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As market dynamics shift and the competitive landscape for communications services intensifies due to the rapid rise of AI, digital transformation is a necessity for communications service providers (CSPs) to remain competitive and deliver a superior customer experience. IDC’s Rob Brothers explains how turnkey managed services can play a critical role.

Telecom service providers are undergoing a massive transformation of their business and their networks. On the network side, there are several market dynamics driving new investments in network technologies, while telecom business priorities continue to focus on monetizing the network investments to drive revenue growth. Perhaps most important for telecom service providers is a greater emphasis on providing superior customer experience, which is largely based on the performance and reliability of the network.

Increasingly, customer experience is seen as a lever for reducing churn and providing a key source of competitive differentiation. In fact, service providers must focus on improving the quality-of-service level agreements (SLAs) within their environments, as this is the number two reason why customers switch providers. According to a recent IDC study, 25% of customers would consider switching providers to get better service quality.

How telecom service providers address these business and network issues through their digital transformation initiatives will determine how competitive they remain in the market.

Transforming communications networks

Digital transformation strategies for telecom service providers involve a complex and broad array of objectives, all driven by the need to support changing network dynamics. Enterprise use of cloud computing as a core of their IT environment, the proliferation of connected devices and sensor-based networks in edge locations, and high-speed wireless connections for data and high-bandwidth streaming video traffic are driving steady increases in traffic traversing the network. In addition, while AI is in its early stage of enterprise adoption, the technology is already in use by over half of enterprises, with another 32% planning to use within the next 24 months. This rapid adoption of AI will have a significant impact on the volume of AI-based traffic traversing networks going forward.

Source: IDC, 2025

These network dynamics put a strain on existing infrastructure and are a catalyst for modernizing telecom service provider networks. Modernization efforts involve a range of investments, including network capacity upgrades to support faster speeds and higher bandwidth connectivity needs, as well as investments in AI, automation, data analytics, and other technologies that telecom operators hope will drive efficiency improvements in network operations. Some investments being made by telecom service providers as part of their network transformation include:

• Replacing the existing copper plan and expanding fiber connectivity for high-bandwidth connections
• Implementing cloud-native architectures
• Deploying network automation for network operations

It should be noted that while AI will be a driver of network traffic, it will also be used by telecom service providers to deliver network- and customer-level insights to fuel network optimization and operational efficiency.

Network provider challenges

While the network investments made by telecom service providers are key to their future competitiveness, they also create technical and business challenges that must be addressed. Reducing capital expenditure and network operational expenses are strategic priorities for telecom service providers. However, investments in new network infrastructure over the past few years have made it difficult to achieve these objectives. For communications service providers continuing to build out their networks, AI is viewed as critical to help streamline operations and reduce network operating costs over time.

Another challenge facing telecom operators is the technical complexity that results from implementing new technologies. Greater use of cloud in network operations, implementation of new network elements that must interoperate with legacy infrastructure, utilization of solutions to minimize security risk, and the deployment of new technologies that technical staff may have limited experience with all represent challenges that can compromise the pace at which a telecom operator can successfully transform.

When you combine the challenges above with the fact that most telecom service provider networks consist of multi-vendor environments, it is clear that the level of complexity in managing the network has increased. IDC believes that this complexity will drive telecom operators to seek greater support from their technology vendors. While technical support services continue to play an important role in addressing network issues, telecom service providers need a turnkey solution for managing network operations that allows them to focus on delivering a superior network experience for customers while monetizing the investment made in their networks.

Leveraging managed services for efficient network operations

The cost and technical complexity of operating telecom service provider networks require an end-to-end service solution that offers ongoing day-to-day management of the network operations center (NOC). IDC believes that telecom service providers will increasingly look to leverage managed services as a key enabler of their transformation initiatives , allowing for tighter control over network operating costs and greater focus on customer-facing activities.

While managed services can provide a range of outsourced offerings from technical support, spare parts management, field service management, and managed network operations, telecom service providers have the flexibility to deploy the services strategically. Outsourcing specific network operations tasks in areas where specific technology expertise is limited can provide technical assistance to telecom providers dealing with a shortfall of skills. In addition, using turnkey managed services operations can be beneficial for telecom service providers looking to outsource full NOC operations and free up resources to support a more customer-centric strategy.

Additionally, traditional network operations models often struggle with the need for more responsive and adaptable services to meet stringent SLAs  . The rapid pace of technological change, including not just the adoption of GenAI and AI but interconnected cloud computing, data, and other mobile technologies, requires network support that can quickly adapt to new demands and provide immediate solutions. Traditional models, which rely on a fixed team of in-house experts, often lack the agility and training needed to keep up with these changes.

Looking ahead

As market dynamics shift and the competitive landscape for communications services intensifies, digital transformation is a necessity for telecom service providers to remain competitive. However, the risk and complexity of transformation can compromise service provider objectives. Subsequently, IDC believes that turnkey managed services can play a key role in helping transform communication service provider networks while helping achieve strategic priorities.

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