2024 telecom industry outlook

The relentless demand for connectivity

While 2023 launched generative AI (Gen AI) into the world, 2024 is expected to see CSPs bringing the Gen AI proofs of concept they’ve been developing into the market. This will require them to better understand the costs and risks of data conditioning and governance, training foundational models, running inference at scale, and building guardrails to minimize errors and hallucinations. Many are already zeroing in on which kinds of data enable the best Gen AI use cases for their businesses. They will likely also look more closely at their data quality, security, and governance, and the implications of sharing it all with cloud providers.

Like all times of great change, there are risks and opportunities. CSPs have large cost burdens and larger responsibilities to deliver reliable connectivity and quality of service. In 2024, their investments could be challenged to pay off, and the businesses they once held dominion over will likely face strong competition from multiple quarters, especially in home broadband. Yet they may also have an opportunity to redefine their place in the connectivity ecosystem and strengthen their future position.

In our 2024 telecommunications industry outlook, we’ll take a closer look at these major forces at play and five key trends expected to shape the industry in the year ahead:

• CSPs are evaluating and experimenting to understand what it takes to implement generative AI: what the costs look like, what the return on investment is, where they can develop early use cases—and where they can’t yet. As they work to operationalize their generative AI models, more opportunities are emerging, especially in customer care, customer service, and network performance.
• Across industries, workplaces have been shifting toward flatter organizational structures that give individual employees more power and autonomy. Although global telecom organizations may have lagged in this shift until now, they particularly need fewer silos and more cross-functional corporate structures.
  
• In 2024, US consumers will enjoy far more options for broadband connectivity—more than double the amount previously available. The abundance of options reflects more competition among providers—and technologies—working to meet the evolving connectivity needs of consumers.
  
• Cloud providers have been increasingly competing directly with CSPs since the pandemic and may be reaching a global tipping point in 2024 where some buyers of connectivity services could see cloud companies as possible alternatives to CSPs for multiple services, potentially eroding revenues and profits.
• Although 5G networks are still being launched in some new geographies, and networks are being made denser, the bulk of CSP spending on 5G equipment seems to be behind us, and there are few signs that the trend will reverse. This has positive implications for CSPs that may have higher free cash flow as 5G build-out settles but has negative implications for the companies that make 5G wireless equipment. 

Download the full report to learn more about the impacts of telecom industry trends, key actions to take, and critical questions to ask.