Agentic AI Should Change Computing Infrastructure: Issue is How Much

Agentic artificial intelligence, eventually featuring teams of autonomous agents working in concert, should have some obvious impact on computing infrastructure. 

Chips will shift further in the direction of custom silicon. There will be more need for low-latency networking; more local or edge processing in addition to remote processing; more parallel and dynamic context to processing; distributed and fault-tolerant processing; more access to distributed databases. 

Specialized hardware (graphics processing units and field programmable gate arrays); more orchestration and more security also will be needed. Think perhaps of swarms of autonomous drones that have to work together, for example. 

In general, we will need “more:” more energy; more chips; more networking; more processing; more interworking and collaboration between autonomous systems. 

So how does that look for a firm such as Lumen Technologies, as a supplier of networking? Perhaps nobody doubts that “more” capacity will be needed, and might be needed in some different locations. 

The issue might be “how much” AI networking requirements actually change market demand, aside from the obvious “more capacity” that is continually needed. 

For starters, Lumen is doubling its intercity fiber mileage; upgrading bandwidth to 100 Gbps and 400 Gbps, using self-provisioning for enterprise customers, with plans to upgrade to 1.2 Tbps to 1.6 Tbps. 

Lumen also is building private networks that connect data centers owned by hyperscalers. But it might be the change in where capacity is needed that will change most. For some time, networking capacity has been driven both by the need to interconnect data centers and the need to make more bandwidth available in the access network so end users are connected with sufficient bandwidth and low-latency services. 

Agentic AI does not necessarily change that situation. Data center interconnection will drive developments in the network backbone. And AI used by edge devices will continue to rely on “on the device” local processing. But requirements for more edge processing in addition to “on the device” will likely mean more regional data center computing and therefore more bandwidth of a regional nature. 

Whether peer-to-peer requirements lead to more meshy architectures remains to be seen. But to some extent agentic AI simply continues other trends such as needs for more symmetrical bandwidth in the access network. As upstream bandwidth became more important as users started routinely uploading images and video, so agentic AI will additionally create more need for bidirectional capacity as local processors and actions combine with web services, software as a service platforms and application programming interfaces.

Barring a big change, such as Lumen somehow divesting its entire local telecom business, to become a latter-day Level 3 Communications capacity supplier, AI-driven requirements might be more incremental than disruptive.

As a financial matter, a Lumen that is a pure-play capacity provider might have 70 percent of present revenue, but a higher valuation. Some believe that could result in a Lumen valuation that is up to double what the firm presently commands, assuming "flawless execution" and probably also hinging on how the debt burden gets distributed.

Fixed Wireless for Home Broadband is the Biggest New 5G Revenue Source

The Ericsson Mobility Report for the first quarter of 2025 is the 11th consecutive quarter in which fixed wireless has accounted for nearly all broadband net additions in the U.S. market. 

During the quarter, AT&T, Verizon, and T-Mobile collectively added 913,000 new connections, bringing the total number of 5G FWA connections to 12.5 million. The number of 4G connections boosts the total further. 

Globally, most fixed wireless connections still rely on 4G. 

source: Ericsson 

And even if fiber to the home is the dominant home broadband trend, fixed wireless continues to be an important platform, as digital subscriber line and hybrid fiber coax connections decrease. 

source: Ericsson 

Despite all the hoped-for advances 5G would bring in terms of new services, so far it is fixed wireless for home broadband which seems to be the biggest new revenue source for mobile service providers, aside from faster mobile internet access. And some of us would say 5G for mobile broadband is not a “new” service but simply the latest version of mobile broadband, as 4G displaced 3G, for example. 

In fact, there is an argument to be made that fixed wireless for home broadband is bigger than all the other “new” 5G services put together, even using arguably optimistic estimates of new revenue. 

5G Service Type	Estimated 2025 U.S. Annual Revenue (USD)	Notes	Sources
Enhanced Mobile Broadband (eMBB)	$10–12 billion	Largest segment; includes premium mobile plans, high-speed data, streaming, gaming	1,2,3
Fixed Wireless Access (FWA)	$5–7 billion	Rapidly growing; over 10 million U.S. homes expected on FWA by end of 2024	4,5
Internet of Things (IoT/mMTC)	$2–3 billion	Includes smart cities, industrial IoT, logistics, and connected devices	1,2,3
5G Entertainment & Gaming	$1–2 billion	Cloud gaming, AR/VR, immersive media	2
5G Advertising	$0.5–1 billion	Targeted, high-speed, interactive ads	2
Private 5G Networks/Enterprise	$1–2 billion	Dedicated enterprise networks for manufacturing, healthcare, logistics, etc.	3

Are Government Home Broadband Networks Facing Worse Business Cases?

Dr. George Ford, Phoenix Center for for Advanced Legal & Economic Public Policy Studies chief economist, notes in a recent study that three sales of municipal home broadband networks illustrates the financial issues such networks face. 

The Bardstown, Ky. network, for example, privatized in 2024, illustrates the revenue side of the problem. 

source: Phoenix Center 

Another study looked at the financial performance of every municipal fiber project (with published financial data) in the U.S. operating in 2010 through 2019. None of the 15 projects generated sufficient nominal cash flow in the short run to maintain solvency without infusions of additional cash from outside sources or debt relief. 

To be sure, 68 operating networks provide no public financial information, some observers note. 

Similarly, 87 percent have not actually generated sufficient nominal cash flow to put them on track to achieve long-run solvency. 

Some 73 percent generated negative nominal cash flow over the past three fiscal years, leaving them poorly positioned to make up their deficits and causing them to fall farther into debt, the authors note. 

Fully 53 percent of projects would not be on track to reach breakeven even assuming the theoretical best-case performance in terms of capital expenditures and debt service.

Business Model Issue	Impact	Sources
Short-Term Revenue Shortfalls	Most projects fail to cover operating costs with subscription fees, requiring taxpayer subsidies.	2,4,10
Long-Term Viability Concerns	Only 2/15 projects studied showed potential for self-sustaining cash flow over 20-25 years.	2,6,10
Network Upgrade Costs	Frequent tech advancements require reinvestment, straining budgets not designed for dynamic needs.	137
Cross-Subsidization Risks	Many rely on municipal utility funds or bonds, distorting competition and transparency.	7,10,11
Crowding Out Private Investment	Municipal entry reduces private sector incentives to build/upgrade networks in the same areas.	3,6,11
Project Management Complexity	Lack of expertise in broadband operations leads to cost overruns and service quality issues.	3,5,9
Political vs. Market Incentives	Prioritizing coverage over profitability results in unsustainable pricing and service models.	3,10,11
Financing Challenges	Securing loans/investment is harder due to incumbent opposition and uncertain ROI.	5,9,11

Telco AI Monetization on the Revenue Front Will be Difficult

Mobile executives these days are talking about ways to monetize artificial intelligence beyond using AI to streamline internal operations. Generally speaking, these fall into three buckets:

• Personalizing existing services to drive higher revenue, acquisition and retention (quality of service tiers of service, for example)

• Creating enterprise or business services (private 5G networks with AI-optimized performance,, for example)

• AI edge computing services for autonomous vehicles, for example

Obviously, those are AI-enhanced extensions of ideas already in currency. But some of us might be quite skeptical that such “AI services” owned by telcos will get much traction. History suggests the difficulty of doing so. How many “at scale” new products beyond voice have telcos managed to create? Text messaging comes to mind. Mobile phone service also was a big success. So is home broadband. 

All those share a common characteristic: they are network services owned directly by the service providers. Generally speaking, other application efforts have not scaled well. 

Mobile service providers have been hoping and proclaiming such new revenue opportunities since at least the time of 3G. But many observers might agree there has been a disconnect between the technical leaps (faster speeds, lower latency, better efficiency) and the ability to turn those into new revenue streams beyond the basic "sell more data" model. 

That is not to say that service providers have had no other ways to add value. Bundling devices, content and other measures have helped increase perceived value beyond the core network features. 

But the core network as a driver of new products and revenue is challenging for a few reasons. 

• Open networks mostly have replaced closed networks (IP versus PSTN) 

• Applications are logically separate from network transport (layers)

• Permissionless app development is the norm (internet is the assumed network transport)

• Vertical control of the value replaced by horizontal functions (telcos had full-stack control of voice, but only horizontal transport functions for IP-based apps)

As I have argued in the past, modern telcos have a hybrid revenue model. They are full-stack “service” providers for voice and text messaging. But they are horizontal transport providers for most IP apps and services, and sometimes are app providers (owned entertainment video services, for example). 

The point is that most new apps and revenue cases can be built by third parties without telco or mobile operator permission, which also takes transport providers out of the direct revenue chain. 

So I’d argue there is a structural reason why telcos and mobile service providers do not directly benefit from most of the innovation that happens with apps. Think about all the customer engagement with internet-delivered apps and services, compared to service provider voice and messaging. 

In their role as voice and text messaging providers, telcos are “service providers” (they own and control the full stack). For the rest of their business, they are transport or access providers (capacity or internet access such as home broadband), a horizontal value and revenue stream. ISPs get paid to provide “internet access,” not the actual end user apps. 

And that has proven a business challenge for now-obvious reasons. Once upon a time, voice services were partly flat-rate and partly usage-based. In other words, telcos earned money by charging a flat fee for access to the network, and then variable usage based on number, length or distance of voice calls. 

In other words, greater usage meant greater revenue. But flat-rate voice and texting usage subverts the business model, as  most of the revenue-generating services become usage-insensitive. That is the real revolution or disruption for voice and texting. 

In their roles as internet access providers, some efforts have been made to sustain usage-based pricing. Customers can buy “buckets of usage” where there is some relationship between revenue and usage. 

Likewise, fixed network providers have used “speed-based” tiers of service, where higher speeds carry  higher prices. Still, those are largely flat-rate approaches to packaging and pricing. And the long-term issue with flat-rate pricing is that it complicates investment, as potential usage of the network is capped but usage is not.  

So as much as ISPs hate the notion that they are “dumb pipes,” that is precisely what home or business broadband access is. So internet access take rates, subscription volumes and prices are going to drive overall business results, not text messaging, voice or IoT revenues. 

To be sure, we can say that 5G is the first mobile generation that was specifically designed to support internet of things applications, devices and use cases. But that only means the capability to act as a platform for open development and ownership of IoT apps, services and value. And even if some mobile service providers have created app businesses such as auto-related services, that remains a small revenue stream for mobile service providers.  

Recall that IoT services are primarily driven by enterprises and businesses, not consumers. Also, the bulk of enterprise IoT revenue arguably comes from wholesale access connections made available to third-party app or service providers, and does not represent telco-owned apps and services (full stack rather than “access services”). 

Optimistic estimates of telco enterprise IoT revenues might range up to 18 percent, in some cases, though most would consider those ranges too high. 

Region/Group	Total Mobile Services Revenue	IoT Connectivity Revenue (Enterprises)	Automotive IoT Apps Share of IoT Revenue	% of Total Revenue from Automotive IoT Apps
Global Average	$1.5 trillion (2025 est.)	10-15% (2025, growing to 20% by 2027)	25-35%	2.5-5.25%
North America (e.g., Verizon)	$468 billion (U.S., 2023, growing 6.6% CAGR)	12-18% (2025 est.)	30-40% (high 5G adoption)	3.6-7.2%
Asia-Pacific (e.g., China Mobile)	$600 billion (2025 est.)	15-20% (strong automotive industry)	35-45% (leader in connected cars)	5.25-9%
Europe (e.g., Deutsche Telekom)	$400 billion (2025 est.)	10-15% (CEE high IoT reliance)	25-35%	2.5-5.25%
Top 10 Mobile Operators	$1 trillion (2025 est.)	12-18% (based on 2.9B IoT connections)	30-40%	3.6-7.2%

Though automotive IoT revenues (again mostly driven by access services) arguably are higher for the largest service providers, their contribution to  total business revenues is arguably close to three percent or so, and so arguably contributing no more than 1.5 percent of total revenues, as consumer services range from 44 percent to 65 percent of total mobile service provider revenues. 

Category	Percentage of Total Revenue	Example products
Services to Consumers	55-65%	Driven by mobile data (33.5% in 2023), voice, and equipment sales; 58% in 2023
Services to Businesses	35-45%	Includes enterprise, public sector, and SMBs; growing at 7.1% CAGR
Business Voice	5-10%	Declining due to VoIP adoption and mobile data preference
Business Internet Access	15-25%	Rising with 5G, IoT (e.g., automotive apps at 2.5-9%), and enterprise demand

The point is that the ability to monetize AI beyond its use for internal automation is likely limited. Changes in the main revenue drivers (consumer and business mobile phone subscriptions and prices) are going to have more impact on revenue and profit outcomes than IoT as a category or automotive IoT in particular.