Vodafone: GenAI overhyped, will spend $151M to enhance its chatbot with AI

GenAI is probably the most “overhyped” technology for many years in the telecom industry, said Vodafone Group’s chief technology officer (CTO) Scott Petty at a press briefing this week. “Hopefully, we are reaching the peak of those inflated expectations, because we are about to drop into a trough of disillusionment,” he said.

“This industry is moving too quickly,” Petty explained. “The evolution of particularly GPUs and the infrastructure means that by the time you’d actually bought them and got them installed you’d be N minus one or N minus two in terms of the technology, and you’d be spending a lot of effort and resource just trying to run the infrastructure and the LLMs that sit around that.”

Partnerships with hyper-scalers remain Vodafone’s preference, he said.  Earlier this year, Vodafone and Microsoft signed a 10-year strategic agreement to use Microsoft GenAI in Vodafone’s network.

Vodafone is planning to invest some €140 million ($151 million) in artificial intelligence (AI) systems this year to improve the handling of customer inquiries, the company said on July 4th.  Vodafone said it is investing in advanced AI from Microsoft and OpenAI to improve its chatbot, dubbed TOBi, so that it can respond faster and resolve customer issues more effectively.

The chatbot was introduced into Vodafone’s customer service five years ago and is equipped with the real voice of a Vodafone employee.

The new system, which is called SuperTOBi in many countries, has already been introduced in Italy and Portugal and will be rolled out in Germany and Turkey later this month with other markets to follow later in the year, Vodafone said in a press release.

According to the company, SuperTOBi “can understand and respond faster to complex customer enquiries better than traditional chatbots.” The new bot will assist customers with various tasks, such as troubleshooting hardware issues and setting up fixed-line routers, the company said.

Vodafone is not about to expose Vodafone’s data to publicly available models like ChatGPT. Nor will the UK based telco create large language models (LLMs) on its own.  Instead, a team of 50 data scientists are working on fine-tuning LLMs like Anthropic and Vertex. Vodafone can expose information to those LLMs by dipping into its 24-petabyte data “ocean,” created with Google. Secure containers within public clouds ensure private information is securely cordoned off and unavailable to others.

According to Petty’s estimates, the performance speed of LLMs has improved by a factor of 12 in the last nine months alone, while operational costs have decreased by a factor of six. A telco that invested nine months ago would already have outdated and expensive technology. Petty, moreover, is not the only telco CTO wary of plunging into Nvidia’s GPU chips.

“This is a very weird moment in time where power is very expensive, natural resources are scarce and GPUs are extremely expensive,” said Bruno Zerbib, the CTO of France’s Orange, at the 2024 Mobile World Congress in Barcelona, Spain. “You have to be very careful with your investment because you might buy a GPU product from a famous company right now that has a monopolistic position.”

Petty thinks LLM processing may eventually need to be processed outside hyper-scalers’ facilities. “To really create the performance that we want, we are going to need to push those capabilities further toward the edge of the network,” he said. “It is not going to be the hype cycle of the back end of 2024. But in 2025 and 2026, you’ll start to see those applications and capabilities being deployed at speed.”

“The time it takes for that data to get up and back will dictate whether you’re happy as a consumer to use that interface as your primary interface, and the investment in latency is going to be critically important,” said Petty. “We’re fortunate that 5G standalone drives low latency capability, but it’s not deployed at scale. We don’t have ubiquitous coverage. We need to make sure that those things are available to enable those applications.”

Data from Ericsson supports that view, showing that 5G population coverage is just 70% across Europe, compared with 90% in North America and 95% in China. The figure for midband spectrum – considered a 5G sweet spot that combines decent coverage with high-speed service – is as low as 30% in Europe, against 85% in North America and 95% in China.

Non-standalone (NSA) 5G, which connects a 5G radio access network (RAN) to a 4G core (EPC), is “dominating the market,” said Ericsson.

Vodafone has pledged to spend £11 billion (US$14 billion) on the rollout of a nationwide standalone 5G network in the UK if authorities bless its proposed merger with Three. With more customers, additional spectrum and a bigger footprint, the combined company would be able to generate healthier returns and invest in network improvements, the company said. But a UK merger would not aid the operator in Europe’s four-player markets.

Petty believes a “pay for search” economic model may emerge using GenAI virtual assistants.  “This will see an evolution of a two-sided economic model that probably didn’t get in the growth of the Internet in the last 20 years,” but it would not be unlike today’s market for content delivery networks (CDNs).

“Most CDNs are actually paid for by the content distribution companies – the Netflixes, the TV sports – because they want a great experience for their users for the paid content they’ve bought. When it’s free content, maybe the owner of that content is less willing to invest to build out the capabilities in the network.”

Like other industry executives, Petty must hope the debates about net neutrality and fair contribution do not plunge telcos into a long disillusionment trough.


Vodafone CTO: AI will overhaul 5G networks and Internet economics (lightreading.com)

Vodafone and Microsoft sign 10-year strategic partnership to bring generative AI, digital services and the cloud to more than 300 million businesses and consumers

Vodafone UK report touts benefits of 5G SA for Small Biz; cover for proposed merger with Three UK?


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