Will Telcos Prove Better at AI Innovation?

Here we go again: telco leaders are talking about how they might use artificial intelligence to create new or bigger roles as solution providers for enterprise customers. Perhaps they should be applauded for trying to innovate. 

On the other hand, past efforts for decades have generally failed to get traction. The laundry list of reasons always includes inability to move fast enough; inability to scale, probably because the innovations are not a core telco competency. 

Oh, and let’s not forget that few enterprise customers seem to look to telcos for such solutions, as they rarely are “best of breed.”

Over the past couple of decades, for example, “telcos” have tried to gain traction in any number of areas, largely without success. 

Telco Initiative	Description	Reason for Lack of Success
Telco Cloud Services	Many telcos attempted to compete with AWS, Azure, and Google Cloud by offering cloud computing and hosting services.	Lacked scale, ecosystem, and expertise compared to hyperscalers; enterprises preferred established cloud providers.
IoT Platforms	Telcos tried to build and sell proprietary IoT platforms for enterprises.	Struggled against specialized IoT providers; monetization limited to connectivity.
Edge Computing Services	Aimed to offer low-latency computing solutions at network edges.	Market adoption slow; enterprises preferred cloud-based edge solutions from hyperscalers.
Mobile Payments (Telco Wallets)	Many telcos launched mobile payment and digital wallet solutions.	Banks, fintech firms, and tech giants like Apple and Google dominated the space.
Unified Communications as a Service (UCaaS)	Some telcos attempted to create UCaaS solutions for enterprise collaboration.	Slack, Microsoft Teams, and Zoom captured the market.
Enterprise Security Solutions	Telcos tried to offer managed security services beyond network security.	Cybersecurity specialists (Palo Alto, CrowdStrike, etc.) provided better solutions.
AI-Powered Customer Engagement Platforms	Efforts to develop AI-driven chatbots and automation for enterprises.	Enterprises preferred AI solutions from CRM providers like Salesforce and Zendesk.
Blockchain for Enterprise	Some telcos explored blockchain-based business solutions.	Failed to find compelling use cases beyond experimentation.
Industry-Specific 5G Solutions	Telcos promoted private 5G networks for industries like manufacturing and healthcare.	Adoption slow; enterprises hesitant due to costs and complexity, Wi-Fi 6 remains a strong alternative.

If you wanted to go back further, in the 1980s and 1990s, telcos also tried to enter many new “up the stack” businesses, without notable success. 

Telco Initiative	Era	Description	Reason for Lack of Success
Videotex & Interactive TV	1980s	Telcos attempted to provide interactive information services (news, shopping, banking) via phone lines.	Outcompeted by the internet and early web browsers; lacked compelling content and user adoption.
ISDN as a Business Communications Standard	1980s-1990s	Telcos pushed ISDN (Integrated Services Digital Network) as the future of business telephony and data.	Expensive, complex, and slow adoption; DSL and Ethernet-based broadband became dominant.
Telco-Run Online Services (e.g., France’s Minitel, BT’s Prestel, BellSouth’s Interchange)	1980s-1990s	Early telco-operated online platforms offering directory services, messaging, and commerce.	The rise of the open internet and web browsers (e.g., Netscape, AOL) made closed telco systems obsolete.
Telco-Owned PC & Business Computing Services	1980s-1990s	Some telcos (e.g., AT&T, BT) tried selling PCs and IT services directly to businesses.	Lacked expertise and faced competition from specialized IT firms (IBM, Microsoft, Dell, HP).
Telco Private Networks Competing with Enterprise LANs	1990s	Telcos promoted managed private networks as alternatives to on-premises LANs.	Ethernet and local networking equipment (Cisco, 3Com) became the preferred standard for enterprises.
ATM (Asynchronous Transfer Mode) for Business Networks	1990s	Telcos tried to make ATM a standard for enterprise networking and broadband.	Too costly and complex; Ethernet and IP-based networks dominated.
Telco-Controlled E-Commerce Marketplaces	1990s	Some telcos attempted to build proprietary online marketplaces for businesses.	Amazon, eBay, and other internet-based platforms grew faster and were more user-friendly.
Telecom-Managed Email and Messaging Services	1990s	Telcos tried offering enterprise email and messaging solutions.	Microsoft Exchange, Lotus Notes, and later, web-based email services (Hotmail, Yahoo) won out.
Early Telco Cloud & Data Hosting Services	1990s	Telcos experimented with hosting business applications and storage.	Poor execution, lack of scalability, and competition from early web hosting companies.

Perhaps it will be different this time. But history suggests just how difficult the task will prove.