Digital-first is the undisputed destination for every telco. Businesses that run on software and data versus people and manual processes deliver flexibility in every important aspect of service delivery and monetization.
That doesn’t mean creating this reality is easy.
We’ve discussed before, Rakuten Mobile’s approach to building a platform where automation and AI are not bolted on but part of day-one design. Rakuten Mobile’s real product was not low cost 4G service, but a living network integrated into the online ecosystem. This model has scaled across more than 70 other Rakuten businesses and services as Rakuten Symphony exports the software-led approach globally.
Rakuten is not alone in its pursuit of digital-first differentiation.
Multinational telco VEON, serving 150 million subscribers in frontier markets, is constantly rethinking what it means to be a telecom operator. Instead of continually tinkering with gigabytes and price, it has redefined itself around local engagement and services. They call this approach AI1440, referring to the idea of being present in customers’ lives across all 1,440 minutes in the day.
The hypothesis? Leverage their local relationships, common cultures and physically present infrastructure. Daily, high-frequency engagement with fintech, education, healthcare and AI copilot services will create stickier relationships and better margins than simply pushing connectivity and forcing customers to find value.
Two such examples:
- Local language AI co-pilots. VEON used its dataset of 2.3 billion annual voice minutes to train a native Kazakh language model. Then, copilot was embedded into its Beeline super-app, giving customers practical tools they could use daily, from helping students with algebra to guiding farmers on livestock care. This created engagement and loyalty that global OTT players could not match.
- Tower-mounted AI cameras. VEON partnered with local government to install 34 AI-powered smoke detection cameras on towers in Kazakhstan. The system delivered 51 verified wildfire alerts, building public trust and prompting regulators to accelerate tower permitting, which in turn supported faster rollout of 5G services.
By anchoring innovation in everyday services, VEON saw rapid adoption. Digital service monthly active users increased 39.7%, as digital services now accounts for 12.6% of group sales, shifting investor perception of VEON toward a tech company profile. Q4 2024 group revenue rose 8.3%, driven by a 63% spike in digital sales.
Rakuten Mobile is seen as an open interface, software-first, cloud-native disruptor. VEON is a frontier markets telco transforming into a digital services company.
Different stories, same playbook. Software, data and automation underpin the approach.
If every telco recognizes this is the destination, how can the journey be simplified?
Mixing old with new
While Rakuten Mobile came to market with the advantages of being a new entrant, it also used traditional telecom solutions in many places, surrounding them with programmable APIs and automation.
Existing operators face larger entrenched challenges like multi-generational legacy complexity and acquired companies with completely different solutions. Siloed data lakes and middleware, OSS/BSS fragmentation and aging processes that don’t integrate smoothly with new tooling are just some of the issues with which telcos contend, but the same approach can be taken.
As every G cycle brings a familiar mix of innovation centers, alliances and celebrated partnerships, the pattern repeats. It’s not for lack of options as the AI boom launches more startups and delivers seemingly endless options.
Telcos continue to chase unicorn promises, but with operating models unchanged, innovation has nowhere to land or spread its wings.
Existing operators may not be able to rebuild from scratch, but they can take the same approach of anchoring innovation in the operating model and tying it to measurable outcomes.
Simplifying the journey: An existing operator playbook
For operators eager to replicate this kind of success, the priority is to stop treating the present and future as separate tracks. The operators making progress are those demanding platforms that solve today’s legacy pain points while extending seamlessly into AI-driven services.
Here’s what that may look like in practice:
- Don’t distinguish between today and tomorrow. Operators can make headway by targeting platforms that address today’s challenges while naturally extending into AI-driven services, avoiding the separate tracks trap.
- Anchor innovation in outcomes. Progress is possible when new capabilities are tied to problems that customers, enterprises or governments genuinely care about (e.g., VEON’s copilots and wildfire detection).
- Fix the operating model. Innovation gains traction when it lands on a foundation of integrated data, streamlined OSS/BSS and automated processes that make it possible to scale quickly.
- Use existing assets. The same challenges that stem from legacy infrastructure and relationships can be repurposed into unique services other OTT competitors can’t match or wouldn’t make sense to pursue.
- Break it down layer by layer. Simplification is easier when operators decide which layers to outsource or open-source and which to invest in for differentiation, with digital services often providing the strongest lever for value creation.
The destination is clear: it is time to establish digital-first businesses that run on software and data. Now the question is how to simplify the journey.
For all operators, that means combining today’s fixes with tomorrow’s foundation, focusing on outcomes that matter and making deliberate choices about where to invest. Operators who take this path will move beyond chasing hype and begin shaping services that customers feel, stakeholders value and the market rewards.
Atila Horvat is head of network slicing at Rakuten Symphony. Mention him in the comments to start a conversation!
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