How can communication service providers (CSPs) grow revenue with AI? Ciena’s Francisco Sant’Anna delves into the possibilities for CSPs to unlock new revenue streams and improve profitability.
Deploying essential infrastructure for AI and leveraging AI in network and service operations has dominated industry conversations. While most agree AI will radically transform the telecommunications sector, not enough attention has been given to how communication service providers (CSPs) can monetize it. As AI becomes integral to network evolution and operations, it is important to expand the discussion beyond operational efficiency and analyze how it can also boost revenue growth.
Faced with the challenge of growing revenue while controlling CapEx, CSPs tend to meticulously scrutinize the potential profitability of new technology trends. In recent years, 5G saw extensive planning and massive investment, but the industry is still figuring out how to capture meaningful financial upside from its introduction. This may lead operators to look at rapidly advancing technology inflection points like AI through a more cautious lens. The question arises: Will AI chart a new course to growth and profitability? There are compelling reasons to believe it will.
Much more than a technology upgrade
AI is much more than a set of new technologies. It is a new set of foundational tools, an accelerator of innovation, and a business transformation force that is defining a new era in the communications industry. When it comes to its potential to boost CSPs’ profitability, the spotlight is on efficiency improvements and cost reduction. This is not without merit – AIOps (the use of AI tools to transform operations) promises to significantly enhance operational efficiency and play a pivotal role in helping CSPs remain competitive (learn more in this article). However, AI-driven profitability gains can also be achieved by creating new revenue streams in addition to reducing costs.
Mapping AI monetization opportunities
At Ciena, we have tapped into a range of industry sources, including our customers, to map and analyze potential AI monetization opportunities for CSPs. We have identified three paths to revenue expansion:
- Optimize existing business and connectivity services: Maximize resource utilization to enable new sales; Capture surging AI-traffic demand; Or improve service levels and mitigate revenue losses. For example, AIOps enables advanced, proactive failure detection, boosting CSPs’ top line by strengthening SLAs and reducing credits from outages.
- Evolve the portfolio with AI capabilities: Leverage AI to design and deliver services with unprecedented levels of personalization; Dynamically upsell excess capacity for premium user experiences; Or convert AI network tools into value-added services over connectivity. A compelling example of this is integrating GenAI-based conversational tools and automated scripting into an enterprise network management portal, which can improve the customer experience and help differentiate a CSP’s managed network services portfolio.
- Diversify revenues by building new adjacent businesses beyond connectivity: Use AI to package network data into business insights offerings or take advantage of network edge infrastructure to create edge cloud services. For example, as AI inferencing is increasingly distributed to the edge, operators can offer edge AI IaaS, leveraging their expansive footprint to avoid core network saturation deliver optimal AI application performance to end-users.
Figure 1. The three dimensions of revenue growth
Immediate opportunities and long-term possibilities
We compiled a comprehensive list of potential revenue-generating opportunities driven by AI, sorting the most promising into the three paths to revenue generation outlined above. Leaning on common features shared among solutions in each category, we have designed a simplified model to help CSPs identify and explore AI-driven growth potential, illustrated in the figure below.
Figure 2. A simplified model to explore AI-driven growth opportunities
AI monetization will not likely take a linear path. As AI capabilities mature in different areas of the business, opportunities branch into new growth possibilities and use cases, in a tree-like fashion. Some are concrete near-term opportunities, while others are service enhancements that will require significant process and system changes. There are even those that might be considered commercial long shots but may catalyze the kind of ideation that results in a breakthrough revenue opportunity.
Today, the widespread development and tuning of AI models is driving the movement of large datasets between different clouds, initiating what we believe will be a multi-year growth curve in cloud exchange and data center interconnection (DCI) services. To address the AI traffic surge and hard-to-predict traffic flows, these services must go beyond scaling bandwidth to automating service provisioning and making IP routing and optical switching more dynamic and efficient. The ExaSwitch consortium model and managed optical fiber network (MOFN) solutions are examples of how these requirements are met. Supporting key network attributes required by AI applications, they are empowering CSPs to differentiate and generate revenue from this early stage of AI-driven connectivity demand.
Leveraging Ciena’s Adaptive Network to fuel monetization
AI monetization is only possible when the CSP’s network infrastructure and operational environment are ready to enable it. To this end, Ciena’s Adaptive NetworkTM offers a pragmatic vision for evolving network architecture and optimizing network and service operations in the AI era.
The Adaptive Network starts with programmable infrastructure, which calls for highly instrumented platforms that can scale and route capacity dynamically, critical for handling new traffic patterns and increasing volume from AI services. Software control and automation, and analytics and intelligence, are two other elements of The Adaptive Network that are essential for AI monetization. Insights from these two functions will not only help enhance existing services to meet AI demand—they will also serve as the basis for many new revenue opportunities.
Figure 3. Ciena’s Adaptive Network vision
For decades, Ciena has partnered with CSPs to turn new technology trends into business opportunities, joining forces with operators to create, deliver, and monetize new services. As AI introduces new connectivity requirements and transformational innovation to networks and operations, opportunities for monetization are emerging. Although the industry is undoubtedly in the early stages of AI-driven revenue generation, the time is now to develop strategies for realizing AI’s monetization potential.
