Estimating AI Direct Contribution to Revenue Will be Difficult

One recurrent problem with revenue forecasts for all new technologies expected to be widely embedded in most existing products is how to isolate the specific contributions made by the one new technology, compared to all the other processes, features, packaging, distribution and manufacturing changes that might also have occurred simultaneously. 

Consider some studies of revenue upside from artificial intelligence for a variety of use cases and products, including virtual assistants, self-driving vehicles, smart factories, health care, fraud prevention, marketing, education or content creation. The numbers are big.

Product	Estimated revenue upside	Study	Key assumptions
Virtual assistants	$30 billion	IDC (2022)	AI-powered virtual assistants are expected to be used in a wide range of applications, including customer service, healthcare, and education. The study assumes that AI virtual assistants will be adopted by 50% of households by 2025.
Self-driving cars	$8 trillion	McKinsey (2018)	Self-driving cars are expected to revolutionize transportation, leading to significant cost savings and productivity gains. The study assumes that self-driving cars will account for 10% of new car sales by 2030.
Smart factories	$1.5 trillion	PwC (2018)	AI-powered smart factories are expected to improve efficiency, productivity, and quality. The study assumes that AI will be adopted by 75% of global manufacturing companies by 2030.
Personalized medicine	$100 billion	Grand View Research (2022)	AI-powered personalized medicine is expected to lead to more effective and targeted treatments. The study assumes that AI will be used to develop new drugs and treatments for a variety of diseases.
Fraud detection	$300 billion	Juniper Research (2022)	AI-powered fraud detection systems are expected to help businesses reduce losses from fraud. The study assumes that AI will be used to detect fraud in a variety of industries, including banking, insurance, and retail.
Marketing automation	$15 billion	Gartner (2022)	AI-powered marketing automation systems are expected to help businesses improve their marketing campaigns. The study assumes that AI will be used to automate tasks such as lead generation and customer segmentation.
Customer service	$10 billion	IDC (2022)	AI-powered customer service chatbots are expected to reduce costs and improve customer satisfaction. The study assumes that AI will be used to answer customer questions and resolve issues more quickly and efficiently.
Education	$25 billion	Research and Markets (2022)	AI-powered educational tools are expected to personalize learning and improve student outcomes. The study assumes that AI will be used to develop new learning materials and assessments that are tailored to individual students.
Content creation	$10 billion	MarketsandMarkets (2022)	AI-powered content creation tools are expected to automate tasks and improve the quality of content. The study assumes that AI will be used to create content such as videos, images, and articles that are more engaging and informative.

Some of that revenue will be earned by suppliers of computing infrastructure necessary to support widespread AI operations; operators of cloud computing services or suppliers of software, training and advice to implement AI is specific business functions. That might be the most-clear and most-direct AI contributions to firm and industry revenue.

That will be easier to measure than revenue upside for all other industries that might use AI in some way. 

Obviously many of those products have existing customers, markets, business models and revenue. AI is expected to enable lower costs, add features to existing products and might also allow creation of some new products. 

In many cases--probably most--AI impact might be indirect. Often AI features will be embedded in products with a revenue impact that is measured by new account additions, product model or version upgrades, lower churn or some other indirect outcome. 

AT&T Steps Up Fixed Wireless Push

AT&T is making a greater effort to market fixed wireless as an alternative to its digital subscriber line services, and is targeting a growing list of communities both inside its fixed network footprint as well as outside it. 

Those  markets include Los Angeles, Calif.; Philadelphia, Pa.; Cincinnati, Ohio; Harrisburg-Lancaster-Lebanon, Pa.; Pittsburgh, Pa.; Las Vegas, Nev.; Phoenix (Prescott), Ariz.; Chicago, Ill.; Detroit, Mich.; Flint-Saginaw-Bay City, Mich.; Hartford-New Haven, Conn.; Minneapolis-St. Paul, Minn.; Portland, Ore.; Salt Lake City, Utah; Seattle-Tacoma, Wash. and Tampa-St. Petersburg (Sarasota, Fla.).

According to Leichtman Research Group, Verizon and T-Mobile have a combined subscriber total of about six million customers for their fixed wireless services. 

Importantly, in the second quarter of 2023, fixed wireless represented about 99 percent of all net account additions in the U.S. market. AT&T might have concluded it simply cannot ignore such gains, in areas where it mostly offers DSL service. 

Some of the out-of-region areas seem to be communities where demand for fixed wireless already is meaningful and where AT&T will not likely want to build its own FTTH networks.The in-region areas seem to be markets where FTTH is not likely to be built soon. 

According to estimates by Light Reading, T-Mobile’s best urban area take rate is about 20 percent, though in most markets take rates are far lower. By way of comparison, that is in the range of what new fiber-to-home networks generally can expect in the first year of marketing. 

Light Reading also estimates the best Verizon take rates at about 15 percent of homes able to buy fixed wireless, while AT&T, which has not been a big proponent of fixed wireless, might still have gotten about 10-percent uptake in its best-performing fixed wireless markets.  

Carrier	Highest Urban Take Rate
T-Mobile	20 percent
Verizon	15 percent
AT&T	10 percent

According to a report by Light Reading, T-Mobile's fixed wireless penetration in Los Angeles is around 15 percent, while its penetration in Philadelphia is around 10 percent. In Cincinnati, T-Mobile's fixed wireless penetration is around 5 percent, while in Pittsburgh it is around 3 percent.

T-Mobile's fixed wireless penetration is higher in Las Vegas (around 20 percent) and Phoenix (around 15 percent). This is likely due to the fact that these markets are more spread out, and there is a greater need for wireless broadband.

T-Mobile's fixed wireless penetration is lower in Chicago (around five percent), Detroit (around three percent), and Flint-Saginaw-Bay City (around two percent).

T-Mobile's fixed wireless penetration is also lower in Hartford-New Haven (around five percent), Minneapolis-St. Paul (around three percent), Portland (around two percent), Salt Lake City (around one percent), Seattle-Tacoma (around one percent), and Tampa-St. Petersburg (around one percent). 

What Affordable Connectivity Program Stats Might Suggest for Internet Access Demand

What business conclusions might be drawn from news that 20 million accounts now are active as part of the Federal Communications Commission’s Affordable Connectivity Program? Probably a quarter of the customer base will prefer to buy less-costly, lower-performance services.

That has immediate business implications for suppliers of fixed wireless services and all internet service providers able to sell lower-speed services at lower prices.

Consider that there are about 123 million to 127 million “consumer and small business” accounts included in counts of “home broadband” subscriptions. 

By most estimates, small businesses represent between 10 percent and 12 percent of those “home broadband accounts.” So for purposes of evaluating the consumer portion of the home broadband market, consider that there might be at least 111 million active accounts, using the FCC’s latest figures. 

If 20 million of those accounts qualify for ACP support, then about 22 percent of the home broadband buyer base is likely to opt for less-expensive service plans. 

Home Broadband Accounts	Small Business Accounts	Study	Year Published	Publishing Venue
126.8 million	15.9 million	Federal Communications Commission (FCC)	2022	FCC
125.1 million	15.5 million	BroadbandNow	2023	BroadbandNow
123.4 million	15.2 million	Statista	2023	Statista

Those figures do not include customers who opt to use mobile internet access as their only form of home internet access. Keep in mind that home broadband accounts are based on service to locations, where mobile-only internet access is based on service to persons. 

If the total U.S. population is about 340 million, and 88 percent of adults use mobile phones, that implies fewer than 299 million mobile phone users. Assume 15 percent of phone customers do not buy an internet access plan for their phones. Assume 10 percent of the population is too young to use a mobile subscription. 

That might imply only 224 million mobile internet access accounts in service. Then further assume 12 percent of phone users rely exclusively on their mobile phones for internet access. That might represent up to 27 million accounts. 

If half of those accounts might consider getting a lower-speed, lower-cost home broadband service, and if half of those live in the same household, then about 6.8 million additional accounts might, in principle, be added to the ranks of potential home broadband buyers.

So possibly 27 million home broadband accounts might be, in principle, candidates for lower-cost services, or about 24 percent of all homes. That is consistent with OpenVault findings that about 26 percent of U.S. customers buy home broadband at speeds of 200 Mbps or lower. 

source: OpenVault 

So one might argue that about a quarter of the home broadband market is value oriented,a  third is performance oriented and the rest are in the “reasonable speed for reasonable price” middle portion of the market. 

Mobile Exclusive Internet Access	Study	Year Published	Publishing Venue
15%	Pew Research Center	2021	Pew Research Center
13%	Federal Communications Commission (FCC)	2022	FCC
12%	BroadbandNow	2023	BroadbandNow
11%	Statista	2023	Statista

Households are eligible for the CP if the household income is at or below 200% of the Federal Poverty Guidelines, or if a member of the household meets at least one of the criteria below:

• Received a Federal Pell Grant during the current award year;

• Meets the eligibility criteria for a participating provider's existing low-income internet program;

• Participates in one of these assistance programs:

• Free and Reduced-Price School Lunch Program or School Breakfast Program, including at U.S. Department of Agriculture (USDA) Community Eligibility Provision schools.

• SNAP

• Medicaid

• Your Medicaid eligibility may be up for renewal. Learn more about how to renew.

• Federal Housing Assistance, including:

• Housing Choice Voucher (HCV) Program (Section 8 Vouchers)

• Project-Based Rental Assistance (PBRA)/Section 202/ Section 811

• Public Housing

• Affordable Housing Programs for American Indians, Alaska Natives or Native Hawaiians

• Supplemental Security Income (SSI)

• WIC

• Veterans Pension or Survivor Benefits

• or Lifeline;

• Participates in one of these assistance programs and lives on Qualifying Tribal lands:

• Bureau of Indian Affairs General Assistance

• Tribal TANF

• Food Distribution Program on Indian Reservations

• Tribal Head Start (income based)

All of those criteria are associated with lower income levels.