skip to main content

Straight Talk Consumer and Entertainment Services

Ovum view

A small but growing number of telcos have launched AI assistants, including Orange (Djingo), Telefónica (Aura), Deutsche Telekom (Magenta), K Telekom (Nugu), and KT (GiGa Genie). They are competing in a space dominated by the big consumer tech players such as Amazon (Alexa), Apple (Siri), Google (Google Assistant), Microsoft (Cortana), and Baidu (Duer). These assistants are highly popular and are backed up by AI expertise that is hard to match, meaning that telcos struggle to innovate and push boundaries to the same extent. This raises the question of whether it's worth telcos investing in their own AI assistants. The short answer is that although telco AI assistants create value if they are well positioned, this is not easy to achieve and many telcos will fall short.

AI assistants optimized for telco services have the potential to pull customers more deeply into telcos' ecosystems. They allow consumers to interact with telco services in a unified framework, via a convenient and fun conversational or visual interface. They can support semi or fully automated customer care functions and enhance upselling and cross-selling scenarios. The deep data insights they generate can be used to better understand how and why people use services, which in turn can be used to further improve CSP service offerings and drive automated personalization at scale.

However, many consumers still don't see the benefit of AI assistants, as they prefer to interact with humans or find the experience of interacting with AI assistants frustrating (see Figure 1). To stand out from the crowd, telco assistants need to focus on areas where they can bring genuine value and make an impact. The most immediate way of doing this is to optimize AI assistants to enhance telco services, particularly in the smart home domain. In Spain, Telefónica has integrated Aura into a smart home speaker device to enhance its TV proposition. In South Korea, KT's GiGa Genie is positioned as a voice-activated set-top box optimized for KT's Olleh IPTV media services. KT has launched a version of GiGa Genie with LTE which has opened new use cases and is proving very popular.


Figure 1. Reasons consumers do not want to use digital assistants

Reasons consumers do not want to use digital assistants

Source: Ovum


Service specialization is another area worth developing, although success will depend on the partners and developers that telcos can attract. The problem for telcos is that they will be competing for partners with the likes of Google and Amazon. KT is using GiGa Genie to build a portfolio of audiobooks for children and services for adult learning. KT also wants GiGA Genie to support e-commerce and financial services. It is working on transactional capabilities and partnerships to support this.

Consumer tech and OTT players do not always have the best reputation for data privacy, which could give telcos a chance to differentiate. For example, Telefónica has created a "personal data space" for users which is integral to the evolution of its big data capabilities as well as Aura. The personal data space allows users to access all their data and through a timeline feature. Eventually Telefónica hopes to create a data exchange, whereby users can choose which data to share with selected third parties in return for enhanced services or other value-added products.

A big question for telcos is whether they should integrate their assistants into other platforms and other assistants, and if so, to what extent? There are pros and cons on either side, but in our view an open approach is best. The risk of integration is that the telco's relationship with the consumer is diminished. But the dangers of not integrating could be worse. Telcos don't want to be in a situation where consumers are forced to choose between the telco assistant and, say, Amazon Alexa, as the outcome may not go their way. Telco AI assistants need to be where consumers are most likely to call on them; they cannot survive in a vacuum. Moreover, telco AI assistants are first and foremost optimized for telco services; they are not general-purpose assistants like those of consumer tech rivals. In this context, telco AI assistants can coexist rather than directly compete with consumer tech AI assistants. This is the best approach for telcos, as competing head on would be a race to the bottom.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.