Telecom sector faces rising risks in cybersecurity, responsible AI and legacy IT
Underestimating changing imperatives in privacy, security and trust and ineffective technology implementation are the top risks for telecom companies around the world, according to research from EY.
Privacy and security
The annual EY report found that when it comes to cybersecurity, IT functions are struggling to respond to a rapidly evolving cyberthreat environment. Alongside technological and organizational challenges, respondents to the survey pointed at inadequate cybersecurity budgets, and a lack of cybersecurity input into cross-function leadership decision-making.
Additionally, many respondents believe that their responsible artificial intelligence (AI) practices are falling short.
Joongshik Wang, Telecommunications Leader at EY for Asean, shares his observations on telcos in Southeast Asia: “For telcos, responsible AI is about trust as much as it is about compliance. As operators in Southeast Asia embed AI into network optimization, new digital services and customer engagement, transparency and accountability become critical.”
“In Southeast Asia’s competitive telecommunications sector, putting in place cybersecurity and data governance frameworks provides dual benefit – operational resilience and the ability to innovate safely for operators, and confidence and service reliability for consumers. Responsible AI practices will determine which telco can turn AI from a technical capability into a sustained business advantage.”
Ineffective transformation through new technologies
Challenges with transformation via new technologies rank second this year, with several factors hampering their efforts to scale up their AI plans. The top concerns of respondents globally around AI adoption include resource constraints and the difficulty of developing effective governance frameworks (both 55%), ahead of regulatory complexity (53%) and challenges around use case prioritization (40%).
These uncertainties are resulting in companies taking dramatically divergent approaches to AI: while 33% are planning to accelerate future AI investments on the back of previous positive results, almost as many – 32% – are scaling back or reconsidering future AI investments.
Compounding these pain points, telcos globally also face ongoing pressure to decommission legacy IT systems and older network technologies – vital if they are to increase levels of efficiency and agility.
The challenges around new technologies are compounded by the long-standing but fast-increasing pressures to decommission legacy IT and network elements. Network switch-offs are progressing in both mobile (2G/3G networks) and fixed-line (copper). During these transitions it is vital to manage and mitigate risks carefully to maintain network reliability and manage customer device and service upgrades appropriately.
Wang says: “In Southeast Asia, consumers now expect more reliable networks, bundled services, flexible financing options and integrated lifestyle offerings. To meet these expectations and stay competitive against cloud-native hyperscalers, telcos must modernize their legacy systems and networks to become more agile. This will enable them to evolve from traditional connectivity providers into builders of platforms, solutions and ecosystems that can power the digital economy.”
Inadequate talent and skills
Third on the list of risks is talent. “Telcos need to acquire new skills is being driven by developments ranging from the advancing automation of network and IT functions to in-house platform development and the integration of multi-vendor technology solutions,” says Wang.
The other risks
An overview of the other risks featuring in EY’s top 10 list:
4) Inadequate network value proposition and performance
5) Insufficient adaptation to evolving geopolitical environment
6) Inability to take advantage of new business models
7) Ineffective engagement with external ecosystems
8) Failure to respond effectively to changing customer needs
9) Poor management of the sustainability agenda
10) Inadequate operating models to maximize value creation
Wang concludes: “Macroeconomic uncertainty and geopolitical shifts are now strategic realities, not short-term disruptions. To position themselves strongly in this environment, telcos should look at diversifying supply chains, modernizing infrastructure and staying close to consumer needs.”
