Generative AI, Cost-of-Living Crisis Among Top Telco Risks for 2024

The proliferation of generative AI is going to reshape the 2024 telecoms risk landscape, EY’s Top 10 Risks in Telecommunications report for 2024 has found.

The report also highlighted lack of talent and failure to respond to customer demands during the cost-of-living crisis as key challenges set to shake the industry next year.

The Challenge of AI

“Cyber-resilience is under pressure,” the report said, “with generative AI throwing into question existing data governance strategies.”

Of the survey’s respondents, 68% said they believe they are not doing enough to manage the unintended consequences of AI, while 74% say they need to do more to mitigate against “bad actors” who could use AI for cyberattacks and other malicious activities.

At the same time, 53% of telcos said they believe cyber breaches will cost their companies more than $3 million in damages in 2023, up from 40% in 2022.

The future of legislation around AI is also mentioned as a cause for concern in the telco industry, rising from the No. 10 to No. 9 in terms of telco’s top 10 risk concerns. 

With the deployment of the tech still rising, the pace of change is currently faster than the ability to implement regulations and differences across regions mean companies are struggling to keep up, with this trend expected to extend to next year.

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“In the EU specifically,” the report said, “this has triggered concerns that AI could stifle innovation and limit international competitiveness.”

Tom Loozen, EY’s global telecommunications leader, said revisiting data governance frameworks will be “critical” in this landscape, as businesses look to address emerging risks. 

“This should be accompanied by adopting new approaches to decision-making and leadership interaction that builds consensus on fast-changing issues around cyber-resilience, data ethics, regulation and digital policies,” he said.

Digital Skills Shortage

Attracting the correct talent to manage the changing risks was also high on the list of concerns. With innovations in technologies including generative AI and edge computing, having a workforce with digital talent is increasingly important, and the current lack of network engineers is causing an industry bottleneck.

Financial pressures and budget cuts are also impacting this skills gap, with more than half (55%) of telcos surveyed saying they’ve introduced hiring freezes, while 61% of telcos said talent retention is being hampered by salary and benefits cuts.

“Budget constraints are limiting the pursuit of critical skills and talent,” said Adrian Baschnonga, EY’s media, entertainment and telecommunications lead analyst. “Telcos must take steps to strengthen their existing workforce with a deeper focus on learning, upskilling and reskilling,

“Engaging with employees in new ways is vital, not only to build new software-led capabilities  but to create more successful connections with customers and stakeholders through renewed organizational purpose.”

Consumer Demands in Cost-of-Living Crisis

Telcos’ response to consumers during the cost-of-living crisis remains a pressing risk for 2024.

Due to ongoing financial pressures, the report found that 60% of consumers surveyed said the cost-of-living crisis has made them more likely to shop around for the best deals.

“Rearticulating the customer promise, along with simplifying value propositions, will help sustain and grow telcos’ relevance to their customers, thereby unlocking new routes to creating long-term value,” said Loozen.