Telco use-cases for AI: A simple categorisation model

The coming years will see the application of AI technology across all sectors of the economy and life. The telecoms industry is no different. Although I’ve been commenting on telco-sector AI in the context of “TelcoFuturism” for some time (link), and co-ran a workshop on it in May 2017 (link), the last few months have seen a notable upswing in interest. I’d say that the public use-cases now seem to be significantly in advance of those for blockchain, in terms of potentially-transformational technologies.

That said, it can still be hard for many executives to grasp exactly what is likely to change, and when, for AI/telecoms combinations. This is highlighted by the surge in AI-related panels, presentations and even complete streams at industry conferences – although sometimes I see more interest from generalist AI people about the telecoms vertical, versus telecom specialists looking at what’s new. 

Both sides of the equation have large volumes of obscure acronyms, multi-layered technology stacks, and complex volume chains – which can mean that mutual understanding is often confined to narrow niches. AI covers machine- and deep-learning, language processing, machine-vision and much more. Telecoms includes vast realms of internal systems and processes that are unknown to most who are not insiders – domains like core networks, OSS/BSS, network optimisation, toll fraud and service-assurance are alien to those not steeped in the industry.

One of the ways I’ve been using to “set the scene” for describing AI/telecoms intersections is to simplify and categorise the use-case areas. I count three, possibly four, large “buckets” into which a variety of telecom AI impacts will fit. These buckets are not based on either specific AI or telecoms technology slices, but more on understandable business functions and roles:

• Dealing with customers
• Managing operations
• Creating new services
• (External risks)

 Within each of these areas, there are many, many sub-sectors – and also some overlap.

“Dealing with customers” can include everything from voice/text chatbots for customer-service, through to predictions of which customers are least-happy and may “churn” to competitors. Where telcos have retail outlets, it could incorporate various in-store technologies, or it could be about smarter web-consoles for B2B customers running complex managed services.

“Managing operations” is even more diverse – it could be fault prediction for network elements, optimising the 100s of configuration variables for radio networks, spotting fraudulent traffic to international premium-rate numbers, allocating engineering resources more productively, or protecting against hackers and malware. There are hundreds of possible uses here, which mostly overlay on top of existing operational/business support systems (OSS/BSS) See also my recent post (link)

“New services” also spans a range of areas, but broadly splits between AI-enabled and AI-enabling services. An AI-enabled service could be a local-language voice assistant added to a cable operator’s set-top box or remote control. Or it could be the provision of integrated “smart city” solutions including video-cameras and security analytics. AI-enablement could include offering “edge” servers for hosting local processing, milliseconds transport-time away from a device, or it could be the provision of anonymised bulk data for others to apply algorithms to. Telco opportunities with IoT+AI include both enablement and enabled services, in numerous manifestations.

The “risks” category includes a diffuse set of possibilities by which AI might harm the telecom industry, or dampen demand for services. Smarter devices (eg autonomous vehicles) will be able to host their own offline image processing & route-planning locally, rather than needing realtime connectivity at 5G speeds/latencies. Another threat could be customers’ smart assistants renegotiating price-plans on their behalf – after crowdsourcing millions of conversations to deduce how best to game the retention staff’s scripts and objections. (Of course in the latter example, the customer-retention team could themselves be bots). Numerous types of automated “least-cost X” and arbitrage engines are likely to emerge. Various security risks are also probable here too.

Clearly, using just these four "buckets" misses much of the fine-grained detail. But I find it helpful as a starting point, as most top-level industry issues apply differently to each. 

Consider input data, for example – for both customer management and operations, telcos have abundant historical records and ongoing data collection that may generate terabytes per day. But for the former, privacy considerations often come to the fore in terms of regulation and risk, while this is far less of a concern for internal operational data, for example on how the network is running. For new services, almost by definition the focus is on collecting/processing/transporting new data, rather than deriving conclusions from existing sets. 

This four-way framework is also useful for thinking about different types of ROI model - split broadly between impacting existing revenues, existing costs, new revenues and potential changes to underlying assumptions. 

I'll be covering these topics in more depth in various upcoming presentations and reports, as well as looking at other areas of telco-linked innovation such as blockchain, 5G and enterprise verticals. Please get in touch if you would like more detail, or are interested in internal workshops, external support through events or white papers, or are seeking ongoing strategic advisory support.

Apple Upgrade - will carrier activation be done with an eSIM or Apple SIM?

The iPhone 6s still has an ordinary SIM slot. Next year, I predict that the iPhone 7 will still have an ordinary SIM slot too. 

But Apple's new Upgrade installment plan that allows people to get a fresh new smartphone every year might change the SIM in the longer term. It's US-only to start with.

There is also a possibility of a removable Apple SIM as part of the Upgrade plan - a similar concept as the one in last year's iPad. That's more likely for next year rather than this year.... but at the time of writing this post (11th September 2015) Apple still hadn't put up the full details of how "carrier activation" would work on the web, so it's *possible* that there will be a surprise coming much sooner (maybe even tomorrow, when pre-orders start).

There is also a possibility that the iPhone 7, next year, will have an embedded "eSIM", although it would also need to have a proper SIM slot too, or at least two versions to choose from.

The Upgrade programme makes a lot of sense - most US carriers now have some form of installment plan for smartphones, rather than a bundled-in "subsidy". That's actually been part-driven as an effect of changing accounting rules, which restrict the bundling of products and services in reported revenues. See this article here from last year, and my own 2007 post where I mused about the economics of phone subsidies, here.

The Upgrade plan allows customers to get their iPhone finance plan from Apple, rather than through AT&T, Verizon, T-Mobile or Sprint. (For Apple, it's actually a lease underwritten by Capital One). The one-year cycle allows Apple to potentially increase revenues, while running this through the Apple stores removes the risk of last-minute switching to Android devices, with a nudge from a carrier salesperson who's been incentivised to pitch Samsungs.

But a couple of things are left unsaid at the moment. When Apple talks about setting up and "activating" your phone on the carrier of your choice, what does that actually mean? 

For some users, it will just mean taking the SIM out of your existing 5s or 6, and popping it into a shiny new 6s. But what if you want to switch to a new carrier - or perhaps a new plan? Will the Apple store keep a stock of SIMs from all the carriers and activate them on the spot, like an independent phone shop? Or.... will it perhaps use Apple's own SIM, with a remote-activation setup menu as on last year's iPad? [EDIT: it has been pointed out to me that Apple already stocks some SIM cards in its US stores. Question remains though, which plans? Including prepay or just normal multi-year contracts?]

[My take on the Apple SIM last year was posted here. As I argued at the time, it has not been a big deal. Other carriers have not signed up, beyond a provider called GigSky, which appears to work with major global carriers like Digicel and Vodafone on a roaming basis]

In theory, and with the cooperation of the carriers, the new 6s could work with an Apple SIM card as well. Rather than walking out of the Apple store and then going to a carrier store for a SIM separately, it would be easier to just remotely download and activate a "profile" on either a blank (Apple-branded) SIM, or in future, to an embedded SIM chip inside the body of the phone. Ideally, Apple would love to do away with the design compromises from cutting a slot in the device, reclaiming space and removing a clunky mechanical component.

However, various scenarios here would require some complex behind-the-scenes processing, like porting your existing mobile phone number, and also maybe dealing with contract termination fees. This is why I have my doubts that it will happen this year, and even next year will have some headaches. They're not insurmountable for Apple - but they probably are insurmountable for others, for anything other than IoT-type deals like Samsung's Gear S2 watch with eSIM from last week.

Either way, whether it's this year or next, the Upgrade plan gets customers used to the idea that you "activate a carrier" on an iPhone bought from Apple. And given that there is no subsidy or payment plan from the carrier, there is no justification for 2-year contract plans, either.

If you have an unlocked iPhone, you'll be much more amenable to getting a rolling and cancellable 1-month contract (already popular in the UK and elsewhere, but less-so in the US) or even a full pay-as-you-go prepay account. You might even choose to go for a data-only SIM, and "bring your own voice".

In that scenario, it actually doesn't really matter (for now) which SIM model Apple uses:

• Swap out your existing SIM & put it in the new iPhone, in the Apple store
• Buy a SIM from a carrier store & put it in the iPhone
• Buy a SIM sold in an Apple store & put it in the iPhone
• Get a removable Apple SIM supplied with the iPhone, activate a carrier if it's chosen to be on the menu, or else take it out & buy a separate SIM as per the options above
• Have an eSIM inside the phone and activate a carrier of your choice, if they're on the menu. (If not, then there's probably a version with a proper SIM, as some countries' operators won't all be eSIM-ready anyway).

Long, long term (maybe 2020 to coincide with 5G) we might get to the "promised land" (or dystopia, depending on your viewpoint) of fully virtual SIMs, but don't hold your breath.

The problem with the eSIM / downloadable Apple SIM type model has always been getting carriers to agree to be involved. I've been skeptical that the model had legs, because of this. But the installment / upgrade plan - and Apple's footprint of own-brand stores - seems to be a victory thought up by a clever game-theorist.

One of the carriers will likely agree to in-store activation on Apple SIM / eSIM - or at least, agree to having their SIMs stocked in Apple's retail outlet. It saves customers a second shopping visit. And then the other carriers may be forced to follow suit. Given that at least *some* people will be able to activate their 6s "on the spot" by simply swapping out their existing SIM, there's even greater incentive to use the Apple Store as a point of decision, if you're trying to capture people ready to churn.

Apple has essentially flipped the cellular sales model on its head - rather than a Verizon/AT&T salesperson having the power to convince a user to switch to a Samsung in a carrier store, it's now in a position to convince users to switch to a different carrier, in an Apple store.

The interesting line on Apple.com is this: "Because the iPhone Upgrade Program isn’t tied to a single carrier, you don’t need a multiyear service contract. If you don’t have any carrier commitments, you’re free to select a new carrier or stick with the one you have. A Specialist can answer questions and help you set your iPhone up the way you like." Note the absence of the word SIM, and the phrases "select a new carrier" and "set up your iPhone". That's rather significant - it implies the SIM is available in-store, in some fashion, for the carrier to be "selected".

So in many ways, the actual SIM mechanism is irrelevant here - it's the retail footprint that matters. Lots of carriers are worried about the eSIM / Apple SIM meaning they "lose ownership of the customer", but the truth is more prosaic: it's the physical store that's the point of control / decision, because it plays to the human psychological need for instant gratification. Even online purchases are clunkier - unless you have same-day delivery, there's an in-built lag for activation anyway. Of course, it's also important that other device vendors don't have a similar retail presence.

Now obviously, the Upgrade plan isn't actually needed here. Nothing stops people from walking into an Apple Store and buying an unlocked phone at full retail price & getting a SIM card however they want anyway. But in the US at least, that's still very much a "minority sport", because of the price tag involved. It's just not how people buy phones, when they're accustomed to an apparently "free" or cheap handset. The monthly plan - and upgrade cycle - might change that, as it alters perception. It's also a clever lead in to some form of programmable SIM card, when it's worked out the various kinks and practicalities.

I suspect that Apple isn't 100% sure how customers will take to this. And it's probably ironing out various kinks and complexities with any sort of remote activation. It may want to wait until all the carriers have back-end systems capable of handling it, rather than risking relationships by jumping the gun with just one or two. Again, the game-theorists are probably trying to work out how to avoid one or more carrier stopping selling iPhones entirely in their own stores, which would have definite negative impact, in the short term at least.

My view on programmable SIMs / eSIMs is that business model is pretty much unworkable, except, perhaps, for Apple. Let's see what happens either next week, or next year.



I've been doing a lot of work thinking about SIMs, eSIM, programmable SIMs, multi-IMSI and so forth recently. Over recent months, I've done a variety of private consulting projects and presentations on my thoughts on SIMs. I've been looking at the announcements, and also considering what the commercial, technical and regulatory implications of various evolution paths might be. If you're interested in a workshop on this, please get in touch via information AT disruptive-analysis DOT com