Here's why AT&T's CEO quietly cheered DeepSeekHere's why AT&T's CEO quietly cheered DeepSeek

China's DeepSeek could ultimately lead to a reduction in the cost of AI services. That could have significant implications for telecom network operators like AT&T.

Mike Dano, Editorial Director, 5G & Mobile Strategies

January 27, 2025

4 Min Read
Abstract AI image featuring outline of human head
(Source: Skorzewiak/Alamy Stock Photo)

China's DeepSeek landed like a bomb Monday, sending AI stocks like Nvidia plummeting amid worries that you might not need trillions of dollars to reach an artificial intelligence utopia.

But AT&T's CEO John Stankey doesn't seem too concerned. "We should expect there's going to be days we wake up to like this one," he said Monday during his company's earnings conference call.

Broadly, Stankey argued that competition is fierce in the AI marketplace, and that's naturally going to push players to figure out ways to make things better and cheaper. DeepSeek is just one example of that.

"Necessity is the mother of invention," he said.

Left unsaid by Stankey was the fact that AT&T could well benefit from a dramatic fall in the cost of AI. AT&T has been working to apply AI into a wide range of its business activities, whether that's AI customer care chatbots or AI-directed wireless connections.

If DeepSeek – or some other AI provider – figures out a way to dramatically reduce the cost of those applications, that will likely come as a relief to AI shoppers like AT&T. (Of course, AT&T would undoubtedly prefer AI models from US companies rather than those from China.)

A 'Sputnik moment'

As noted in a detailed report from VentureBeat, DeepSeek is a China-based startup that has been hinting for weeks that its new AI tech rivals that of market leaders like OpenAI.

But on Monday the company released its full R1 model, allowing users to actually test the service. The results are apparently impressive, with DeepSeek's AI app rocketing to the top of the iOS and Android app stores.

According to VentureBeat, DeepSeek uses reinforcement learning (RL) to train its large language model (LLM) instead of the standard supervised fine-tuning (SFT) process. The result is reportedly a model that can explain how it arrives at its conclusions – meaning, it can describe its chain of thought and provide answers transparently. That's a feat that other top LLMs either can't or won't do.

More importantly though is that DeepSeek reportedly built its AI tool for a measly $6 million. That's the figure that pushed Wall Street investors to dump AI stocks like Nvidia, which are built on the assumption that cutting-edge AI programs will require billions of dollars of expensive computing resources, including graphical processing units (GPUs) like those from Nvidia.

"DeepSeek R1 is AI's Sputnik moment," Marc Andreessen wrote on social media. Andreessen is a pivotal figure in Silicon Valley and the founder of influential venture capital firm Andreessen Horowitz.

A "Sputnik moment" is one that galvanizes a nation or society into action, often in the realms of science, technology or education – much like the Soviet Union's launch of Sputnik in 1957 that spurred the US into the space race. However, the details surrounding DeepSeek remain somewhat unclear, raising questions as to whether it represents a leapfrog by China ahead of the US in the realm of AI.

Using AI

For companies like AT&T, DeepSeek has important implications.

Stankey, AT&T's CEO, said AI is already powering a variety of functions at the company.

"What we've been able to do in our call centers and how we operate within our customer base, a lot of that has been driven by AI tool applications. And it's not that we're necessarily exclusively replacing individuals with the technology, but we're making them a lot more effective and efficient," Stankey said, adding that AT&T is also using AI to develop its computer code. "We're spending less right now to develop new code internally ... And it's through the application of AI and technology."

Stankey said AT&T plans to invest more heavily into AI this year, including by using its customer data to more effectively target customers with promotions and other offerings. "If I were to say I had a goal for 2025, I would like to ... be talking about good momentum we've received in business as a result of executing on some of those things moving forward."

Thus, AT&T would presumably be interested in lowering the costs of its AI tools with models like DeepSeek.

However, AT&T officials have also hinted at the company's interest in making money from hosting AI computing operations. That's the path that AT&T rival Verizon laid out on Friday in its plans to sell the power, space and cooling necessary for high-end AI computing.

But if DeepSeek and other, cheaper AI services gain traction, demand for that power, space and cooling could be reduced or eliminated.

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About the Author

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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