Rewiring the telecom mindset
Foreword
In the rapidly evolving telecom landscape, 2025 stands as a pivotal moment, marked by a triad of transformative dynamics in the realm of cloud and AI integration within networks.
- AI. The growth trajectory of AI adoption in the telecom sector is surging upward. Between 2023 and 2024, GSMA Intelligence research noted a 4x uptake in the commercial deployment of generative AI solutions. This expansion underscores a growing confidence in AI technologies but also the imperative operators feel in deploying AI.
- Monetization. Our work with operators highlights that the enhancement of user experiences and the generation of new revenue streams are now at the forefront of industry executives' strategic priorities. The network, traditionally a cost center, is increasingly being viewed as a canvas for AI-driven innovation, with use cases ranging from network optimization to the creation of new services. Novel opportunities for leveraging AI to fuel business growth are also gathering momentum, exemplified by GPUaaS, AI Factories, and AI solution sell-through models.
- ROI. While communications service providers (CSPs) are often characterized as taking a long time to weigh the value of new technologies, ROI concerns do not appear to be a primary barrier to AI deployment for them. Executives share an optimism for AI's potential, while understanding the necessity to engage in AI-related investments and explorations, regardless of the clarity of ultimate returns.
Despite these shifts, certain dynamics persist.
The debate around "AI for networks versus networks for AI" remains a familiar narrative. While AI holds the promise of enhancing network performance and operations, it is equally evident that network investments are essential to accommodate AI workloads effectively. This dual focus presents a momentous opportunity for operators to further capitalize on their networks and seize the full potential of AI, contingent upon making the right investments.
However, the path forward is complex with ongoing interoperability and security challenges among the top concerns. As AI use cases continue to unfold and the broader AI value proposition takes shape, guidance can help CSP executives navigate this terrain, including research such as this IBM Institute for Business Value report, Rewiring the telecom mindset: How CSPs are gaining a network advantage with cloud and AI. Informed by a survey of 750 industry executives and interviews with 14 global CSP leaders, this report offers insights and tangible steps for telecoms to propel progress at a consequential time. It is a call to action for telecom executives to rewire their mindsets, reimagine their networks, and reap the immense benefits that lie at the intersection of cloud and AI.
Peter Jarich
Head of GSMA Intelligence
Key takeaways
Communications service providers (CSPs) are adopting a hybrid, multicloud approach for network functions, with 27% hosted in public clouds.
But interoperability concerns, vendor dependency, and uncertain business value hinder development of cloud-native networks—which are crucial for the future of CSPs.
Concerned about data security and the pace of technology changes, many CSPs are slow to harness AI’s promise.
60% use traditional AI for their leading use case of network performance monitoring, but fewer than half apply it to other use cases. Even fewer deploy generative AI in the network.
55% of network executives report they’ve suffered a network security breach in the last 12 months.
A group of leading cloud and AI adopters report 45% fewer security breaches over the past year and see a greater positive impact from cloud on network security than their peers.
Executives rank network monetization as both their biggest challenge and their lowest priority.
The maturity of 5G and open APIs—underpinned by cloud and AI—holds potential, but monetization may remain elusive unless CSPs renew their focus with a cloud-native, collaborative mindset for innovation.
Juggling legacy challenges and new opportunities
The technology terrain for CSPs is a whirlwind of rapid evolution where 5G, IoT, cloud, and AI can reshape the very fabric of communication. New research from the IBM Institute for Business Value (IBM IBV) finds that today’s telecom network executives are negotiating a complex mix of tried-and-true legacy systems, new technologies, and intensifying security threats, where the strategic balance between innovation and risk is a delicate dance.
Our survey of 750 global network executives—and 14 exclusive one-on-one interviews with CTOs, strategy leaders, and domain specialists at major telecom companies worldwide—reveals that CSPs are keenly focused on modernizing the network to deliver seamless performance, innovative consumer and enterprise services, and enhanced customer experiences. Over the next three years, executives expect to increase network investments in cloud implementation by almost 20%, traditional AI by 16%, and generative AI by almost 19%.
Yet, today’s fast-moving environment is testing an industry known for its measured approach. “The main challenge in telecom is balancing the rapid introduction of new features, such as CNF [cloud-native network function] versions, with the need for stable and reliable networks for essential services. Traditionally, stability was ensured by minimizing change, but modern practices of automated, low-risk updates create a culture clash,” says Iain Wilkinson, Principal Enterprise Architect for Strategy and Architecture of Cloud at Great Britain’s Vodafone.
Some CSPs are setting the pace. Our research identified a group of technology front-runners that are embracing cloud computing and AI in their networks and reaping significant rewards—including better performance and security, greater scalability and availability, reduced maintenance costs, and accelerated deployment times. Their commitment to cloud and AI is yielding greater operating margins than their peers.
To emulate similar success, other CSPs must look beyond just technology adoption and transform their mindset—embracing bold, calculated risks, strategic partnerships, and a proactive approach to innovation. This report delves into three areas where this broader perspective can help CSPs stay ahead of emerging rivals, confront market disruptions, and establish leadership:
- Part one explores the trajectory and hurdles of cloud and AI adoption in the network domain.
- Part two probes the pressure to boost network security management as CSPs come under increasing attacks.
- Part three examines why now is the moment to upend the status quo in the ongoing quest to monetize the network.
Each section concludes with steps CSPs can take to solidify their stance in defining the future of communications. And a perspective, Voices of the executives, captures select quotes from our interviewees on these topics.
Public cloud technology: On-demand cloud services (compute, storage, development environments, and applications) hosted in an off-premises, third-party data center
Private cloud technology: Dedicated cloud computing environment hosted either in a third-party, off-premises data center or an on-premises data center
Virtualization: A simulated computing environment or virtual machine that mimics the functions of physical hardware such as servers, storage, and networks
Telco cloud: A software-defined, highly resilient cloud infrastructure that allows telecommunications service providers (telcos) to add services more quickly, respond faster to changes in network demand, and manage central and decentralized resources more efficiently
5G Standalone: A cellular infrastructure built specifically for 5G services by implementing 5G standards and protocols in the radio network and controller core. It is dependent on a cloud-native 5G Core and 5G Radio architecture.
Part one: Modernizing the network
Telco cloud is the linchpin for the AI-powered network of the future. Are CSPs capitalizing or falling behind?
The transition to 5G Standalone networks—and the ROI opportunities they offer—puts CSPs’ adoption of cloud technology in the spotlight. “The advent of 5G marked a pivotal shift, integrating connectivity, compute, and storage—a ‘Holy Trinity’ that redefined the concept of cloud in the telco landscape,” explains Shyam Mardikar, President and Group CTO of Mobility at India’s Reliance Jio.
In pursuit of 5G's ROI, CSPs continue to shift key network operations to the cloud, supporting financial returns as well as advanced AI and automaton capabilities. AI-driven network performance analysis, predictive analysis, and real-time service automation are more efficient and help optimize capital expenses when powered with a flexible, cloud infrastructure. Plus, cloud-based programmability powers a rich developer community, fueling rapid service creation, niche app development, and on-demand features that can drive innovative network monetization strategies. These technical and operational benefits are clearly influencing key initiatives.
When asked to choose their top priorities for the network division over the next three years, 79% of network executives place network performance first, and this informs their second priority, modernizing the network. The imperative for reliable, resilient connectivity compels CSPs to adopt a hybrid cloud strategy for the network, blending on-premises infrastructure, private cloud, public cloud, and edge computing.
CSPs are taking a hybrid cloud approach for network functions.
Note: Percentages do not equal 100% due to rounding.
However, performance, operational transparency, security, compliance, and privacy concerns make many CSPs cautious about public cloud for core network functions. “Our network is purpose-built to deliver consistently high performance. … the cost reductions of public cloud are not on par with the reliability and operational agility of the private cloud,” asserts Srinivasa Kalapala, Senior Vice President of Technology and Product Development at Verizon in the US. Yet, smaller CSPs (with revenue ranges from $10 million to $100 million) are embracing public cloud, where they run 44% of their network functions—potentially reflecting their priority for agility and buy-versus-build resource strategies over the risks on the minds of larger CSPs.
Smaller CSPs are embracing public cloud.
Overcoming challenges that hinder adoption
Network executives cite lack of interoperability and standardization across cloud providers (63%), fear of vendor lock-in (58%), and unclear business cases (53%) as their biggest hurdles to cloud adoption. “Each step [in adoption] must be meaningful and purposeful, ensuring tangible value and alignment with long-term objectives rather than change for its own sake,” says Nikos Angelopoulos, Group CIO at South Africa’s MTN Group.
Some CSPs are addressing vendor lock-in by planning and deploying disaggregated architectures, where hardware and software are sourced from multiple vendors. While this approach offers CSPs greater flexibility, it adds to interoperability challenges, particularly when vendors rely on proprietary solutions that are not based on open standards and APIs (see Perspective, “Open RAN: A divided frontier”).
“While suppliers claim to provide cloud-native solutions, they often insist on proprietary stacks, resulting in what can be called a ‘pseudo-cloud’—offering limited flexibility and defeating the purpose of cloud adoption,” says Jio’s Mardikar.
Kevin Plunkett, Vice President of Cloud Services at Boost Mobile, an EchoStar company in the US, says they have had to be the systems integrator, handling the software integrations needed for telecom workloads to thrive in cloud environments: “Our secret sauce lies in hiring cloud and automation specialists rather than telco veterans, enabling us to push major vendors to become truly cloud native.”
Perspective
Open radio access network (Open RAN) technology allows software and hardware components to be built to industry-wide specifications defined by the O-RAN Alliance. This helps ensure interoperability between components, giving CSPs flexibility to customize their networks. But opinions differ as to whether the stars have aligned for Open RAN.
Nearly half (48%) of executives surveyed say Open RAN is still a few years away but they are following trends. Just over a third (37%) say it’s very important and that they are early adopters.
We found a similar dichotomy in our executive interviews, with Vodafone being one of the pioneers. “We have been on this journey for over five years now,” explains Francisco Martín Pignatelli, Head of Open RAN. “From an ecosystem perspective, it takes time, but there is now a very good ecosystem developed. Once technology is ready, deployment becomes the next challenge.”
“While gaps in technology needed addressing, right now, Open RAN is ready for massive scale deployment,” he continues, noting that Vodafone plans to deploy across 2,600 sites in the UK.
Plunkett of Boost Mobile, an EchoStar company, says that open RAN is inherently more secure than closed systems: “By making the code accessible and transparent, we enable thorough interface inspection and interoperability, allowing for rapid vulnerability scanning and patch deployment—multiples faster than typical operators.”
On the other hand, others are not even considering Open RAN. “While trials have been conducted, they have not demonstrated the economies of scale necessary to make Open RAN a viable deployment model at this stage,” says Amit Kumar, Senior Vice President of Technology Strategy Enterprise Solutions at Indonesia’s Indosat.
Jio’s Mardikar observes, “Historically, new technologies in telecom, such as massive MIMO in 4G, take a full generation to mature before achieving large-scale viability. Similarly, while Open RAN has a compelling proposition, it would likely become a default standard in future generations like 6G.”
Advancing AI innovation on a telco cloud foundation
Cloud technology enables the scalability, flexibility, and computational power necessary for handling large AI datasets, training sophisticated models, and delivering low-latency inference at scale. However, many CSPs are slow to harness AI’s promise. While 60% use traditional AI for network performance monitoring—their leading AI use case—fewer than half apply it to other uses, such as predictive maintenance of network equipment (46%), service ticket automation (46%), and network planning (43%). Even fewer deploy generative AI in the network.
Why the hesitancy? 61% of executives cite concerns about data security and privacy as the leading adoption barrier. More than half also cite the pace of technology changes (53%) and the lack of an AI strategy for the network (51%).
47% of executives are also concerned about insufficient in-house AI skills. They report just 26% of their network teams have traditional AI skills, with generative AI skills even scarcer at 13%. As organizations increasingly pair people with domain-specific AI agents capable of performing more complex tasks autonomously, this shortage underscores the need for tailored training programs that equip network experts with AI skills and encourage redesigning jobs to make the most of AI.
“The network domain requires extensive expertise, and simply adding more data scientists doesn’t help if they don’t understand the intricacies of the data,” says Ahmed Hafez, Vice President of Technology Strategy at Germany’s Deutsche Telekom (DT). “It’s often easier to teach network experts basic AI tools than to get data scientists fully up to speed on our domain.”
By deploying AI more extensively, our leader group of technology front-runners demonstrates how cloud readiness delivers the agility and on-demand resources needed for sophisticated AI-driven capabilities (see Perspective, “CSPs leading the way in AI”). 69% use traditional AI for network performance monitoring—including observability and insights—(versus 59% of peers), 62% employ it for network planning (compared to 40%), and 54% integrate generative AI into network planning, double that of their peers.
As leaders in cloud adoption, the tech front-runners also use AI to a greater extent.
Perspective
Visionary CSPs are already harnessing the power of AI and generative AI. Aayush Bhatnagar, Senior Vice President of Jio Platforms at India’s Reliance Jio, explains how AI is at the core of their operational and strategic framework: “Our proprietary AI platform, Jio Brain, operates across three domains: real-time AI for network optimization, near real-time AI for IT processes, and non-real-time AI for data-driven decisions.”
For example, using AI for proactive root cause analysis in Jio’s network helps prevent incidents before they occur, significantly reducing operating expenses. Their AI-driven Agent API supports personalized customer experiences to enhance retention and loyalty. And integration of their energy management platform with Jio Brain is helping optimize energy consumption across radio networks.
Deutsche Telecom has leaped into generative AI with multiple use cases already operational. As explained by DT’s Ahmed Hafez, gen AI powers chatbots for resolving queries, coding assistants in network and IT development, and RAG for complex problem-solving. As a notable use case, Hafez cites their Fiber-to-Home chatbot, which supports third-party contractors with real-time guidance on regulations and constraints for ground-digging based on factors such as terrain, weather, and depth requirement. They also use gen AI as a copilot for interpreting 3GPP standards, improving efficiency in understanding and applying technical documents.
“Our approach is to first identify real problems, consider simple solutions (like if-then logic), then explore predictive AI, and finally turn to generative AI if needed,” Hafez explains. “This ensures we use technology responsibly, avoiding unnecessary complexity and costs.”
Action guide
The journey to a cloud-powered, AI-driven network is rigorous—often requiring changes in budgeting, risk management, and operational culture—but is essential for CSPs to meet evolving customer demands while securing long-term growth and resilience. 5G and AI technologies demand intentional cloud strategies, leveraging both public and private options to optimize business impact and operations.
Reimagine a holistic, agile network architecture and reskill to support it. Executives expect high demand for cloud computing skills to nearly double from 30% today to 59% in 2027. Complement your network experts with cloud and automation specialists so that you can build a dynamic, responsive network that can morph in tandem with market dynamics. Adopt cloud FinOps principles for the financial discipline that bolsters business cases and strong ROI. Embrace open standards and interfaces to help ensure flexibility and interoperability.
Elevate your generative AI use. Start with pilot AI deployments in controlled sandbox environments, establish robust data governance practices, and collaborate with AI vendors who understand telecom’s stringent performance requirements. Devise a thoughtful strategy to tailor existing large language models (LLMs) models to the niche industry and enterprise context, using techniques such as Retrieval-Augmented Generation (RAG) and fine-tuning. Agentic-RAG is emerging as a cutting-edge innovation that automates context understanding and response generation to resolve network incidents more efficiently. Don’t overlook the power of small language models (SLMs) to help balance costs, efficiency, and effectiveness for industry-specific tasks.
Insist that vendors truly be open. Include strict interoperability requirements in contracts, such as adherence to open standards and the availability of well-documented APIs. Organize interoperability testing events or facilitate testing and certification programs to ensure compatibility between vendor equipment. Collaborate with other operators to create a unified front, amplifying collective bargaining power and driving industry-wide adoption of interoperability standards. Integrate interoperability into your strategic technology roadmap and leverage success stories to showcase its importance to vendors.
Part two: Securing the network
A surging number of network security breaches undermine trust and jeopardize cloud and AI innovation.
Trust underpins every service a CSP delivers more than ever, but network vulnerabilities cast a shadow, exposing core services to cyber threats. A parade of breaches in 2024 underscores the grim reality that CSPs are a prime target for cybercriminals. These include the hack of multiple US telecommunications networks to spy on law enforcement officials, the sabotage of French telecom infrastructure, a penetration of a Belgium provider’s administrative systems, and the data breach of an Australian provider. And cyberattacks are more expensive than ever: the average cost of a breach involving more than 50 million records is $375 million.
In our survey, 55% of network executives say they’ve suffered a network security breach in the last 12 months. Adding to the financial losses, these breaches erode customers’ confidence and can ultimately curtail their adoption of services such as private 5G networks, IoT, and AI-driven solutions.
Against this formidable backdrop, 42% of executives consider network security a top challenge over the next three years. An open, hybrid cloud approach means they must safeguard data across different environments, while multivendor network solutions and open networks also broaden their attack surfaces. Yet, their frequency of security audits and penetration testing is disconcerting, with only 36% conducting them quarterly, and 21% biannually. This amounts to leaving the bank vault doors unlocked. CSPs need more effective, streamlined tools and strategies to counter the escalating threats.
55% of network executives say they’ve had a network security breach in the last 12 months.
From reactive to proactive security with cloud and AI
Our data analysis shows a correlation between cloud’s positive impact on security and revenue growth, while our technology front-runners represent the advantages cloud and AI can bring to security. Compared to peers, 45% fewer of these leading adopters of cloud and AI experienced security breaches over the past year.
Cloud technologies help fortify the network against cyber threats, a point reinforced by Plunkett of Boost Mobile, an EchoStar company: “Our open, cloud-native architecture allows for continuous and real-time security enhancements.” Cloud also provides the foundation for advanced AI-driven security frameworks that enable CSPs to shift from reactive defenses to preemptive, automated systems that detect, analyze, and mitigate threats in real time. Our survey found that CSPs are gaining traction using AI, with 59% of executives citing network security threat detection as a popular use of traditional AI in the network. Spam management (33%) and fraud management (31%) are their top use cases for generative AI.
CSPs can better capture the advantages of AI-powered security solutions by transitioning from piecemeal, point-based security to a streamlined platform-based approach. In recent IBM IBV research on security platformization, 57% of CSP executives reported complexity is their biggest impediment to security operations as they wrestle with an average of 107 cybersecurity solutions from 39 vendors. These standalone security solutions often have suboptimal integration and higher costs, while a platform-based approach leveraging automation, machine learning, and AI can unify CSPs’ approach, reduce complexity, and enhance security team efficiency.
Balancing centralized and decentralized security
Strategically, CSPs walk a tightrope between centralized and decentralized security approaches. As with security platforms, a centralized approach can enhance the effectiveness of network security measures while fostering a holistic, coordinated defense. Vodafone’s Wilkinson explains: “Network security is a pan-organizational priority, directly overseen by the CTO. Dedicated teams focus on securing the network, ensuring protection not just for Vodafone’s services but also for third-party applications like Netflix accessed via our network.”
But in our security platformization study, nearly two-thirds of CSPs reported that cybersecurity is not governed centrally. Daisuke Furukawa, Senior Director of the Unified Cloud and Platform Division at Japan’s SoftBank Corp, suggests the need for decentralized security will continue: “Our cloud services will decentralize as social infrastructure expands to activities requiring low latency and high capacity, like aviation, trains, healthcare, and autonomous driving. This shift emphasizes the need for localized security, as communication requirements evolve.”
CSPs will likely need to take a hybrid approach based on their overall cloud strategy, risk tolerance, and security expertise. Combining elements will allow them to leverage the benefits of both, such as centralized threat intelligence and automated response while maintaining a degree of localized control and flexibility.
Viewing security as catalyst for revenue
A robust security posture can also spark new revenue streams via cloud-enabled and AI-driven services, particularly in data-intensive areas such as 5G and edge computing. In fact, in our security platformization study, 60% of CSP executives said their cybersecurity investments have improved revenue generation over the last two years, while 72% reported cybersecurity is essential to innovation. User trust rests on encrypted, reliable data transfers, which are most effectively delivered through resilient cloud operations defended by AI-enabled threat monitoring. End-to-end security—bolstered by tighter governance, frequent audits, and AI-powered protections—is indispensable for a thriving digital business.
Action guide
The threat landscape is evolving at breakneck speed, with adversaries unleashing AI and generative AI to orchestrate increasingly complex assaults. Adding to the risks, the evolution of quantum computing will profoundly alter how you secure critical applications through cryptography. Tight budgets and evolving regulations can be challenging in this tenuous environment, but robust security is an imperative to maintaining continuity of service and protecting customer data, trust, and the bottom line.
Apply hybrid-by-design principles so your cloud, AI, and security solutions work together. Hybrid by design is an intentional approach to technology decisions focused on business outcomes. This includes the integration of security into every technology choice you make for your network. Enforce zero-trust principles to ensure all network access is continuously verified at every functional level. Develop your identity and access management and segmentation strategies in tandem to eliminate opportunities for an attacker to move laterally across the network. Harness the security capabilities of cloud-native technology to enforce access control over API calls from third-party vendors. Regularly assess the security of all cloud and network function virtualization (NFV) providers and conduct pilots that validate security controls under real-world conditions.
Centralize and standardize security management with platform-based solutions. Transition to a platform-based security model that integrates disparate tools for security operations, threat intelligence, incident response, network and platform security, data security, and compliance management into a unified framework. These platforms streamline visibility and governance across cloud, on-premises, and edge operations while reducing complexity. The IBM IBV security platformization study found that CSPs embracing platform-based security solutions saw an average ROI on their security investment of 108% compared to 43% for those that have not yet adopted the approach.
Use AI and quantum-safe capabilities to shift from reactive to proactive threat protection. Leverage AI-powered security technologies to accelerate detection of security threats to the network. Explore gen AI solutions to automate remediation of security issues. Upskill security personnel in how to use AI-based tools, increasing their familiarity with prompt engineering and agentic frameworks. Understand and prepare now for impending future threats, such as encryption risks introduced by quantum computing. Conduct risk assessments to identify systems that could be compromised due to inappropriate encryption standards and upgrade to approved encryption libraries.
Part three: Breaking the monetization deadlock
The maturity of 5G and open APIs—bolstered by cloud and AI technologies—has CSPs poised to unlock the next level of network monetization.
The network’s potential to drive revenue through new services is within reach, but many CSPs still grapple with moving beyond traditional business-to-consumer models. In fact, executives rank network monetization as both their biggest challenge and their lowest priority—a conundrum that's stifling growth in a competitive, rapidly evolving market.
Executives rank network monetization as both their biggest challenge and their lowest priority.
What stands in the way? Investment barriers top the list, driven largely by the need to overhaul hardware and software for 5G Standalone implementation. Technical, regulatory, and business model obstacles follow. These challenges leave CSPs caught between knowing 5G monetization is essential to their financial future and a reluctance to invest without a clear path to profitability. Their hesitation can lead to further tightening of investments, resulting in a downward spiral.
The barriers to network monetization are complex and multifaceted.
Cloud and AI pave the path to monetization
The synergy between cloud and AI is the cornerstone of the modern telecom network, enabling CSPs to stay competitive in an increasingly digital and technologically advanced landscape. When cloud and AI work in harmony, they can enable real-time network intelligence, cost optimization, and personalized services, helping CSPs deliver greater value while adapting quickly to changing market demands.
CSPs cite advantages that represent the link between network modernization with cloud, AI and gen AI adoption, and the creation of innovative services that drive monetization. Their leading benefits from cloud include faster time to market (61%), higher quality of service to customers (58%), and new revenue-generating services (58%).
Our interviews reflect a similar sentiment. “Cloudification offers clear benefits—scalability, faster infrastructure deployment, and better insights with lower investments—making accelerated investment in this space inevitable,” says Abhishek Biswal, Chief Business Officer, Digital Services at India’s Bharti Airtel.
Telecom Argentina’s Fernandez agrees: “Cloudification serves as the cornerstone of our network's digital transformation, driving both business and operational evolution.”
5G and open APIs reveal new avenues to monetization
As part of 3GPP Release 18, 5G-Advanced represents the next phase of maturity for 5G, introducing transformative capabilities such as AI-driven network intelligence, high-precision positioning, and enhanced self-healing (see Perspective, “State of 5G and APIs”). These capabilities enable CSPs to pioneer innovative services in diverse domains such as autonomous vehicles, IoT, and real-time fraud detection.
When paired with robust cloud infrastructure, these advanced functionalities can scale securely, protecting valuable customer data while facilitating rapid service innovation in a market that’s ready. The global 5G services market is expected to grow from $98.3 billion in 2023 to $427.7 billion by 2028, while the Standalone 5G network market is projected to increase from $44.9 billion in 2025 to $4.7 trillion by 2034. With 6G looming on the horizon for 2030, CSPs can build on 5G-Advanced solutions to drive real business value that can be achieved through integration of AI into all aspects of a CSP’s network.
At the same time, the telecom API market size is growing, with revenue of $320.9 billion in 2023 increasing to an estimated $664.9 billion by 2028. Open API projects—such as The Linux Foundation’s CAMARA, GSMA’s Open Gateway, and TM Forum’s Open API initiative—are democratizing developer access to network capabilities, underscoring the need for CSPs to actively court a robust developer community to enable scalable solutions.
Leveraging APIs as critical enablers for both internal efficiency and external service offerings is a growing approach. Vodafone’s Wilkinson explains: “We have been working on implementing an API layer across our network to enable Network as a Service (NaaS), simplifying the inherent complexity of 5G Standalone, SDN (software-defined networking), and Open RAN. This abstraction allows the network to be made available in an API-driven, automated manner to internal consumer and enterprise units, as well as external users.”
Collaborations such as Aduna, the joint venture among Ericsson and multiple global operators, are designed to facilitate seamless access to carrier networks, fueling solutions that simplify and monetize network capabilities. Similarly, API alliances formed in local markets, such as Indonesia, allow operators to combine their user bases to offer unified access across the country. Indosat’s Kumar says, “This collaboration helps create a stronger position against competitors.” These new efforts by CSPs to proactively tap into network API opportunities position them to create bold business models that can convert new capabilities into revenue.
Perspective
Source: GSMA Intelligence data; 5G Services Market Size, Share, Growth Analysis, by Communication Type, End User, Application, Enterprises, and Region – Global Industry Forecast to 2028; Standalone 5G Network Market Research Report: By Application, By Network Architecture, By End Use, By Deployment Model, and By Region – Forecast to 2034; 5G IoT Market by Component, Network Type, Organization Size, Type, End Users and Region – Global Forecast to 2028; “Telecom API Market by Type of API, User, and Region – Global Forecast to 2028; GSMA Open Gateway: State of the Market, H2 2024
Adapting business models
CSPs are choosing different paths to monetization (see Perspective, “Network monetization strategies vary by geography”). For some, 5G and network APIs are enabling dynamic consumption models, but these challenge traditional subscription paradigms. CSPs must innovate pricing models and adopt AI-based frameworks as part of the solution. “Delivering flexibility without harming profitability will require both technological advancements—expected in three to four years—and innovative business models to strike the right balance,” says Verizon’s Kalapala.
Other CSPs, such as Telstra, are doubling down on core strengths, refining their portfolio to deliver reliable, secure connectivity at scale. “In many ways, telcos are at a crossroads. There is a legacy from the role they played in the 90s and being everything to everyone,” says Nathan Gumley, Executive for Strategy and Transformation, Products and Technology at Australia’s Telstra. “This history has led to more and more attempts to diversify and pull value from adjacent markets. But there is also a great opportunity for telcos to really focus on what they do best.”
Jio’s Mardikar suggests a better understanding of industry nuances can open the door to fresh opportunities. In our survey, network executives favor government, healthcare, and banking and financial markets as both the easiest and most valuable industries for monetizing their networks. Indeed, a growing synergy between CSPs and banks is setting the stage for creative mobile finance solutions, such as enhanced banking services through mobile phones and digital payments. Verizon’s Kalapala predicts that heightened fraud risk and privacy concerns will entice consumers toward services that protect their financial information, driving traction in API-based monetization over the next two years. Security will remain paramount to success, making secure cloud environments and AI-powered fraud detection critical.
Reinventing culture to compete in the modern marketplace
To meet this pivotal moment for network monetization, CSPs must embrace the ethos and culture of cloud-native enterprises: accepting greater risks, learning from failure, and pivoting fast. “The willingness to adapt and pivot quickly is crucial in a rapidly evolving technology landscape,” says Vodafone’s Head of Digital Networks and OSS Europe, Simon Norton. “Rapid iterations, experimentation, and the ability to admit failure are essential for progress.”
In parallel, CSPs must jettison traditional telecom mindsets and broaden their perspectives, says Jio’s Mardikar. “It's not just about adopting cloud or AI—it’s about using this architecture to serve differently while rethinking how we operate and engage with customers.”
Indosat’s Kumar agrees: “By fostering a strong relationship and trust with customers, we aim to position our company as a provider of value-added services, opening opportunities for upselling and monetization of additional content or capabilities.”
A willingness to collaborate will also be key as technology advances. Telstra’s Gumley suggests the shift to eSIMS introduces new opportunities. “This change could unlock new propositions and ecosystems and an increasingly digitally-driven, partner-centric approach with more choice for consumers,” he says.
Perspective
Market maturity, regulatory environments, and customer needs drive different monetization strategies across regions:
- North America. Enterprise-driven use cases, using private 5G networks and APIs to tailor solutions for industries such as manufacturing and logistics. Advanced API adoption supports Network-as-a-Service offerings.
- Europe. Consumer services and public-sector initiatives that balance innovation with strong governance frameworks such as GDPR. Collaborative API initiatives support cross-operator services.
- Asia Pacific. Consumer-driven applications such as gaming and IoT, with some CSPs applying 5G monetization through app-based micropayments. API marketplaces help unify developer access.
- Emerging markets. Flexible pricing to attract customers. Strategic alliances with major vendors (such as Nokia, Ericsson, and Huawei) and nonprofits (such as the Telecom Infra Project) to offset capital expenditures and operational complexities.
“Network monetization remains a challenging conversation for CSPs, especially in low economic countries,” says Indosat’s Kumar. “Many countries still view telecommunications as a necessity. … As society uplifts, people will become more open to using telecom services for banking, medicine, education, and other lifestyle improvements, opening doors for more monetization opportunities.”
Source: Based on IBM internal expertise and interviews with global communications service providers.
Action guide
Now is not the time to be timid. When CSPs treat security, cloud, and AI as shared foundations, monetization can shift from a challenge to an ever-expanding opportunity. Those taking a problem-first approach to investing strategically and courageously in solutions that meet customer needs—while adopting a collaborative, cloud-native mindset—can emerge as trailblazers in a hyper-competitive market.
Embrace co-opetition. “True value can be unlocked through joint efforts across the industry,” says MTN’s Angelopoulos. Build alliances with other operators in your local markets to consolidate APIs and create a unified marketplace that can be used for revenue-generating opportunities. Then identify unlikely partners in other industries to co-create nontraditional, high-impact products and services. Adopt an outside-in mindset to address customer pain points. Ensure security is a shared priority, including data governance protocols and compliance measures that foster trust among all ecosystem players. Start with a minimum viable ecosystem to establish how all partners can benefit and implement governance to foster collaboration and mutual growth.
Assimilate the startup mentality by working with startups. For larger CSPs, become an incubator for network startups. Provision a dedicated developer environment and offer free or low-cost network testing environments with real 5G capabilities. This allows startups to build and test innovative applications, with CSPs potentially acquiring equity or revenue shares in return. Co-develop AI-powered tools for predictive analytics, cybersecurity, and enhanced customer experiences with startups. Host hackathons and competitions to engage global developer communities in solving industry-specific challenges (such as telemedicine or smart agriculture). For smaller CSPs, consider forming collaborative alliances or consortiums with other operators and local industry groups to pool resources, share testing facilities, and jointly fund developer programs.
Champion industry standardization. Actively contribute to industry initiatives such as the CAMARA open-source project for standardized telecom APIs, GSMA’s Open Gateway, and TM Forum’s Open API Project. Provide input on AI-related elements to standards groups, such as 3GPP and the Internet Engineering Task Force, to help ensure the industry’s evolution aligns with technological advancements. Keep security standards at the forefront of these efforts to further strengthen trust in cloud-based, AI-driven network services.
Conclusion
CSPs are charting their course in the modern era of communications, poised to leverage cloud and AI as the twin engines that will propel them forward. This potent duo helps safeguard the network against mounting security threats, reinforcing customer trust and confidence in new products and services. At the same time, cloud and AI can clear new avenues to monetization as the network transforms from a mere conduit of data to a fertile ground for meeting changing customer demands and crafting personalized services. CSPs with a vision for seamlessly integrating cloud and AI into their network fabric—using them to reimagine the role of the network—can stake an advantage in a competitive marketplace.
Voices of the executives
From November 2024 through January 2025, we selected 14 executives from leading companies in the telecom industry to interview one-on-one to validate and explore the survey results in more depth. Their expertise is reflected in the report and below in these select quotes.
On cloud and AI adoption
“It's not just about adopting cloud or AI—it’s about using this architecture to serve differently while rethinking how we operate and engage with customers. We’re close, but achieving this requires a fundamental shift in perspective.”
Shyam Mardikar
President and Group CTO of Mobility, Reliance Jio
“This progression—virtualization, cloudification, automation, and AI—is a necessary sequence for the future of the industry.”
Srinivasa Kalapala
Senior Vice President, Technology and Product Development, Verizon
“Our secret sauce lies in hiring cloud and automation specialists rather than telco veterans, enabling us to push major vendors to become truly cloud native.”
Kevin Plunkett
Vice President of Cloud Services, Boost Mobile, an EchoStar company
“The network domain requires extensive expertise, and simply adding more data scientists doesn’t help if they don’t understand the intricacies of the data. It’s often easier to teach network experts basic AI tools than to get data scientists fully up to speed on our domain.”
Ahmed Hafez
Vice President of Technology Strategy, Deutsche Telekom
“A structured program is needed to standardize AI knowledge across the organization, fostering curiosity and readiness for technological evolution.”
Miguel Fernandez
CTO, Telecom Argentina
“The success of cloud-native workloads in telecom is less about their inherent nature and more about the mindset of agility and innovation they enable. The ability to quickly identify market opportunities and support business development relies on the automation capabilities brought by cloud platforms, rather than simply their cloud-native architecture.”
Iain Wilkinson
Principal Enterprise Architect for Strategy and Architecture of Cloud, Vodafone Group
“While gaps in technology needed addressing, right now, Open RAN is ready for massive scale deployment.”
Francisco Martín Pignatelli
Head of Open RAN, Vodafone Group
On security
“Security requires proactive investment, research, and partnerships. We also prioritize advanced solutions like quantum security. Our 5G core is quantum-secure to prevent man-in-the-middle attacks, and we advocate for quantum security in enterprise 5G and edge computing.”
Aayush Bhatnagar
Senior Vice President, Jio Platforms, Reliance Jio
“We have implemented a centralized cybersecurity pillar, ensuring a unified approach to detection, response, and backup security.”
Amit Kumar
Senior Vice President, Technology Strategy Enterprise Solutions, Indosat
“Our projection is that cloud services will decentralize as social infrastructure expands to activities requiring low latency and high capacity, like aviation, trains, healthcare, and autonomous driving. This shift emphasizes the need for localized security, as communication requirements evolve.”
Daisuke Furukawa
Senior Director of the Unified Cloud and Platform Division, SoftBank Corp.
On network monetization
“[The shift to eSIMS] could unlock new propositions and ecosystems and an increasingly digitally-driven, partner-centric approach with more choice for consumers.”
Nathan Gumley
Executive for Strategy and Transformation, Products and Technology, Telstra
“Future growth depends on maturing use cases for monetization and developing unified orchestration APIs for consistent user experiences. This will require industry collaboration, similar to past successes in CPaaS and voice.”
Abhishek Biswal
Chief Business Officer, Digital Services, Bharti Airtel
“Monetization requires identifying innovative use cases that generate new value streams. AI holds immense potential in this regard, limited only by our imagination.”
Nikos Angelopoulos
Group CIO, MTN Group
“The willingness to adapt and pivot quickly is crucial in a rapidly evolving technology landscape. Rapid iterations, experimentation, and the ability to admit failure are essential for progress.”
Simon Norton
Head of Digital Networks and OSS, Vodafone Group
Meet the authors
Rahul Kumar, Senior Partner and Vice President, IBM Consulting Global Industry Leader for Telecom and Media, IBM Industry Academy MemberEoin Coughlan, Global CTO, Industry Engineer, TME, IBM
Rakhee Chachra, Global Telecommunications Leader, IBM Institute for Business Value
Download report translations
Originally published 21 February 2025
