Dan Schulman sounds like he has been rewatching that scene from The Matrix Reloaded in which Neo fights off a multiplying swarm of Agent Smiths. “I think as I look out over the next couple of years, there’ll be something like 8.5 billion people in the world, but I think there could be at least 100 billion agents,” the CEO of Verizon told analysts on his call about third-quarter results.
These won’t, of course, be the sinister agents of the Keanu Reeves movie with their sneering resolve to exterminate anyone unplugged from the machine. “We’ll be sure that we won’t allow agents to access our platforms unless we’re 100% certain that it’s truly a customer and not a rogue agent,” continued Schulman, portraying agentic AI as an opportunity for Verizon to boost customer spending and grow sales.
His view that people will be vastly outnumbered by supposedly autonomous software programs – believed to be “super intelligent” by the US president – might trouble anyone who has tracked Schulman’s predictions since he became boss of the American telco about a year ago. Speaking to The Wall Street Journal in April, he reckoned AI could lift the unemployment rate to 30% in the next two to five years. If he is right, it should already be creeping up – perhaps even surging.
So far, however, Schulman’s AIpocalypse forecast looks as accurate as McKinsey’s prediction about network APIs. Almost three years ago, the consulting firm prophesied that telcos would generate up to $300 billion in additional sales over the subsequent five to seven years as those APIs spurred usage. Without an unprecedented spike in the next two years and four months, it will go down as one of the worst examples of soothsaying since Winston Churchill predicted the Gallipoli campaign would be a cakewalk.
Despite what Schulman thinks, the US rate of unemployment did not budge between April and September, when it was 4.2%, according to the US Bureau of Labor Statistics. There is also scant evidence that AI is either boosting productivity or responsible for mass layoffs. Yet Verizon continues to cut thousands of jobs every year.
Storming the Bastille
Verizon finished 2025 with 9,700 fewer employees than it had a year earlier after Schulman announced plans for 13,000 job cuts on his arrival at headquarters. Staff numbers were then fattened by the acquisition of Frontier Communications, a broadband operator, at the start of 2026. With its previous headcount of about 13,000 people, Frontier would have given Verizon a total of about 112,600 employees at the end of 2024. Yet by June this year, Verizon employed only 97,600 people. Three months later, the figure had dropped to 93,300, according to accounts published this week.
Verizon’s update followed the revelation a day earlier that rival AT&T had similarly cut another 3,700 jobs over the same three-month period. It means the two big US telcos combined have slashed another 8,000 jobs, nearly 4% of the total, in a single quarter. Together, they employed roughly 220,500 people in September, fewer than AT&T alone had in 2020. Headcount across the two companies has fallen by 142,460 since then.
(Source: Companies, Light Reading)
Successive quarters of layoffs have now become so normalized that they are barely acknowledged. No analyst thinks to ask how Verizon could have grown annual sales by almost $10 billion between 2020 and 2025 while offloading about a third of its workforce during this period. In 2020, Verizon generated about $970,500 in revenues per employee. Last year, that figure had soared to more than $1.53 million.
Investors, if not employees, might be delighted to hear this epic downsizing is all the consequence of AI and the efficiency it has promised. Layoffs used to be taken as a sign that a company was in trouble. But if AI allows companies to operate with a fraction of the workforce they previously needed, while generating the same or higher revenues, profits should rise and shareholders should benefit.
Unfortunately, there are numerous problems with this assessment. For starters, both AT&T and Verizon were cutting headcount long before anyone had heard of Sam Altman and AI had become an everyday news story. Indeed, the deepest cuts happened prior to the revolutionary date of November 30, 2022, when ChatGPT was released to the public – AI’s storming-of-the-Bastille moment.
Nor are the telcos dramatically more profitable with much lower costs than they were several years ago. Verizon booked total operating expenses of about $25.7 billion for the recent third quarter, up slightly from $24 billion for the same period five years ago. AT&T’s equivalent figure was $28.2 billion for each of those quarters. Over this period, Verizon cut 17% of its workforce while AT&T’s shrank by 28%.
Of course, the operators would probably have been worse off financially had they not made such hefty cuts. The problem is that any savings have been eroded by wage inflation, severance packages and the costs of outsourcing work. What’s often forgotten, too, is that labor expenses account for a relatively small fraction of any large operator’s total costs – perhaps only a fifth of the amount among US telcos.
Difficult and dangerous
The real blame for job cuts probably lies with the usual suspects: standard efficiency measures, the elimination of layers of middle-management fat, heavier reliance on external contractors, the retreat from non-core businesses like TV, the removal of duplicate roles after mergers, the closure of stores as customers shop online, and more humdrum forms of automation.
None of this offers much consolation for affected employees – or even remaining staff. If operators didn’t need AI to cut so many jobs, could the rapidly advancing technology help them shrink even more drastically in the next few years? The software side of the telco business has looked especially vulnerable to an AI takeover. Agents’ ability to write code in response to a few basic prompts, and even to solve algorithmic problems, has scarily improved this year.
Letting Agent Smith eradicate the human programmers, nevertheless, would be difficult and dangerous. Difficult because IT bosses within telcos still regard software-writing tools like GitHub Copilot as a virtual assistant for speeding up the output of a given human coder, rather than a like-for-like replacement. Dangerous because relinquishing expertise and decision-making to AI could leave organizations reliant on expensive, fallible technologies that few people really comprehend. If humans are no longer trained to do those jobs, skills might be lost forever.
Whether AT&T and Verizon can sustain job cuts at the current rate will be instructive. In 2020, few would have expected AT&T to cut its headcount by 45% in the next six years. Were the trend to continue, it would enter 2032 amid the rollout of 6G with around 70,000 employees.
By then, if Schulman is right, agents will have led to “an explosion in data traffic,” making the Verizon network “a scarce and valuable asset,” he told analysts. “And we will price it as such. You’ll see different pricing plans.” Verizon’s share price fell 3% on the day it published results and is down 9% in the last six months amid concerns about Starlink. Telecom analysts voice skepticism about the AI productivity story. But they sound even less convinced by the sales one.