Singapore - 22 Nov 2017

New wave telco virtual assistants, or “Telcobots”, are emerging as telcos increasingly start to adopt artificial intelligence to improve their customer services. While telcos are currently prioritizing these virtual assistants primarily to improve customer engagements and consequently reduce churn rates, they are also positioning themselves to compete directly with the Siris, Cortanas and Alexas of the Webscale giants. ABI Research forecasts that the virtual assistants will enable telcos to save US$1.2 billion on customer care management by 2022 with a CAGR of 17% over the next five years.

This is particularly impressive given that telcos were not the early adopters of virtual assistants.

“The recent introduction of virtual assistants in customer service signifies the level of urgency within telcos to start emphasizing the importance of customer relationships and customer care management, something they have been taking for granted for decades," says Sarju Vasavada, Industry Analyst at ABI Research. “Case in point, Vodafone released TOBi, a virtual assistant to address their customer service woes after being fined £4.6 million by U.K. regulators Ofcom for falsely charging more than 10k pay-as-you-go customers for top-up credit. They also had a record-breaking number of customer complaints until TOBi stepped in.”

Telcobots now assist customers with a variety of issues ranging from basic account inquiries to SIM purchases, service troubleshooting, and technical settings. Several telcos are leveraging AI and NLP heavyweights, including IBM Watson, Nuance, LivePerson, and IPsoft or are building technology in-house. For example, Telefónica is developing their digital chatbot, Aura for 2018, and DT’s Tinka is already averaging 50k customers in Austria every month. However, the most important point is that telcos are realizing the advantages and benefits of adding virtual assistants to their arsenal for customer service delivery and are aggressive in introducing them throughout their footprint.

ABI Research forecasts that AI investments by telcos will reach US$14 billion by 2022 with a CAGR of 22.4%. The fruits of early AI investments by TIER I telcos are beginning to grow with Orange and SK Telecom, both announcing the release of their multi-talented chatbots, Djingo and Nugu, respectively in early 2018.

“Telcos are slowly but steadily getting ready for prime time. We are bullish on telcos making this “Next - Gen” leap within next five years,” concludes Vasavada.

These findings are from ABI Research’s Artificial Intelligence in Telecom Networks report. This report is part of the company’s Telco Cloud Platforms & Digital Transformation research service, which includes research, data, and analyst insights.