused pricing models such as pay-per-use AI services, dynamic rating and real-time charging
• Network and Location Aware Utilisation + AI-Powered Customer Experience: Hyper-personalised customer experience and location awareness allows for personalised offers, AI-driven self-service, and intelligent service management.
• AI in Fraud Detection & Security: Telcos can use AI to detect network anomalies and prevent billing fraud.
• AI-Orchestrated Service Creation: AI-powered OSS/BSS can identify fleeting arbitrage opportunities and dynamically provision AI-driven services on demand.

OSS/BSS will no longer just support AI-powered operations—it will enable telcos to sell and monetise AI services at scale.

Step 5: AI Partnerships: Choosing the Right Alliances for Telco Growth

To accelerate their AI ambitions, telcos must form strategic partnerships—but on their terms rather than as the dependent partner. They can facilitate this using the following alliance strategies:

• Avoid dependency on hyperscalers – Telcos have the potential to co-build AI platforms rather than merely reselling cloud-based AI.
• Partner with enterprises – Whilst telcos are often more widely known as B2C comms providers, they have some of the most valuable B2B partners (as existing customers) in their local regions
• Collaborate with AI startups – Incubating AI innovation within the telco ecosystem will create proprietary AI capabilities – involving the telco subscriber-base as both/either buyers and sellers of AI products and services
• Engage, Innovate and Invest in AI hardware & infrastructure – Owning AI computing power (GPUs, AI chips, edge infrastructure) will future-proof telco businesses and their client offerings by reducing dependence on external providers. But it’s not just the infrastructure that matters. It’s the innovations that are built on top of the infrastructure where AI opportunities lie, just like the cloud opportunities before it. If the telcos aren’t investing, building, researching and innovating, you can almost guarantee that the AI boom will bring prosperity to others this time around too
• Leverage government & regulatory partnerships – Telcos can position themselves as AI compliance leaders, ensuring data privacy and security. Data sovereignty is one of the most important elements of critical infrastructure and industries dependent on privileged data / privacy. AI-powered services tailored for industries like healthcare, finance, and manufacturing can differentiate telco providers because of their management of hyper-local data sets and local regulatory control measures

By choosing partnerships wisely and becoming key ecosystem connectors, telcos can stay relevant in the supply-chain of AI value creation.

The AI Race Certainly Won’t Wait for Telcos to Catch Up

The cloud computing revolution taught telcos a hard lesson—one they can’t afford to repeat with AI. If they remain passive, the opportunities will pass them by as a world of eager suppliers looks to invest and innovate heavily. AI’s future depends on networks, data, compute, storage and service delivery mechanisms (ie OSS/BSS) – assets telcos already own – but telcos can still be easily marginalised.

Asset ownership alone isn’t enough. Without a clear strategy, telcos risk becoming low-margin infrastructure providers while hyperscalers and AI startups capture the real value.

The good news? AI is still in its early days. Telcos that act fast—by investing in AI-powered OSS/BSS, building AI-infused services, and facilitating partnerships to share in the AI infrastructure boom—can still secure a leadership position in this trillion-dollar economy.

The choice is simple: Innovate and lead in AI or get left behind. What do you think telcos will do?