Telecom service providers are not ready for the AI economy, and the gap is in their networks and operations, Kim Krogh Andersen, Group Executive – Network, Product and Technology at Telstra, said during the recently concluded FutureNet Asia event.
He spoke candidly about his own company’s position, saying a recent internal assessment put Telstra below Level 2 on TM Forum’s Autonomous Networks Framework, which uses six levels (Level 0 to Level 5) to rank a telco’s progress to full autonomy. “It is a bit of a downer to talk about intent-based slicing before you get the fundamentals right,” said Andersen. He argued the industry will not reach Level 4 without letting go of legacy systems and simplifying and modernizing their networks and operations.
“AI exploits the vulnerabilities, the basic stuff we have not done in the past,” he said, pointing to frontier models that can find and exploit gaps at machine speed.
Back to the core
Andersen believes telcos should focus on their core, which is their networks. “Our strategy is to get back to the core, but grow and innovate from the core. No one on Earth can convince me that compute and storage in a rack in the data center is more sophisticated than connectivity. It’s not. But we have lost our confidence.”
The industry should adopt a product-engineering mindset and move away from its habit of selling “buckets of megabytes and gigabytes, not outcomes,” he argued.
“The network of the future will be fundamentally different. We cannot wait five or 10 years to prepare for it, we need to build the foundations now. We need to think of the network as always-on connectivity supporting agents, devices and autonomous workflows across society, because in an AI-driven world, connectivity will underpin far more than communication,” said Andersen.
“The network is our product, and we need to treat it that way. That means adopting a product-engineering mindset, continuously improving network capabilities and managing them throughout their lifecycle, rather than deploying equipment and revisiting it only when it reaches end of support. It also means addressing legacy infrastructure, because we cannot build the level of automation and intelligence required for an AI-driven future on fragmented and outdated foundations,” he added.
Andersen’s comments come at a time when telcos across the world are struggling to grow their revenue even as the demand for connectivity keeps rising. While service providers are required to make heavy capital expenditure to keep up with growing traffic, revenue growth has stayed low in most markets. On the other hand, the hyperscalers and content providers are able to capture the value from traffic growth.
He compared service providers with cloud providers, which earn more as consumption increases. This, he said, is mainly because telcos remain “domestic by nature” and are unable to replicate a global playbook, which is why he believes APIs are the best way to monetize telcos’ network capabilities.
“We are building APIs. We have six APIs deployed to ensure application providers can start getting access to these attributes. We have to start monetizing these capabilities, and the capabilities will be more sophisticated when AI becomes more mature as well,” Andersen elaborated.
He also said AI traffic patterns are changing network demand. Uplink is growing faster than downlink, and latency matters both between data centers and between data centers and end users. Telcos need business models built around those patterns, he argued.
Tokens, cost and control
For Telstra, token consumption grew 275% last year and now averages 15 billion tokens a day, across more than 400 use cases while costs dropped by 7% He noted 56% of tokens go to the customer experience layer, including Telstra’s first AI voice agent for customer calls. Software engineering takes 24%, autonomous networks 12% and cybersecurity 8%
He mentioned Telstra’s joint venture with Accenture, which gives Telstra “one governance view to responsibly manage and optimize its AI ecosystem. It shows what’s running, how it is performing, where risk or cost could emerge, giving Telstra the opportunity to act early and make data driven decisions.”
Andersen urged the industry to “not look at someone else out there to save this industry. It’s us.”
