Ookla: AI workloads will force changes in 5G mobile network infrastructure

Introduction:

Ookla’s latest research study examines how AI use cases will stress 5G mobile networks, relative to standard internet traffic. The report, based on Speedtest Intelligence® data across 22 markets, evaluates metrics like upload capacity, latency under load, and cloud infrastructure pathways (see graphs below).  Using Speedtest 5G data from 2025 across 22 markets and 86 operators in North America, Europe, Asia Pacific, the Middle East, and Latin America, it measures upload capacity, latency under load, and the quality of the path to the cloud. It also shows where current 5G falls short of what AI actually demands.

Analysis:

Ookla’s report argues that 5G network evaluation is entering a new phase: raw download speed is no longer enough to describe user experience or network capability in an AI-driven era. The more relevant indicators are upload performance, latency, consistency, and resilience, because AI-heavy applications tend to be interactive, symmetric, and sensitive to delay.  The report’s timing is important because it reframes 5G from a consumer mobile broadband service into an infrastructure question for AI workloads. That shift matters for network operators, because uplink and latency have historically received less attention than headline download rates in market rankings and public messaging.

Here’s the lead-in (emphasis added):

“AI has changed what a good mobile network looks like, and the metric the industry has marketed for two decades — peak download speed — no longer predicts it. The networks that top the download charts are often not the ones best prepared for AI traffic. Whether an AI application feels instant or breaks depends in large part on how much a network can upload, how it holds up under load, and how consistently it reaches the cloud, and on those measures, different networks come out on top. This report rebuilds the industry’s download-led scorecard around what AI actually asks of a network, and shows where today’s 5G mobile networks are ready and where they fall short. AI traffic is not one thing. Text chat, conversational voice, multimodal and AR vision, generated video, and agentic activity each load the network differently, and most of them lean on parts of the network that download speed never tested. The change AI brings is less about raw capacity, which operators have expanded for years, than about the shape of the traffic — heavier on upload, always on, and bursty, rather than download-led and session-based.”

A few high-level takeaways for the U.S. market include:

  • Although the United States ranks among the strongest on overall network performance, it sits at 5.1% for the proportion of network capacity allocated to the uplink, which is the lowest in the dataset.
  • The U.S. upload share has contracted, declining from 8.0% to 5.1% between 2023 and 2025.
  • The U.S. market top network operators fall short of the 20 Mbps upload target required for AR and multimodal AI.
  • For baseline network responsiveness, the U.S. records a multi-server latency of 50.5 ms, missing the target of less than 50 ms for text-based large language models (LLMs).

Technical Implications:

Ookla’s framing implicitly favors 5G SA, 5G Advanced, and edge-assisted architectures, since these are the network generations most likely to improve latency determinism and support more efficient uplink behavior. It also suggests that future benchmarking should include workload-aware tests, not just conventional speed tests, because AI applications stress networks differently from video streaming or web browsing.  The report has immediate relevance for markets where 5G download speeds look strong but uplink and latency remain weaker, because those networks may appear healthy under older metrics while still underperforming for AI use cases. That is a useful lens for comparing operators, especially where regulators and carriers are beginning to discuss AI readiness as part of national digital infrastructure strategy.

Conclusions:

With the rise of AI workloads, mobile network measurement is becoming application-specific. The central question is no longer just “How fast is 5G?” but “How well does the network support AI-era traffic patterns, especially interactive and uplink-heavy traffic?”  In this new context, metrics such as upload capacity, latency consistency, and service resilience are becoming just as important as peak downlink speed. For operators, this implies that competitive advantage will increasingly depend on how well the network supports real-time, bidirectional, and latency-sensitive applications, rather than how well it performs on legacy consumer benchmarks.

Traditional speed tests still matter, but they are increasingly insufficient as a proxy for user experience in an AI-native environment. In practice, the networks that win will be those that can deliver symmetry, resilience, and predictable latency across real workloads, not merely impressive headline throughput.

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Ookla Charts:

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References:

https://www.ookla.com/articles/benchmarking-5g-ai-workloads-2026

https://www.ookla.com/s/media/2026/07/Ookla_Research_AI_network_readiness_07262.pdf

Ookla: AI workloads strain 5G infrastructure

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Huawei’s AI-Centric Network Vision: Six Imperatives for the Next Decade; Critical Questions for IEEE Techblog Community

The Case for AI-Native Networks:

At MWC Shanghai 2026  [1.], David Wang, Deputy Chairman of the Board and Rotating Chairman of Huawei, outlined a strategic roadmap for AI-native mobile networks, positioning artificial intelligence as the cornerstone of industry growth over the next decade.

Note 1. MWC Shanghai 2026 was held June 24–26, 2026 at the Shanghai New International Expo Center (SNIEC), with Huawei showcasing products and solutions in Hall N1.

Over the past 40 years, innovation in mobile technology from each generation to the next has been key to the industry’s success. “With each generation, we have pushed the limits of spectral efficiency and performance,” said Wang. “Network architecture has gradually flattened, with new application scenarios and services emerging left and right. This has consistently expanded the boundaries of communications, helping carriers translate network capabilities into commercial value,” he added.

Huawei argues that traditional telecom infrastructure built around data traffic is no longer sufficient. As the global digital ecosystem transitions toward real-time interactions with AI applications and intelligent agents, mobile and transport networks must be completely redesigned to support both communication and computing. According to Huawei, an AI-native architecture transforms networks from simple communication utilities into revenue-generating engines while helping operators transition to Level-4 and Level-5 network autonomy

Huawei’s Six Strategic Imperatives:

Wang identified six imperatives to guide the industry through the age of intelligence:

  1. Developing new services and capabilities for future mobile communications systems

  2. Integrating AI with mobile communications to build three distinct layers of intelligence

  3. Building network architecture for integrated satellite-ground communications

  4. Advocating for sustainable and future-oriented spectrum planning and allocation

  5. Clearly defining the specifications of AI-native core networks

  6. Exploring new business models and application scenarios for mobile services

Photo Credit: Huawei

Innovations Unveiled: Byte and Token Monetization:

Huawei released a portfolio of innovations targeting both services and infrastructure. On the services side, in collaboration with China’s three major carriers, the company announced advances in 5G-Advanced (5G-A) high-uplink and experience monetization, AI-powered business upgrades, and token monetization.

For infrastructure, Huawei launched the AI-centric target network, designed to enhance carrier competitiveness in byte and token monetization. This architecture comprises three layers:

  • Basic Communications Network: A shift from traffic-centric to real-time interaction networking, offering guaranteed connectivity with high uplink and downlink capabilities alongside advanced QoS mechanisms.

  • Computing Network: A transition from traffic transport to network-wide compute scheduling and supply, where “connecting to the network is equivalent to accessing compute.”

  • AI Computing Infrastructure: High-performance, efficient compute with support for open-source and open ecosystems.

5G-Advanced: 100 Million Users and Beyond:

The global 5G-A (based on 3GPP Release 18) user base has surpassed 100 million. Huawei is now working with network operators worldwide to advance 5G-A experience monetization and integrate it into installed base operations, targeting mid-range and high-end user retention, ARPU growth, and sustainable revenue expansion.

High uplink capacity is critical for token monetization. Emerging AI applications—such as multimodal AI glasses for real-time translation and augmented exhibitions—demand uplink speeds of 20 Mbps or higher. In 2026, leading carriers globally are piloting commercial high-uplink services with guaranteed peak speeds, latency, and universal uplink performance.

Upper-6 GHz: The Next Golden Band:

The proliferation of AI agents is expected to drive rapid growth in token services, requiring ultra-broadband networks with high uplink, high reliability, and low latency. Upper-6 GHz (U6 GHz) is positioned as the next-generation golden frequency band for this purpose.

  • More than 20 countries and regions have designated U6 GHz for IMT, covering nearly 80% of the global population.

  • 2026 marks the commercial debut of U6 GHz, with the Middle East expected to deploy the world’s first commercial 5G-A network on U6 GHz.

  • Select carriers in Hong Kong and Macao will also initiate commercial U6 GHz deployment.

AI-Native B2C and B2B Services:

Huawei plans to collaborate with carriers in Guangdong, Shanghai, Hebei, and other regions in 2026 to reengineer B2C and B2H services with AI, targeting consumer applications such as smart home assistants, personal communication assistants, and integrated consumer-home services. In the B2B segment, the focus is on AI computing services centered on compute-network integration, unlocking new business growth avenues.

Path to Level-4 Autonomous Networks:

Huawei is advancing AI-native technologies toward Level-4 autonomous networks by developing domain-specific intelligence. In 2026, the company will work with carriers to deploy domain-specific intelligence across wireless and transmission network domains in key regions. This will enable cross-domain synergy in maintenance, optimization, energy efficiency, and user experience, enhancing network quality and enabling differentiated products for high-speed rail, event venues, and campuses.

Critical Questions:

Huawei’s AI-centric network vision positions AI not as an incremental improvement to mobile networks but as a foundational network architecture. That vision raises several critical questions for the IEEE community and IEEE Techblog readers:

  • Interoperability: How does Huawei’s AI-centric target network align—or conflict—with AI-RAN Alliance initiatives and O-RAN specifications?

  • Vendor Comparison: How does Huawei’s AI-centric target network compare with Ericsson’s cloud RAN strategy and Nokia’s Altiplano/Corteca agentic AI platforms in terms of technical architecture and commercial viability?

  • Specifications and Standards: What role will 3GPP and ITU-R play in standardizing AI-native core network specifications, particularly for token monetization and compute-network integration?
  • Autonomous Networks: How do Huawei’s domain-specific intelligence approaches compare with vendor-neutral SMO/rApp ecosystems, and what are the implications for multi-vendor interoperability?
  • Are carriers adequately prepared for the operational and cultural shifts required to transition from traffic monetization to token monetization?

  • How will U.S./European regulatory frameworks (e.g. spectrum policy, AI governance, data sovereignty) shape the deployment of AI-native networks compared to China’s more centralized approach?

  • Spectrum Policy: With Upper 6 GHz emerging as a key enabler for AI-driven token services, what are the regulatory and coexistence challenges, particularly in regions yet to designate Upper 6 GHz for IMT 2030?   What will WRC 2027 decide?

Conclusions:

Huawei’s roadmap underscores the ICT industry’s rapid shift towards AI token monetization, positioning 5G-Advanced high-uplink, AI-native networks, and Upper 6 GHz spectrum as the foundational pillars for the next decade of growth.  The success of this vision depends not only on technological feasibility but also on standards alignment, regulatory support, and carrier willingness to reinvent business models—a complex challenge that warrants close scrutiny from the IEEE technical community.

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References:

https://www.huawei.com/en/news/2026/6/mwcs-ai-byte-token

https://carrier.huawei.com/minisite/mwcs2026/en/

https://www.huawei.com/en/news/2026/6/mwcs-gsma-asac-5g-advanced

Huawei unveils AI Centric Network roadmap, U6 GHz products, 5G Advanced strategy and SuperPoD cluster computing platforms

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Bloomberg: Meta to sell AI compute in a new cloud services offering

Disclaimer: Perplexity.ai was used for research resulting in this article.

Executive Summary:

According to Bloomberg, Meta Platforms is advancing plans to commercialize its internal AI infrastructure through a new cloud services offering, signaling a strategic expansion beyond its traditional hyperscale consumer platforms into the competitive AI infrastructure market. This initiative would position Meta alongside established cloud providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, while also overlapping with emerging GPU-centric “neocloud” providers.  Meta’s move represents a significant evolution in the AI infrastructure landscape, with potential ripple effects across data center architecture, optical transport networks, and the broader telecom ecosystem.

At the core of this strategy is the monetization of Meta’s rapidly expanding AI compute footprint. The company has aggressively invested in large-scale data center infrastructure—reportedly including multi-hundred-billion-dollar campus developments—to support training and inference for its proprietary large language models (LLMs) and recommendation systems. As these deployments scale, Meta appears to be seeking to externalize surplus capacity, transforming a cost center into a revenue-generating platform.

The proposed service portfolio is expected to span two primary layers. First, Meta may expose access to hosted AI models via APIs, analogous to AWS Bedrock or Azure AI Services, enabling enterprises to integrate generative AI and foundation model capabilities without managing underlying infrastructure. Second, Meta is exploring the provision of raw compute capacity—primarily GPU-accelerated workloads—mirroring the infrastructure-as-a-service (IaaS) model offered by neocloud providers such as CoreWeave. This dual-layer approach would allow Meta to compete both in higher-margin AI platform services and in lower-level compute provisioning.

Telecom & Networking Implications:

From a telecom and network infrastructure perspective, this development has several implications. Hyperscale AI workloads are increasingly bandwidth-intensive, requiring high-capacity, low-latency interconnects within and between data centers. Meta’s investments are therefore likely to drive demand for advanced optical networking technologies, including coherent pluggable optics (e.g., 400ZR/800ZR), data center interconnect (DCI) architectures, and AI-optimized fabric designs leveraging Ethernet-based scale-out topologies. In addition, the geographic placement of these data centers—often in power-abundant, rural locations—introduces new requirements for long-haul fiber connectivity and edge aggregation.

The initiative, internally referred to as “Meta Compute,” reflects a broader industry shift toward vertically integrated AI infrastructure stacks, where hyperscalers tightly couple compute, networking, and software frameworks. For telecom operators and infrastructure vendors, this trend underscores the growing convergence between cloud, AI, and network domains, particularly as AI-driven workloads begin to influence traffic patterns, peering strategies, and edge deployment models.

Strategically, Meta’s entry into the AI cloud market raises competitive pressure across multiple fronts. Unlike traditional cloud providers, Meta brings extensive experience in hyperscale distributed systems and open-source AI frameworks (e.g., PyTorch), but lacks a mature enterprise cloud ecosystem. Its success will likely depend on its ability to translate internal infrastructure efficiencies into externally consumable services, while addressing enterprise requirements for reliability, security, and service-level agreements.

Meta’s cloud push is best viewed as a network-and-infrastructure strategy as much as a software business, because monetizing AI capacity depends on how well it can expose compute, move data, and preserve performance at hyperscale. The telecom significance is that Meta is turning internal AI infrastructure into a market-facing platform, which increases the importance of optical transport, data-center interconnect, and low-latency backbone engineering.

From a telecom perspective, the key issue is not simply that Meta may sell AI models or GPU capacity; it is that the company is building a service layer on top of a very large, power- and bandwidth-intensive distributed system. Reuters reported that Meta is considering both hosted model access and raw compute sales, with the former resembling an AI platform service and the latter looking more like neocloud infrastructure.That means the network becomes part of Meta’s product offering. Large AI inference and training environments require high-bisection fabrics inside the data center, plus dense east-west traffic handling, which pushes demand for faster Ethernet switching, advanced optical modules, and carefully engineered rack-to-rack and site-to-site interconnects.  Meta’s AI cloud ambitions reinforce a broader shift: hyperscalers are no longer treating networking as a background utility, but as a primary constraint on scale.

Network World’s coverage of Meta Compute notes that Meta has unified data center and network oversight and is planning multi-gigawatt AI buildouts, underscoring how tightly power, fiber, switching, and facility design are now linked.

For network operators and vendors, that translates into stronger demand for long-haul fiber, DCI platforms, low-latency transport, and high-radix switching. It also raises the strategic value of metro and regional interconnect corridors that can support AI clusters, especially when capacity must be spread across multiple sites for power, land, or resiliency reasons.

Meta’s potential move into raw compute sales is especially relevant to telecom because it resembles the economics of infrastructure-heavy cloud and colocation models. In practice, the service quality will depend on how efficiently Meta can provision GPU clusters, maintain deterministic performance, and avoid congestion across the transport layer connecting those clusters.  That implies growing importance for:

  • Coherent optical transport and scalable DCI.

  • High-capacity Ethernet fabrics for AI clusters.

  • Open-rack and disaggregated infrastructure designs.

  • Network automation that can track workload placement and traffic hotspots.

These are not just cloud concerns; they are telecom-grade capacity-planning problems. As AI clusters become larger and more distributed, network planning starts to look more like core network engineering than conventional enterprise hosting.

Image Credits: Gabby Jones/Bloomberg / Getty Images

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Conclusions:

Meta’s entry would not only compete with AWS, Azure, and Google Cloud, but could also pressure specialized neocloud providers more directly. Reuters noted that Meta’s spare capacity could matter more to neo-cloud vendors than to the largest hyperscalers, because those providers rely on access to external GPU supply and managed infrastructure growth.  For telecom analysts, that suggests the competitive battleground is shifting from “who has the best model” to “who can deliver the most resilient compute-network-power stack.” The winners will likely be those that can couple AI accelerators with fiber-rich sites, robust interconnect, and energy-secure data center footprints.

Meta’s move reflects the convergence of cloud, AI, and transport networks. The story is less about Meta becoming a generic cloud vendor and more about hyperscale AI infrastructure evolving into a new class of network-dependent utility.  Indeed, Meta’s cloud initiative highlights a broader industry reality — in the AI era, compute is valuable, but connectivity, optical scale, and power-aware architecture increasingly determine whether compute can be monetized at all.

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References:

https://www.bloomberg.com/news/articles/2026-07-01/meta-is-building-a-cloud-business-to-sell-excess-ai-compute?embedded-checkout=true  (PAYWALL)

https://www.reuters.com/business/meta-sell-excess-ai-computing-capacity-via-cloud-business-bloomberg-news-reports-2026-07-01/

https://www.networkworld.com/article/4115975/meta-establishes-meta-compute-to-lead-ai-infrastructure-buildout.html

Meta, like SpaceX, looks to turn excess AI compute into cash

https://www.cnbc.com/2026/05/27/mark-zuckerberg-says-meta-starting-cloud-business-on-the-table.html

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TM Forum’s DTW Ignite 2026: Open Digital Architecture (ODA); Nokia, Ericsson, IBM and Mavenir AI announcements/cloud partnerships

The ongoing DTW Ignite 2026 conference [1.] represents a major shift for the telecom industry from theoretical AI experimentation to practical, code-proven execution under the core theme, “The Future Faster.”
“The Race to 2030” & Core Theme:
    • Shift to Action: TM Forum Vice President Aaron Boasman-Patel and CEO Nik Willetts opened the summit emphasizing that the industry must move past abstract C-suite visions.
    • The AI Economy: The flagship keynote officially launched the “Race to 2030,” a direct directive tasking operators to secure their market relevance by deploying high-velocity, production-grade architectures.
Live Agentic AI Integration:
    • On-Stage AI Co-Hosts: In an industry event first, agentic AI systems took the stage alongside human moderators to act as live panel co-hosts, digital analysts, and experts.
    • Summit Intelligence Layer: Advanced AI systems recorded and indexed every keynote, panel, and breakout session, functioning as a real-time intelligence layer to deliver daily trend summaries to attendees.
Three Core Mission Summits– the conference agenda was architected around three foundational pillars:
    • Autonomous Networks (AN): Featuring the largest showcase of live autonomous operating systems to date. Major case studies from carriers like China Mobile, China Telecom, TDC NET, and Telefónica showcased functional solutions for self-optimizing networks, RAN energy efficiency, and fast fault resolution.
    • Trustworthy AI and Data: Discussions zeroed in on scaling responsible AI, exploring Models-as-a-Service (MODaaS) frameworks, managing tokenomics, and reinforcing cyber resilience.
    • Composable IT and Ecosystems: Demonstrations focused on scaling Open Digital Architecture (ODA) from boardroom design into functional, interoperable engineering realities.

Practical Engineering & Showcases:

  • Catalyst Showcases: The exhibition floor hosted over 60 collaborative proof-of-concept Catalyst projects and Innovation Engine live demonstrations.
  • New Interactive Hubs: The event debuted dedicated “Mission Garages” for hands-on engineering collaboration, along with a specialized Future Skills program to help tech teams adapt to AI-native workflows. [1]
  • Major Tech Partnerships: Industry titans—including IBM, Ericsson, Cisco, and Nokia—used the floor to debut subsea infrastructures, physical AI, and cloud-native automation frameworks.

Note 1. DTW Ignite 2026 is TM Forum’s flagship global connectivity event focused on accelerating AI-native telcos, autonomous networks, and composable IT. The event is from June 23 to June 25 at the Bella Center in Copenhagen, Denmark.

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At the show, the TM Forum and its member alliance of over 850 companies across 180 countries, announced a major structural evolution for the Open Digital Architecture (ODA), shifting it from a cloud-native IT modernization blueprint into an AI-native execution environment. The core focus of these updates is to establish standardized, executable reference frameworks that allow operators to move beyond fragmented AI pilots and build an autonomous enterprise. The primary ODA updates and structural expansions announced at the summit include:

Transition to AI-Native ODA:
    • Governed Execution Layer: TM Forum members launched AI-native extensions to the ODA specification, adding a governed execution layer. This allows autonomous AI agents and large language models to run natively within the existing ODA component architecture and Open APIs.
    • Project Foundation & AI Canvas: Through the Demo ONE Catalyst project, tech leaders debuted an updated AI-Native ODA Canvas. This cloud-native runtime environment orchestrates data, AI models, and autonomous agents across fragmented BSS, OSS, and network domains to replace rigid legacy systems.
    • Model-as-a-Service (MODaaS): To solve the challenge of rising token costs and fragmented model selection, an ODA-aligned MODaaS framework was introduced. It establishes a unified control plane to govern, secure, and manage AI model usage across the carrier architecture.

“ODA for Satellite” Expansion:
    • Space-Telco Interoperability: In a major scope expansion, TM Forum officially launched the ODA for Satellite project. Supported by 16 foundational partners—including Airbus, Terrestar, and Vodacom—the initiative targets multi-billion dollar direct-to-device and space-connectivity markets. 
    • Unified Non-Terrestrial Frameworks: The project extends standard ODA components to satellite technology providers, standardizing how terrestrial mobile networks and non-terrestrial networks (NTNs) handle cross-industry billing, service delivery, and zero-touch roaming integrations. 

Industry Scale and Certification Milestones:
  • Plug-and-Play Validation: TM Forum rolled out its newly expanded ODA Component Certification. This toolkit gives vendors a programmatic way to verify that their commercial software components are truly plug-and-play ready, lowering custom integration costs for telecom buyers.
  • “Running on ODA” Milestones: The alliance celebrated that 18 global Communication Service Providers (CSPs), representing over two billion subscribers globally, have officially achieved “Running on ODA” accreditation—confirming that modular, componentized architecture has reached full scale in production environments.

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Vendor Announcements:

Nokia announced several major infrastructure and cloud partnerships to move telecom providers from isolated AI pilots to fully autonomous networks:
  • Amazon Web Services (AWS) Expansion: Nokia and AWS expanded their partnership to run Nokia’s Autonomous Networks Fabric natively on AWS. The integration brings operators closer to Level 4 network autonomy, enabling networks to orchestrate, analyze, and heal themselves at machine speed. 
  • Google Cloud Integration: Nokia deepened its alliance with Google Cloud to integrate Gemini models into the Nokia Assurance Center. They unveiled six specialized generative AI agents (including a Router Agent and Event Triage Agent) to automatically process data and isolate the root causes of service faults. It launches as a SaaS offering in September 2026.
  • Databricks Proof of Concept: Nokia and Databricks announced the completion of a joint project showing a unified, cloud-agnostic data platform. This resolves a legacy pain point by unifying hundreds of fragmented operational silo data architectures so multi-agent AI can run seamlessly across networks.
  • GenAI-Native Operations: Instead of relying on traditional rules-based code, Nokia’s new interfaces allow field engineers to query complex multi-vendor topologies, generate diagnostic code, and run natural-language root-cause analyses on real-time traffic faults.
  • Autonomous Network Scaling: Nokia presented multi-party Catalyst project solutions targeting network optimization, zero-touch slicing, and automated enterprise edge deployments tailored for the 5G-Advanced landscape.

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Ericsson is expanding network automation to the core network:
  • EIAP Core Expansion: The headline announcement from the Ericsson Cloud Software and Services division was the expansion of the Ericsson Intelligent Automation Platform (EIAP). Formerly restricted to RAN operations, the platform now fully integrates and unifies Radio Access Network (RAN) and core network automation systems.
  • Introduction of cApps: Ericsson claimed a major industry first by rolling out core-specific automation applications (cApps). These decentralized apps allow operators to run automated routines directly on core architectures, streamlining cross-domain workflows to cut operations costs. 
  • Business Value Pathways: Ericsson debuted a structured strategic blueprint designed to guide Communication Service Providers (CSPs) through the financial steps of scaling from Level 3 to Level 4 autonomous networks.

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IBM – Scaling Sovereign and Trustworthy AI Models:
  • Addressing the “AI Trust Gap”: Responding to a TM Forum study revealing that only 14% of operators can prove their AI systems are fully reliable, IBM presented framework tools at DTW Ignite to address security and model bias. 
  • B2B2X Monetization: IBM focused its platform showcase on orchestrating automated workflows for multi-enterprise B2B2X networks, enabling secure data federation across third-party hyperscalers and edge servers.

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Mavenir – “AI-by-Design” Software Solutions:
  • Telco-First Cloud Architecture: Stationed at Booth 334, Mavenir debuted its updated AI-by-design, cloud-native software portfolios built natively around TM Forum’s Open Digital Architecture (ODA) frameworks. 
  • Closed-Loop Automation: Mavenir demonstrated actionable frameworks that handle real-time resource adjustments, shifting power and processing capacity across base stations based on AI-predicted user demand cycles.

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References:

https://www.tmforum.org/events/dtw/experience-dtw/new-for-2026

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AI-Era Cloud Network Transformation: A Reference Architecture and Implementation Roadmap

By Shazia Hasnie, PhD

Introduction:

The physical network infrastructure that underpins cloud computing was designed for an era that no longer exists. Distributed training across hundreds of thousands of GPUs, real-time inference at the edge, and autonomous agent coordination impose requirements that traditional cloud network designs were never intended to meet. The networks that served the cloud era were architected for north-south traffic, best-effort delivery, and human-scale applications. None of these assumptions hold for AI.

This article presents a framework for transforming cloud network infrastructure for the AI era. It is organized around two components: a four-pillar reference architecture that defines what must be built, and a five-phase implementation roadmap that defines how to execute the transformation. Together, they provide infrastructure transformation leaders with a complete program for preparing their organizations’ physical network infrastructure for the age of AI.

The Four-Pillar Reference Architecture:

The physical network infrastructure for AI-era cloud computing is organized around four interdependent pillars. Each pillar groups related layers of the infrastructure stack. Each depends on the pillars that precede it and enables the pillars that follow.

Figure 1: The Four Pillars of AI-Era Cloud Network Infrastructure — a complete reference architecture for physical network transformation.

PILLAR 1: PHYSICAL FOUNDATION

The physical foundation is the literal infrastructure on which all higher-layer network services depend. Optical transport determines the bandwidth, latency, and reliability of every interconnection between data centers, regions, and compute clusters. Physical plant and cabling provide the fiber, connectors, and cable management that make connectivity possible. Power and cooling provide the electrical and thermal infrastructure that keeps everything running.

Optical Transport. Optical link engineering for AI workloads requires a fundamental shift from traditional practice. Traditional optical link engineering treats traffic surges as anomalies and provisions for average utilization. AI workloads generate synchronized, high-bandwidth bursts—checkpointing incast can saturate multiple optical links for minutes at a time—that demand link budgets engineered for peak synchronized demand. The cost of insufficient capacity is not degraded optical performance; it is stalled training runs.

The optical technology roadmap is being reshaped by AI requirements. Co-packaged optics (CPO) integrate the optical engine directly with the switch ASIC, reducing power consumption by 30-50% while increasing port density. Silicon photonics leverage semiconductor manufacturing to produce optical components at scale. 800G and 1.6T per wavelength will be required as GPU bandwidth scales. Linear drive optics remove the digital signal processing from the optical transceiver, reducing power and latency. Breakout optics enable multi-planar topologies where each GPU connects to multiple parallel fabrics. Organizations must ensure that today’s optical investments are forward-compatible with these technologies.

Physical Plant and Cabling. Deployment precision at the physical layer determines whether the architectures designed at higher layers function as intended. Rail-optimized topologies depend on perfect physical cabling—a single miscabled port breaks the single-hop guarantee. Automated cabling verification, where the management interface validates each connection against the reference design, has reduced deployment time by up to 90% for early adopters. Continuous monitoring must detect cabling degradation before it causes performance issues.

Power and Cooling. AI network hardware consumes significantly more power than traditional cloud hardware. A rack of switches populated with 800G pluggable optics can consume over 10 kilowatts. CPO engines may require direct-to-chip liquid cooling. The transition to liquid cooling has implications that extend beyond the network—chilled water systems, heat rejection, building structural load—and retrofitting liquid cooling into a data center designed for air cooling is significantly more expensive than incorporating it into new construction.

PILLAR 2: NETWORK SYSTEMS

Network systems translate the physical foundation into functional network services. Modern data centers operate multiple physical networks—front-end, back-end, storage—each optimized for a specific traffic class. AI training demands a dedicated high-bandwidth, low-latency fabric for GPU-to-GPU communication that must interoperate with existing networks through well-defined interconnection points.

Network Fabrics. AI workloads generate east-west traffic that behaves differently from anything traditional cloud networks were designed to handle. It is dominated by a small number of high-bandwidth elephant flows—sustained, predictable data streams between GPU pairs—that produce synchronized bursts at predictable intervals. Worst-case path latency determines the completion time for collective communication operations, making the performance of the slowest path more important than average performance.

The industry has developed two distinct architectural paths to meet these requirements. For scale-up networks within a single rack or GPU pod, where distances are measured in meters and the cost of a stall is immediate, lossless transport via Priority-Based Flow Control (PFC) and Explicit Congestion Notification (ECN) remains the dominant approach. For scale-out networks connecting GPU clusters across data center halls or buildings, the industry is moving toward efficient utilization with low tail latency through fast recovery rather than absolute loss prevention. The Ultra Ethernet Consortium’s Ultra Ethernet Transport (UET) specification leads this effort, treating packet loss as a recoverable event rather than a failure.

The choice between paths is governed by three criteria: scale of deployment (≤256 GPUs favors lossless; ≥512 GPUs favors low-loss), workload characteristics (tightly coupled training benefits from lossless; loosely coupled inference tolerates low-loss), and organizational maturity (deep PFC expertise extends lossless viability to larger scales).

Four fabric capabilities support both paths. Dynamic load distribution—flowlet switching and packet spray—replaces static Equal Cost Multi-Path (ECMP) with congestion-aware path selection. In-band network telemetry (INT) provides the microsecond-granularity congestion visibility that makes intelligent load distribution possible. Rail-optimized topologies provide single-hop GPU-to-GPU connectivity for the most latency-sensitive collective operations. Advanced transport protocols, add selective retransmission via SACK and NACK that serves both scale-up and scale-out deployments.

Hardware Platforms and Qualification. Hardware must be qualified under AI workload conditions, not standard benchmarks. A switch that performs well under steady-state testing may exhibit unacceptable packet loss under synchronized burst patterns. The qualification process must answer a specific question: will this hardware maintain performance under the traffic patterns that AI workloads generate? Qualification is continuous—a firmware update, a new optics module, or a configuration change can alter behavior and must be validated before reaching production. The endpoint NIC plays a critical role, handling RDMA at line rate, packet-spray reordering, and selective retransmission. NIC qualification must be part of the same AI workload simulation process as switches and optics.

Network Operating Systems. The NOS must support PFC, INT, dynamic load distribution, and automation APIs. Interoperability is an architectural requirement in inherently multi-vendor AI infrastructure. Organizations should prioritize platforms that adhere to open standards—UET specifications, IETF YANG data models, OpenConfig—over proprietary extensions that create long-term supply chain constraints.

Edge and Regional Interconnect. AI inference increasingly occurs at the edge, requiring low-latency connectivity to cloud reasoning agents. Traffic engineering via Segment Routing over MPLS (SR-MPLS) and SR over IPv6 (SRv6) enables explicit path specification for latency-sensitive flows. Model distribution to edge endpoints requires versioned, efficient distribution protocols. Regional interconnect must be treated as a production input, not a shared utility—it is part of the AI supercomputer’s backplane.

PILLAR 3: OPERATIONAL INTELLIGENCE

Operational intelligence provides the control systems that make the network operable at scale. The AI-ready network cannot be managed through manual processes—a single AI cluster may contain thousands of switches requiring consistent configuration, where a single misconfigured buffer can stall thousands of GPUs.

Automation and Orchestration. The architectural response is declarative intent-based automation. The operator declares the desired network state using IETF YANG data models, and the automation framework translates this into device-level configuration via NETCONF, RESTCONF, and gNMI. Zero-touch provisioning enables switches to self-configure from the moment of installation. Configuration-as-code ensures every device conforms to architectural standards, with drift detected and corrected automatically. Network changes move through CI/CD pipelines that validate against policy and test under AI workload conditions before production deployment.

Telemetry and Monitoring. INT captures per-packet, per-path metrics at microsecond granularity. Streaming telemetry replaces polled monitoring with continuous, event-driven data push. The telemetry platform must ingest, store, and analyze millions of data points per second, enabling cross-layer correlation—tracing a GPU-level stall back through the fabric to the specific optical port and wavelength where the loss occurred. Predictive models detect performance degradation before it causes packet loss, shifting operations from reactive to proactive.

Testing and Validation. A dedicated testing environment must replicate production AI workload patterns—synchronized bursts, collective communication operations, checkpointing incast. Fault injection and chaos engineering validate network behavior under failure conditions. A digital twin of the production network, continuously synchronized, within a bounded delay, with real-time telemetry, enables what-if analysis for topology changes, capacity additions, and configuration updates before production deployment.

Security Architecture. Distributed AI dissolves the traditional network perimeter. The architectural response is in-fabric security: microsegmentation at the switch level validates every flow at the point of ingress, policy is bound to workload identity rather than network location, and the enforcement architecture relies on IEEE 802.1X, MACsec, and IPsec. Policy-as-code manages security rules through the same CI/CD pipelines as network configuration. The immutable audit trail serves double duty as both the security record and the compliance record.

PILLAR 4: STRATEGIC RESILIENCE

Strategic resilience ensures the network survives disruptions, scales with demand, and sustains itself over the long term.

Capacity Planning. Traditional capacity planning, based on historical averages and steady-state utilization, systematically underprovisions for AI. AI traffic is bursty, synchronized, and high-volume by design. Capacity must be provisioned for peak synchronized demand. Simulation-based planning models proposed network designs under projected AI workloads, identifying bottlenecks in the design phase before hardware is committed.

Disaster Recovery. AI training runs lasting weeks or months cannot be restarted from scratch. The network must support checkpointing at AI scale, with Recovery Time Objectives (RTO) and Recovery Point Objectives (RPO) defined per workload. The optical backbone must provide physically diverse paths with automatic protection switching. Failover architectures—active-active or active-passive—must be designed at the network level for inference workloads requiring high availability.

Business Continuity. The network fabric must tolerate WAN partitions without cascading failures, with local control planes capable of independent operation at each site. State reconciliation architecture—based on the shared event log pattern—must preserve causal ordering across partition boundaries. The network must support non-disruptive infrastructure refresh, with redundant paths and hitless failover enabling component replacement without interrupting workloads that run continuously for weeks or months.

The Five-Phase Implementation Roadmap

The migration from legacy to AI-ready network infrastructure is a multi-phase program that must deliver value at each stage while building toward the target architecture. Each phase has defined activities, deliverables, and success criteria. Each phase delivers measurable value before the next begins. Phase durations are calibrated for a Tier-1 cloud services provider; individual organizational timelines may vary based on scale, complexity, and resource availability. The success criteria stated for each phase are drawn from industry benchmarks and practitioner experience with large-scale network transformation programs. They represent targets that are ambitious but achievable for a Tier-1 cloud services provider with dedicated transformation resources and executive sponsorship.

Figure 2: The Five-Phase Implementation Roadmap — A 24–36 Month Transformation Program.

PHASE 1: FOUNDATION (MONTHS 1–6)

The first phase establishes the essential building blocks. Nothing can be automated, optimized, or secured until the network is instrumented and its state is understood.

The starting point is telemetry. Streaming telemetry must be enabled across all network devices in the AI infrastructure path—switches, optics, fabric elements—using gRPC-based protocols and OpenConfig YANG data models. The deliverable is a centralized telemetry platform receiving continuous data streams from every device. The success criterion is 100% telemetry coverage. Without complete visibility, every subsequent phase operates on incomplete information.

With telemetry flowing, a topology knowledge graph must be built—a dynamic map of all devices, links, and interconnections, continuously updated from telemetry data and discovery protocols. The graph must reflect topology changes within seconds, not minutes. Accurate neighbor discovery across all fabric layers is the foundation on which intent-based automation will reason about the network.

Configuration management must be brought under version control. Every device configuration—PFC thresholds, QoS policies, dynamic load distribution parameters—must be stored in version-controlled repositories. Every change must be tracked and attributed. The success criterion is 100% configuration version control with no out-of-band changes permitted. An automation framework that deploys configuration changes cannot operate reliably if changes are also being made through manual processes that bypass the automation pipeline.

Finally, the foundational intent model must be established. This is a structured format for expressing network intent—topology, capacity, QoS policies—in machine-readable YANG-based models. The deliverable is five foundational intents, defined and validated against the existing network state:

  1. Lossless Transport Intent: “All Remote Direct Memory Access over Converged Ethernet (RoCE) traffic on the AI fabric shall receive PFC priority treatment with zero packet loss under sustained load.”
  2. Fabric Capacity Intent: “The AI fabric shall maintain a minimum of 30% headroom on all east-west links during peak utilization.”
  3. Optical Link Diversity Intent: “Every GPU cluster shall have at least two physically diverse optical paths to its checkpoint storage.”
  4. Configuration Compliance Intent: “All device configurations shall match version-controlled templates. Any deviation shall be detected and flagged within 60 seconds.”
  5. Telemetry Coverage Intent: “Every device in the AI network path shall stream telemetry data. Any device that stops streaming shall be flagged within 30 seconds.”

These five intents are scoped to be achievable within Phase 1 while covering the most critical dimensions of AI network operations: lossless transport, capacity, resilience, configuration compliance, and observability.

PHASE 2: TRANSLATION (MONTHS 6–12)

The second phase builds the machinery that translates intent into device-level configuration. This is where declarative automation becomes operational.

The centerpiece is the intent compiler—a translation engine that converts YAML or JSON intent specifications into device-level configuration via NETCONF, RESTCONF, and gNMI. The intent compiler is not merely a template engine. It must understand the capabilities and constraints of each target device, select the appropriate protocol for each configuration operation, and handle the transactional semantics that make configuration changes safe. The success criterion is that the five foundational intents from Phase 1 are compiled and deployed without manual intervention.

Before any compiled configuration reaches production, it must be validated in a digital twin—a virtual replica of the AI network, continuously synchronized with production telemetry. The digital twin enables what-if analysis: if this configuration is applied, what happens to fabric utilization, PFC pause events, and flow completion times? The success criterion is 100% of configuration changes validated in the digital twin before production deployment.

Validation checks must be automated. Every intent must pass feasibility validation (can the network support this intent given current capacity?), capability validation (do the target devices support the required features?), and policy validation (does this intent comply with security and operational policies?). The success criterion is zero invalid intents deployed to production.

Multi-domain support must be enabled. The intent compiler must support both data center fabric and optical backbone domains, translating a single intent into coordinated configurations across domains.

PHASE 3: ASSURANCE (MONTHS 12–18)

The third phase closes the loop between intent and reality. The network may be configured correctly at a point in time, but AI workloads cause continuous change—congestion patterns shift, optical performance degrades, buffer utilization fluctuates. Assurance ensures the network remains in its intended state.

Real-time telemetry monitoring must track SLA compliance for all AI network services, updated continuously from streaming telemetry rather than periodically from polled data. Sub-second detection latency for SLA deviations is the success criterion. A RoCE stall that lasts 500 milliseconds must be detected while it is happening, not after the training run has been disrupted.

Drift detection must compare the intended network state against the actual state continuously. Drift can take many forms: a configuration change applied outside the automation pipeline, a performance degradation that violates the intent without changing the configuration, a topology change due to a link failure. The success criterion is 99% detection accuracy for both configuration and performance drift.

The assurance dashboard must provide all stakeholders—network operations, compute operations, capacity planning—with real-time visibility into network state versus intent. Alerting must be integrated with the incident management system so that 100% of SLA breaches generate alerts within one second of detection.

PHASE 4: REMEDIATION (MONTHS 18–24)

The fourth phase enables the network to respond to drift and failures. Detection without response is observation without action. Remediation closes the loop.

Root cause analysis (RCA) must be automated. When drift is detected, the system must correlate telemetry data across layers—optical, fabric, device—to identify the source. A packet loss event at the GPU layer may originate from a congested optical link three hops away. The RCA engine must trace the event across layers. The success criterion is greater than 80% accuracy for common incident types.

At least three remediation types must be implemented and validated in the digital twin before production enablement: rollback to the last known good configuration, traffic rerouting around congested or failed links, and dynamic QoS adjustment.

A policy engine must govern which remediation actions are fully automated, which require human approval, and which are prohibited. The policy framework must be machine-readable, version-controlled, and enforced at the automation layer. The success criterion is 100% of automated remediation actions comply with defined policies.

Supervised remediation must enable a human-in-the-loop approval workflow for actions that exceed the automated threshold. The goal is that 50% of detected issues are resolved automatically without human intervention, with the remainder escalated for approval.

PHASE 5: AUTONOMOUS (MONTHS 24–36)

The final phase extends over 12 months—longer than the preceding phases—because full autonomy is not a single deployment event. It requires progressive expansion of automation scope, validation of continuous optimization across diverse workload patterns, and accumulation of sufficient operational data for the learning system to deliver meaningful accuracy improvements. Each increment of autonomy must be earned through demonstrated reliability.

The automation scope must be expanded to cover all common incident types identified and validated in Phase 4. The success criterion is that 80% of all incidents are resolved automatically. The remaining 20% represent novel failures, complex multi-domain incidents, or situations where policy requires human judgment.

Continuous optimization must become a background process. The network self-tunes PFC thresholds based on observed congestion patterns, adjusts dynamic load distribution policies as workload distributions shift, and reallocates buffer resources as traffic characteristics evolve. The success criterion is a 20% reduction in SLA violations compared to the Phase 3 baseline.

Cross-domain coordination must achieve full automation for standard intents. When a new GPU cluster is provisioned, the orchestration layer coordinates optical link provisioning, fabric configuration, and security policy establishment across domains without manual intervention. Human involvement is reserved for novel or high-risk changes.

The learning system must improve from experience. Machine learning models trained on historical incident and remediation data must increase root cause analysis accuracy over time. The success criterion is a 10% quarterly improvement in RCA accuracy.

COEXISTENCE: RUNNING LEGACY AND AI-READY NETWORKS IN PARALLEL

The transformation cannot be accomplished through a flag-day cutover. The existing cloud network must continue to operate and generate revenue throughout the transition. The AI-ready network is deployed as a separate physical infrastructure—dedicated optical links, dedicated fabric, dedicated switches—wherever possible. Physical separation eliminates the risk that AI workload traffic patterns will disrupt legacy services. Where physical separation is impractical, logical isolation with strict QoS enforcement provides the necessary workload separation. Interconnection points between the two networks must be engineered with the same packet loss, latency and throughput requirements as the AI-ready network. Operational processes must govern both environments simultaneously during a transition measured in years.

ORGANIZATIONAL TRANSFORMATION

The AI-ready network cannot be operated by a team trained only on legacy network operations. Three new skill domains become critical: AI workload literacy (understanding the traffic patterns and failure modes of distributed training and inference), telemetry and data engineering (building and operating streaming telemetry platforms and correlation engines), and automation engineering (designing and operating intent-based automation and CI/CD pipelines). The talent strategy must balance retraining existing engineers—many of the required skills are extensions of existing knowledge—with external hiring for skills that cannot be developed internally in the required timeframe. Retention of critical talent during the transformation is essential: the engineers who understand the legacy infrastructure are essential to the coexistence strategy.

FINANCIAL MODELING

Network investment for AI must be justified on value generation—the network cost per training run completed, per inference served, per GPU-hour utilized—not traditional cost efficiency metrics. This shift from cost-per-bit to value-per-outcome transforms the investment conversation. A network that costs more per gigabit but enables higher GPU utilization generates a return that far exceeds its cost premium. The five-phase roadmap enables investment to be spread over 24 to 36 months, with each phase delivering measurable value before the next begins. The cost of inaction must be quantified and presented alongside the cost of transformation.

CONCLUSIONS:

The physical network is no longer a utility layer that can be taken for granted. It is the foundation on which AI performance depends. The optical backbone determines whether GPU clusters operate at full utilization or sit idle. The network fabric determines whether distributed training completes in days or weeks. The automation and telemetry infrastructure determines whether issues are detected proactively or discovered after customer impact.

The four-pillar reference architecture defines what must be built. The five-phase implementation roadmap defines how to execute the transformation. Together, they form a complete program for infrastructure transformation leaders.

The technologies described here are deployed and operational in production AI networks today. The challenge for infrastructure leaders is not whether these approaches work, but how to adapt them to their organization’s specific constraints, scale, and timeline.

REFERENCES:

[1] TM Forum, “Autonomous Networks: Business Requirements and Framework,” TM Forum IG1251, 2025. [Online].

 https://www.tmforum.org/

[2] AMD, “Next Gen Networking Transport for Large Scale AI Training,” May 2026. [Online].

https://www.amd.com/en/blogs/2026/next-gen-networking-transport-for-large-scale-ai-training.html

[3] Tolly Group, “Dell Networking Data Center AI Switch Fabric Congestion Mitigation Evaluation,” April 2026. [Online].

 https://reports.tolly.com/publications/226105

[4] Tech Field Day, “Cisco AI Networking Cluster Operations Deep Dive,” November 2025. [Online].

https://techfieldday.com/video/cisco-ai-networking-cluster-operations-deep-dive/

[5] Akamai / WWT, “East-West Is the New North-South: Rethink Security for the AI-Driven Data Center,” February 2026. [Online]. https://www.wwt.com/article/partner-pov-east-west-is-the-new-north-south-rethink-security-for-the-ai-driven-data-center

[6] NIST, “Zero Trust Architecture,” NIST Special Publication 800-207, Aug. 2020. [Online].  

https://csrc.nist.gov/publications/detail/sp/800-207/final

[7] IETF, “Network Configuration Protocol (NETCONF),” RFC 6241, June 2011. [Online]. 

https://datatracker.ietf.org/doc/rfc6241/

[8] IETF, “RESTCONF Protocol,” RFC 8040, January 2017. [Online].  https://datatracker.ietf.org/doc/rfc8040/

[9] IEEE, “Priority-based Flow Control,” IEEE Standard 802.1Qbb, 2011.

[10] IEEE, “Congestion Notification,” IEEE Standard 802.1Qau, 2010.

[11] OpenConfig, “OpenConfig: Vendor-Neutral Network Configuration and Telemetry,” [Online]. https://www.openconfig.net/

[12] Cloud Native Computing Foundation, “gRPC: A High-Performance, Open Source Universal RPC Framework,” [Online]. https://grpc.io/

[13] Ultra Ethernet Consortium, “Ultra Ethernet Specification,” [Online].  https://ultraethernets.org/

………………………………………………………………………………………………………………………………………………………….

References from IEEE Techblog:

Why Batch Pipelines Break AI Agents: The Case For Streaming-First Network Operations

The enterprise network stack is collapsing; AI’s impact; comparison with “Batch Pipelines Break AI Agents”

ABOUT THE AUTHOR:

Shazia Hasnie, Ph.D., is VP Product Strategy and Innovation at Cuber AI, focused on Agentic Network Operations. Her work explores the intersection of autonomous systems, cloud-native infrastructure, and the economic models that make AI operations sustainable at scale. She brings over 20 years of global experience in communications networks and holds a Ph.D. in Communications Engineering from the Australian National University.

https://linkedin.com/in/shaziahasnie/

Network X Americas: AT&T and Comcast reveal huge AI impact on network operations

Echoing a recent Cisco report, telecom leaders at the Network X Americas conference (held in Irving, TX last week) noted that AI is fundamentally shifting traffic patterns while having a very positive impact on network operations.  With billions of connected sensors and devices (like autonomous vehicles generating 20GB of data per day), operators are forced to prioritize uplink capacity and low latency over traditional consumer downlink traffic.

AT&T’s network CTO, Yigal Elbaz, cited the robo-taxi as a bellwether for how AI is affecting network traffic.  Each Waymo vehicle generates about 20 gigabytes of data per day, roughly 30 times the amount a typical mobile user consumes. Most of that traffic flows from the car to the cloud.  “Every other week,” Elbaz noted, “a new flavor of a frontier AI model drops on us.”

“We already have about 700,000 changes on a daily basis in our network made by AI,” said Elbaz, noting that AT&T has built a proprietary foundation AI model because standard large language models (LLMs) don’t understand KPIs, network alarms or fiber deployment specifics. He cited a 20-25% cost reduction and 12-15% better results than general-purpose models.

In his keynote speech, Comcast EVP and Chief Network Officer Elad Nafshi described 200 edge compute centers capable of self-healing 77% of network events. He touted AI chipsets close enough to customers’ homes to pinpoint outside plant faults with 99.2% precision, and a partnership with Nvidia to push that edge platform further.

Nafshi highlighted the gap in network provider promises vs delivery with a hypothetical small-business use case example. A pizza shop operator, could materially change workflow and productivity if the service provider delivered an AI-enabled concierge—built on a task-optimized small language model—to manage order intake and customer interaction. In that scenario, the network evolves from a passive access pipe into an application-aware platform that augments business operations. The concept is credible from a technical standpoint, but remains largely theoretical until operators can effectively reach and educate SMB customers who still perceive connectivity as a fixed monthly expense.

Both AT&T and Comcast Israeli executives said this was more than modernization and discussed the changes in what a network does. The network is now a platform, not a pipe. Today’s network learns, adapts and increasingly acts on behalf of its customers. But I can’t help but wonder if the customers know… or if that network value will ever trickle down to the customers who need it most.

In a keynote panel session titled, ” Convergence in action – Competing, scaling and winning in the AI-driven connectivity market,” Josh Goodell, AT&T’s VP of Broadband and Converged Product Development, framed the company’s objective as becoming “the greatest simplifier of our customers’ lives” while instilling “connectivity confidence.” That positioning is notable for a sector that has historically under-communicated its value proposition beyond basic service metrics.

The broader industry narrative appears to be shifting. Historically, go-to-market strategies emphasized throughput benchmarks and promotional pricing. As Omdia’s Ruth Brown (panel session moderator) observed, packaging has been largely defensive, optimized around billing constructs rather than differentiated user experience. The emerging model instead centers on networks that operate contextually and autonomously—delivering value in ways that are largely invisible to the end user.

Derek Peterson, CTO of Boingo Wireless, articulated a parallel issue in venue networks, describing the “stadium problem.” Operators dimension infrastructure for peak ingress and then underutilize that capacity once users are inside the venue. The architectural question is no longer solely about capacity provisioning, but about service-layer innovation on top of that capacity. At Petco Park, Boingo leveraged existing network assets to enable pre-entry commerce, driving incremental revenue before fans pass through the gates. The infrastructure was not the constraint; the limiting factor was identifying and executing on higher-order use cases.

A similar disconnect persists in the industry’s framing of the digital divide. AT&T’s  John Stankey and others have suggested the gap is nearing closure, citing expanded fiber footprints and fixed wireless access. While coverage metrics have improved, the divide has never been purely a function of infrastructure availability. Adoption is equally constrained by affordability and, critically, by perceived value. If connectivity continues to be positioned as a commoditized utility, the most economically vulnerable segments—those with the greatest need for digital enablement—remain the least likely to engage.

This is particularly relevant in an AI-driven economy. The users and small enterprises that could benefit most from intelligent, network-delivered services are often those least exposed to the evolving capabilities of the platform. The industry risks over-indexing on measurable deployment milestones while under-communicating the functional value of next-generation networks.

The Network X keynotes underscored that the technical roadmap is largely in place. Network operators are advancing toward networks capable of real-time traffic learning, proactive cybersecurity at the edge, and highly personalized in-home connectivity experiences. These capabilities represent a more compelling value proposition than traditional service tier comparisons.

However, the central challenge remains go-to-market execution. The industry has demonstrated that it can architect and deploy these capabilities at scale. It has yet to establish a clear, effective framework for articulating that value to end users and enterprises in a way that drives adoption.

As a final observation, the broader telecom ecosystem—illustrated by developments such as autonomous vehicle platforms—already depends on AI-enabled, highly distributed network intelligence. While the underlying infrastructure is incrementally aligning with these requirements, the industry dialogue around its broader economic and societal implications remains underdeveloped.

References:

https://www.lightreading.com/ai-machine-learning/the-ai-enabled-network-is-here-the-pitch-is-stuck-in-traffic

 

Cisco report: Agentic AI to reshape WAN traffic, AI inference will be ~25% of total traffic by 2035

Will the wave of AI generated user-to/from-network traffic increase spectacularly as Cisco and Nokia predict?

Telecom operators investing in Agentic AI while Self Organizing Network AI market set for rapid growth

Analysis: Cisco, HPE/Juniper, and Nvidia network equipment for AI data centers

Cisco CEO sees great potential in AI data center connectivity, silicon, optics, and optical systems

The Financial Trap of Autonomous Networks: Scaling Agentic AI in the Telecom Core

Ericsson integrates Agentic AI into its NetCloud platform for self healing and autonomous 5G private networks

STL Partners webinar: Agentic AI needed for RAN autonomy & efficiency

Nokia to showcase agentic AI network slicing; Ericsson partners with Ookla to measure 5G network slicing performance

Agentic AI and the Future of Communications for Autonomous Vehicles (V2X)

Telecom data centers must be redesigned for the AI era with rack scale architectures, enhanced power & cooling requirements

Is the “far edge” a bridge to far to cross for AI inferencing? What about “Distributed AI Grids”?

T-Mobile US announces new broadband wireless and fiber targets, 5G-A with agentic AI and live voice call translation

Intel and AI chip startup SambaNova partner; SN50 AI inferencing chip max speed said to be 5X faster than competitive AI chips

CES 2025: Intel announces edge compute processors with AI inferencing capabilities

 

Cisco report: Agentic AI to reshape WAN traffic, AI inference will be ~25% of total traffic by 2035

Executive Summary:

Consumer-driven AI traffic [1.] currently represents a marginal share of aggregate Internet traffic. However, accelerating adoption of agentic AI is expected to materially reshape traffic composition over the next decade. In its “AI Impact on Wide Area Networks” report, Cisco projects that AI will emerge as the dominant driver of network traffic growth. As consumer AI adoption approaches “near-universal usage,” AI and agentic AI are forecast to increase consumer-driven network traffic by approximately 6.6× by the mid-2030s (see chart below).

Cisco estimates that this AI expansion will account for roughly 63% of incremental traffic growth relative to non-AI scenarios. The study focuses specifically on WAN implications, rather than data center or GPU infrastructure, and provides guidance on network design and capacity planning. Methodologically, the report integrates real-world traffic observations (via Cisco Crosswork Assurance User Experience), third-party industry datasets, and controlled laboratory evaluations of AI agents to characterize how AI-generated traffic diverges from conventional web traffic patterns.

Token-consumption data shows nearly 10x year-over-year growth, while in some service provider measurements Cisco is seeing ~4x growth in just eight months. Sustained growth at these rates means AI traffic will become a meaningful component of overall network traffic by 2035.

Note 1. Consumer AI traffic has a few defining technical traits: it is still dominated by short text-based exchanges, but it is becoming more stateful, more upstream-heavy, and more latency-sensitive as users move from simple prompts to agentic workflows and multimodal interactions.  Today’s consumer AI traffic is still overwhelmingly text-oriented, which is one reason the aggregate bandwidth impact remains modest despite rapid adoption. Comcast’s network observation is a useful real-world proxy: 97.1% of AI traffic was text-based, while images accounted for 2.6% and video only 0.3%. The key technical implication is that current traffic volumes are often limited more by conversation frequency and session behavior than by very large payloads, though that changes quickly as users adopt image, audio, and video generation.

Although AI inference traffic is currently “negligible” relative to dominant categories such as video streaming, Cisco projects it will comprise approximately 25% of total network traffic by 2035 (see chart below). At that point, AI traffic is expected to represent a “meaningful component” of overall network load. Importantly, AI-generated traffic exhibits distinct characteristics: inference flows are approximately twice the duration of typical web transactions, demonstrate higher upstream bandwidth demand, and operate at “software speed” rather than human interaction rates.

The emergence of AI agents as “power users” further amplifies these dynamics. Cisco notes that agent-executed tasks can generate up to 450% more traffic per task compared to human-driven interactions. This shift is expected to drive operator adoption of “flow-aware network and security systems” as traffic patterns become increasingly machine-driven and less predictable.

Cisco’s broader framing is that AI traffic “isn’t just adding traffic,” but is changing the shape of traffic, with inference flows running about twice as long as typical web transactions and, in some cases, generating up to 450% more traffic per task when an agent executes the workload.  AI inference sessions tend to hold resources longer, create more sustained flows, and push operators to think in terms of flow-aware behavior rather than only peak-throughput sizing. Cisco also notes that about 9% of AI inference flows carry more upstream than downstream traffic, versus about 0.5% for typical web traffic, which is a meaningful shift for access and broadband networks.  Cisco reports that approximately 9% of AI inference flows are upstream-dominant, compared to roughly 0.5% for traditional web traffic, with this divergence expected to widen alongside increased agentic AI utilization. In parallel, latency sensitivity is anticipated to become a more critical performance parameter for AI-driven applications.

Latency and symmetry:

AI traffic is also more sensitive to latency than many ordinary consumer web transactions because the user experience is often conversational and interactive, with the expectation of near-immediate turn-taking. Cisco describes AI inference as operating at “software speed” rather than human speed, which means small delays can be more noticeable and operationally important. At the same time, upstream demand becomes more significant because prompts, context, attachments, and agent-generated actions can increase return-path traffic, especially as multimodal inputs and agentic tool use expand.

Multimodal growth:

The biggest step-up in technical impact comes when consumer AI shifts from text-only prompting to multimodal generation and agent-driven workflows. In those cases, each task can involve multiple model calls, retrieval steps, tool invocations, and richer media payloads, which expands both flow count and bytes per session. Cisco’s study suggests that this is why AI traffic will increasingly require “flow-aware network and security systems,” because the traffic profile is not just larger, but structurally different from conventional browsing.

 

Infrastructure Implications:

Telecom infrastructure is becoming “increasingly intertwined with hyperscale infrastructure, not because operators are leading AI investment, but because they are becoming part of the ecosystem that supports it,” analyst firm MTN Consulting said in an April 27th research note.  “Demand for optical transport, data-center interconnect, and edge infrastructure is rising as telecom networks carry growing volumes of cloud and AI-driven traffic,” the firm said.

“AI network traffic is already reshaping infrastructure needs. What we are seeing is clear: AI isn’t just adding traffic. It’s changing the shape of traffic,” Javier Antich, principal product management engineer in the CTO office of Cisco’s provider connectivity group, and Gurudatt Shenoy, SVP, product management, provider connectivity, explained in this blog post.

These shifts are beginning to influence access network evolution. Fiber networks already provide relatively symmetric throughput and low latency, while cable operators are advancing similar capabilities through DOCSIS upgrades. Mid-split and high-split architectures increase upstream spectrum allocation, enabling more balanced capacity profiles. Concurrently, Tier 1 operators such as Comcast and Charter Communications are introducing low-latency enhancements within DOCSIS networks.

Operational data reflects early-stage impacts. Comcast Chief Network Officer Elad Nafshi noted at the Cable Next-Gen event in March that approximately 97.1% of AI traffic on Comcast’s network remains text-based, with images accounting for 2.6% and video just 0.3%, indicating that bandwidth-intensive multimodal AI traffic has yet to scale materially.

Network design impact:

For broadband and access networks, the immediate engineering issues are upstream traffic capacity, queue behavior, and latency consistency rather than raw total throughput alone. Symmetry upgrades (such as DOCSIS mid-split and high-split for MSOs), along with low-latency capabilities, are relevant because consumer AI creates more return-path pressure and more time-sensitive sessions. In other words, the challenge is not simply to carry more bytes; it is to carry more interactive sessions with predictable performance, especially as multimodal and agentic usage scales.

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References:

https://www.cisco.com/c/dam/en/us/solutions/collateral/artificial-intelligence/mass-scale-infrastructure/ai-network-traffic-report.pdf

https://www.lightreading.com/ai-machine-learning/ai-emerging-as-top-driver-of-overall-internet-traffic-growth-study

https://www.cisco.com/site/us/en/products/networking/software/provider-connectivity-assurance/user-experience/index.html

Petabits per rack: How AI traffic is reshaping networks

Will the wave of AI generated user-to/from-network traffic increase spectacularly as Cisco and Nokia predict?

Telecom operators investing in Agentic AI while Self Organizing Network AI market set for rapid growth

Analysis: Cisco, HPE/Juniper, and Nvidia network equipment for AI data centers

Cisco CEO sees great potential in AI data center connectivity, silicon, optics, and optical systems

The Financial Trap of Autonomous Networks: Scaling Agentic AI in the Telecom Core

Ericsson integrates Agentic AI into its NetCloud platform for self healing and autonomous 5G private networks

STL Partners webinar: Agentic AI needed for RAN autonomy & efficiency

Nokia to showcase agentic AI network slicing; Ericsson partners with Ookla to measure 5G network slicing performance

Agentic AI and the Future of Communications for Autonomous Vehicles (V2X)

Telecom data centers must be redesigned for the AI era with rack scale architectures, enhanced power & cooling requirements

Is the “far edge” a bridge to far to cross for AI inferencing? What about “Distributed AI Grids”?

T-Mobile US announces new broadband wireless and fiber targets, 5G-A with agentic AI and live voice call translation

Intel and AI chip startup SambaNova partner; SN50 AI inferencing chip max speed said to be 5X faster than competitive AI chips

CES 2025: Intel announces edge compute processors with AI inferencing capabilities

Inside Nokia’s new AI Networking Innovation Lab

As AI workload demands continuously affect how data center networks must operate, challenges across performance, scale, and precision must be addressed to maintain the large-scale demands on network infrastructure.  To address those needs, Nokia announced today the launch of its AI Networking Innovation Lab, a new facility designed to bolster innovation between AI and cloud partners and to accelerate next-generation development of AI infrastructure.
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Located within Nokia’s Sunnyvale, California facility, the lab serves as an innovation hub where Nokia will work across advanced AI networking technologies, architectures and ecosystems with a variety of partners to help shape the future of data center networking. The lab will serve as a testing center for Nokia Validated Designs and a co-innovation hub with its global partners, assessing real-world scenarios, commercial technologies, and the latest networking solutions.
Nokia has teamed up with several prominent infrastructure and platform providers. Early lab partners include AMD, Everpure, Keysight, Lenovo, Nscale, Supermicro and Weka.
  • Silicon & Compute: Collaborating with AMD to optimize enterprise AI workloads alongside Nokia data center switches.
  • Testing & Infrastructure: Partnering with Keysight Technologies to emulate workloads across Ultra Ethernet Consortium (UEC) and RoCEv2 transports.
  • Hardware & Servers: Integrating high-performance platforms from Lenovo and Supermicro.
  • Data Storage & Cloud: Working with Weka and cloud builders like Nscale to eliminate storage bottlenecks during heavy computational training.

Nokia’s AI Networking Innovation Lab is built upon three fundamental pillars: Technology Innovation, Ecosystem Collaboration, and Validation.  Image credit: Nokia

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Technology Innovation: The lab provides a dedicated space for AI partners to experiment with next-gen solutions across the entire networking stack – driving emerging standards forward with pioneering approaches to new protocols, switching silicon, congestion control, real-time telemetry, and automation.

Ram Periakaruppan, Vice President and General Manager, Network Applications and Security business at Keysight:
“Partnering with Nokia in the AI Networking Innovation Lab has enabled us to benchmark and optimize AI networks under real-world conditions…Together, we are helping accelerate AI network adoption by giving operators and hyperscalers the validated insights needed for confident, large-scale deployment.”

Ecosystem Collaboration: True progress depends on a strong ecosystem of technology providers – silicon manufacturers, GPU developers, system, storage and test vendors, and cloud platforms – that work together to create highly-compatible AI-ready solutions. This facilitates joint testing for interoperability, improves integration, and ensures roadmaps are aligned across different hardware, software, and orchestration layers.

Travis Karr, Corporate Vice President, HPC and Sovereign AI at AMD believes customer collaboration and an open ecosystem are fundamental to accelerating AI innovation:

“By co-developing solutions with partners, such as Nokia in their AI networking innovation lab, we ensure our AMD enterprise AI solutions are tested with Nokia data center switches on real-world workloads and network demands. An open, standards-driven approach empowers customers to integrate seamlessly across heterogeneous environments, avoiding lock-in and fostering industry-wide advancement in AI.”

Validation: This positions the lab as the testing ground for Nokia Validated Designs, where customers and partners rigorously validate multi-vendor data center architectures under authentic AI training and inference workloads. By testing failure scenarios, congestion behavior, and operational automation, the lab turns NVDs into proven, deployable solutions — enabling predictable performance, faster deployment, and reduced operational complexity and risk for organizations navigating the AI era.

Arno van Huyssteen, Vice President of Global Telecommunications for Nscale:

“Nokia is a strategic networking partner for Nscale as we build towards AI Grid, and the engineering rigour behind their Validated Designs reflects the kind of innovation needed to enable next-generation AI infrastructure. The depth of hardware, software and failure testing behind those blueprints is what will give operators the confidence to deploy complex AI environments faster, with fewer integration risks and less operational disruption. We’re excited to collaborate in the AI Networking Innovation Lab to help push the boundaries of AI-native networking and validate the next generation of solutions before they reach production.”

A primary focal point inside the lab is managing data center congestion. Unlike traditional cloud traffic, back-end AI networks feature high-density data synchronization across massive GPU clusters. The lab uses advanced automation, AIOps, and lossless Ethernet solutions—such as the Nokia 7220 IXR-H6 switches—to handle these intense uplink and synchronization demands safely.

The AI Networking Innovation Lab supports Nokia’s broader strategy to accelerate the next era of AI-driven connectivity. As demand for AI infrastructure continues to grow, data center networking has become one of the most critical foundations of the global AI ecosystem. Through this investment, Nokia is strengthening its capabilities in AI and cloud infrastructure while advancing its vision of AI-native networking.

Rudy Hoebeke, Vice President of Software Product Management at Nokia:

“The launch of Nokia’s AI Networking Innovation Lab marks a major milestone in our commitment to drive the next era of AI-native connectivity. As the industry continues to evolve with solutions like scale-across and AI-Grid, this lab is poised to accelerate AI networking technology that will not only support but optimize these emerging industry offerings. This center gives our customers and partners early access to new technologies, deeper collaboration with the world’s leading AI ecosystem players, and the confidence that their networks are validated under more realistic AI conditions. By accelerating innovation and reducing deployment risks, we’re enabling the industry to deliver faster, more reliable, and more sustainable AI experiences to people and businesses everywhere.”

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References:

https://www.nokia.com/newsroom/nokia-launches-ai-networking-lab-to-drive-co-innovation-with-partners-and-accelerate-next-era-of-ai-native-data-center-networking/

Analysis: Nokia’s strong growth in Optical Networks and AI network infrastructure

Orange, Nokia, Nvidia, and Intel debate: ASICs vs. GPUs vs. General-Purpose CPUs for RAN Baseband Processing

Nokia’s AI Applications Study: “Physical AI” may require RAN redesign to support high‑volume, low‑latency uplink traffic

Australia’s NBN and Nokia demonstrate multi-generation optical technologies concurrently over existing FTTP infrastructure

Nokia to showcase agentic AI network slicing; Ericsson partners with Ookla to measure 5G network slicing performance

Tampnet to expand 5G offshore connectivity in the Gulf of Mexico using Nokia AirScale 5G radios

Dell’Oro: Analysis of the Nokia-NVIDIA-partnership on AI RAN

 

Orange, Nokia, Nvidia, and Intel debate: ASICs vs. GPUs vs. General-Purpose CPUs for RAN Baseband Processing

For Orange CTO Laurent Leboucher, the main attraction of AI today lies in its potential to improve the efficiency of 5G radio access networks (RANs). That helps explain Orange’s recent collaboration with Nokia and Nvidia. Orange already deploys Nokia’s purpose-built 5G network equipment and software at mobile sites in France and other markets. Until recently, it had little obvious need for Nvidia, the U.S. chip making king best known for the graphics processing units (GPUs) used to train large language models. But Nokia and Nvidia became closely aligned last October, when Nvidia took a 3% stake in Nokia as part of a $1 billion investment. Nokia is now developing AI RAN software designed to run on GPUs.

Leboucher’s interest is driven in part by concerns over the cost of custom silicon — the application-specific integrated circuits (ASICs) used in purpose-built 5G networks. “It creates an opportunity to bring a general-purpose chipset instead of an ASIC implementation,” he told Light Reading at last week’s FutureNet World event in London. “I think we could, at some point, benefit from the economies of scale of new chipsets. That could be Nvidia.”

The rationale is much easier to understand than arguments about 5G for autonomous vehicles. Chip manufacturing is already expensive, and both Nokia and Ericsson expect component costs to rise further this year amid relentless AI demand. At the same time, the RAN market remains relatively small and has contracted. According to market research firm Omdia, telco spending fell from $45 billion in 2022 to $35 billion last year and is expected to stay at that level. In that context, it is increasingly difficult to justify designing high-cost chips with limited reuse outside telecom.

Image Credit: Orange

Last year, Nvidia spent about $18.5 billion on research and development, generated nearly $216 billion in revenue, and reported a gross margin of more than 70%. Its financial strength is not in question. If telecom operators can use its GPUs for RAN software, they may face less pressure to secure the long-term economics of 5G and 6G development. That alone could be enough to support the case for Nvidia. The counterarguments are cost and power consumption. By design, custom silicon is optimized for a specific workload and will always outperform a more general-purpose processor at that task. An Nvidia GPU in the RAN could therefore be seen as excessive — like using a crop duster to water a hanging basket.

Leboucher, believes that Nokia and Nvidia are developing something far more compact than a typical data-center deployment. “It is not a Blackwell GPU,” he said, referring to Nvidia’s current hyperscaler-class product line. “I have an understanding it’s something which is a little bit smaller.” One of the first GPU-based products is expected to come on a card that Orange can insert into an existing Nokia AirScale chassis.

He is also interested in replacing traditional RAN algorithms with AI to improve spectral efficiency and overall performance. Through trials with Nokia and Nvidia, Orange wants to determine whether a GPU is actually required to capture the full benefit. “We can completely rethink the way we are doing algorithms today, using AI for the radio Layer 1,” he said, referring to the most compute-intensive part of the RAN software stack. Some of the “AI-RAN” narrative still sounds “a little bit like science fiction,” Leboucher admitted. “But I think there are some very interesting ideas behind that. We want to understand where we are.”

This is not the first time the industry has debated a shift from ASICs to general-purpose processors for RAN equipment. Alongside its purpose-built 5G portfolio, Ericsson already offers cloud RAN products based on Intel CPUs. Samsung is now focused on Intel-based virtual RAN and has recently predicted the end of purpose-built 5G. Even so, cloud and virtual RAN still account for only a small share of live 5G deployments. Huawei and Ericsson, the two largest RAN vendors, remain committed to custom silicon development.

Nvidia’s entry into the market has clearly given Leboucher and his team more to evaluate as RAN technology becomes more sophisticated. “We are introducing new requirements for radio networks, typically for beamforming, and we have to consider the need for quite powerful chipsets,” he said. “Whether the best way to keep going is using ASICs or a general-purpose architecture – I think this is a good time to ask the question. Before, it was too early.”

The answer could shape Orange’s next major RAN decisions. The operator is preparing for what Leboucher describes as a “refresh” of RAN equipment across several countries ahead of the expected 6G launch in 2030. For the first time, he said, Orange will include cloud RAN as a “major option” in its request for proposal.

The concern around Intel as an alternative to Nvidia is its still-fragile financial position. Before December, Intel had been trying to spin off its network and edge group (NEX), which develops RAN chips. Those plans were later shelved, but the company’s net loss widened to about $4.3 billion in the most recent first quarter, from $887 million a year earlier, while revenue rose only 7% year over year to $13.6 billion. Cristina Rodriguez, who had led NEX, left this month to join Coherent, and Intel has not yet named a successor.  “The shares jumped 28% in after-hours trading, taking Intel firmly into meme-stock territory,” said Radio Free Mobile analyst Richard Windsor in a blog published after results came out on April 23. “I say meme-stock because there is no other way to describe it when the shares are on a 2026 PER [price-to-earnings ratio] of 137x, and its technology looks obsolete.”

Orange places significant value on separating hardware from software, allowing the same RAN software to run across multiple hardware platforms. Ericsson and Samsung both say the virtual RAN software they have built for Intel CPUs could, with relatively modest changes, be ported to AMD silicon using the same x86 architecture or to Arm-based CPUs.

By contrast, Layer 1 code written for Nvidia GPUs and the CUDA software stack would not be portable to other platforms, according to Ericsson. “I think the main challenge we see with that is we are trying very hard to keep our stack portable, to give hardware options,” Michael Begley, Ericsson’s head of RAN compute, told Light Reading at MWC Barcelona this year. “If you go all in on one, it’s great, but you’re all in on one, and you can’t offer those other options to the operators or the ecosystem.”

Leboucher acknowledges that risk. “The risk of lock-in exists, definitely,” he said. “We really want to stay open. At the same time, we know that benefiting from a very, very large-scale general-purpose architecture should improve the TCO [total cost of ownership]. At the end of the day, it will be a trade-off. But we would welcome an architecture where we have the capacity at some point to decide to swap if we need to swap.”

Nokia’s hope is that much of the Layer 1 software written for Nvidia GPUs will eventually be deployable on other GPU platforms. But Nvidia’s near-monopoly in that segment leaves the industry with few alternatives for now. There is also optimism inside Nokia that GPU-based code could later be adapted for capable CPUs, although Ericsson’s comments suggest that would be much harder. For telecom executives, the choices made over the next couple of years may be pivotal as 6G approaches.

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References:

https://www.lightreading.com/5g/orange-weighs-nvidia-against-intel-for-5g-chips-ahead-of-new-rfp

RAN Silicon Rethink- Part II; vRAN and General-Purpose Compute

RAN silicon rethink – from purpose built products & ASICs to general purpose processors or GPUs for vRAN & AI RAN

Big Tech AI spending binge results in massive job cuts!

Executive Summary:

The tech industry is undergoing a massive structural realignment. Hyperscalers, Software as a Service (SaaS) vendors, and telecom network and equipment providers are aggressively slashing workforces to reallocate capital toward massive AI infrastructure investments.  Alphabet, Meta, Amazon, and Microsoft are projected to spend a collective $674 billion in 2026—over double their 2024 levels.  Most of that spending is AI related.

From the referenced WSJ article:

“Tech companies are in effect playing a game of chicken with each other on capital-spending plans. They are shelling out as much as they can—more than their rivals, they hope—on AI chips and data centers that could put them in the lead in a race they feel they can’t afford to lose. That in turn is heightening competition over who can use AI to help do more with a lot less, freeing up money to spend on expensive chips.”

Hyperscalers, such as Microsoft and Meta Platforms (Meta), are the latest to  their significantly reduce their workforces to scale AI-driven operations. Meta is reportedly reducing its headcount by approximately 8,000, while Microsoft has initiated a “voluntary retirement program” (aka a buyout) targeting 7% of its U.S. workforce—a strategic move to trim payroll before resorting to involuntary layoffs.

This trend is industry-wide: Oracle and Snap have executed significant reductions, while Block announced plans to cut 40% of its staff (over 4,000 employees).  March 2026 represented a two-year peak in tech industry contraction, with Layoffs.fyi reporting 45,800 tech job reductions.

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Source:  Layoffs.fyi
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The AI Transformation Narrative vs. Financial Reality:

Executive leadership is framing these cuts as a strategic pivot toward an AI-native future where automated workflows replace legacy human-centric processes. While CEOs like Block’s Jack Dorsey insist these decisions aren’t driven by distress, a “game of chicken” is unfolding in capital planning.

Companies are locked in an escalating race to secure AI silicon (GPUs), High Bandwidth Memory (HBM) and expand Data Center footprints, creating a massive drain on liquidity.  This heightens the pressure to achieve “doing more with less”—using AI to automate internal functions and free up the capital necessary for expensive infrastructure. However, in many cases, these cuts are simply corrective measures for pandemic-era overhiring or efforts to normalize efficiency metrics:

  • Oracle: Annual revenue per employee remains significantly below industry leaders like Microsoft.
  • Snap: Headcount remains 65% above pre-COVID levels despite consistent operating losses.

Strategic Risks and “Off-Balance-Sheet” Engineering:

While slashing headcounts improves Revenue Per Employee (RPE)—a key KPI for Wall Street—it introduces significant long-term risks:

  • Talent Attrition & Brain Drain: Aggressive layoffs degrade morale and may drive elite engineering talent toward startups, potentially creating new competitors.
  • Governance & Safety: Reducing human oversight during AI deployment could lead to safety and business model integration failures.
  • Regulatory & Public Backlash: The “AI as a job killer” narrative is fueling community opposition to massive data center builds, complicating infrastructure rollouts.

The CAPEX Burden:

The financial strain is becoming evident even for “Deep Pocket” firms. Alphabet, Meta, Amazon, and Microsoft are projected to spend $674 billion in CAPEX this year—more than double their 2022 spend.

  • Amazon is projected to be cash-flow negative this year.
  • Meta’s CAPEX is set to exceed 50% of its annual revenue, with its debt-to-equity ratio climbing to 39% (up from 8% five years ago).
  • Some firms are reportedly utilizing “off-balance-sheet financial wizardry” to maintain their AI compute growth without alarming debt markets.

Verdict of the Market?

Markets are sending mixed signals. While analysts are obsessed with efficiency metrics (questions about efficiency on earnings calls have tripled in two years), they are becoming “skittish” regarding unbridled spending. Tesla (TSLA), for instance, saw a 4% stock dip after raising its spending target to $25 billion.

Ultimately, tech giants—who already average $2M in annual revenue per employee—are betting that further workforce reductions will juice efficiency and fund the AI arms race. The trade-off remains whether these “leaner” organizations can maintain the innovation and safety standards required to lead the next technological cycle.

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The telecom sector is particularly vulnerable, as AI-native “zero-touch” operations begin to replace legacy roles permanently.

  • Network Operators:BT has announced plans to replace up to 10,000 roles with AI by 2030, specifically targeting network management and customer service.
  • Network Equipment Vendors: Equipment giants Ericsson and Nokia have collectively shed over 36,000 roles in recent years, pivoting from traditional hardware to AI-optimized software and networking.
  • Integrators:Accenture and IBM are utilizing AI to automate junior-level coding and back-office HR tasks, signaling that AI reskilling is now a prerequisite for workforce retention.

Strategic Outlook – Monetization and the “RPE” Battle:   

For both MNOs and tech giants, the coming years are about monetization. Investors have shifted from cheering bold AI visions to demanding tangible results, with a heavy focus on Revenue Per Employee (RPE)—a metric that workforce reductions are designed to “juice.”

That “Great Realignment” is a high-stakes gamble, in this author’s opinion.  The firms that successfully bridge the gap between massive infrastructure investments and scalable, profitable AI-native services will lead the next generation of global technology. Those that fail to balance efficiency with talent retention may find themselves outpaced by leaner, AI-native startups born from the very talent they have released.

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References:

https://www.wsj.com/tech/ai/the-ai-splurge-is-costing-big-tech-its-workforce-34a88e68

AI spending boom accelerates: Big tech to invest an aggregate of $400 billion in 2025; much more in 2026!

AI infrastructure spending boom: a path towards AGI or speculative bubble?

Gartner: AI spending >$2 trillion in 2026 driven by hyperscalers data center investments

AI spending is surging; companies accelerate AI adoption, but job cuts loom large

Big tech spending on AI data centers and infrastructure vs the fiber optic buildout during the dot-com boom (& bust)

Will billions of dollars big tech is spending on Gen AI data centers produce a decent ROI?

Canalys & Gartner: AI investments drive growth in cloud infrastructure spending

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