A quarter of all new customers joining Lumen Technologies' Network-as-a-Service platform in the first three months of 2026 had never done business with the company before - a signal that the telecom veteran is not merely converting its existing base, but actively expanding its footprint in a market that AI and multi-cloud adoption are rapidly redefining. NaaS active customers grew 25% sequentially in Q1 2026, with active ports up 35% and services sold across those ports rising 32% from the prior quarter. For a company still working through significant legacy revenue erosion, these figures represent something genuinely worth watching.
What NaaS Is and Why Enterprises Are Moving Toward It
Network-as-a-Service is a consumption model that allows enterprises to procure connectivity on demand - paying for capacity as they need it rather than committing to fixed infrastructure contracts. The appeal is straightforward: as organizations build out AI workloads and distribute applications across multiple cloud environments, their bandwidth requirements become harder to predict and easier to overprovision under traditional models. On-demand connectivity lets infrastructure scale with the workload rather than ahead of it.
Lumen's fiber network, one of the most extensive in North America, positions the company to serve this demand directly. The NaaS platform sits on top of that physical infrastructure, adding a software layer that allows customers to configure, activate, and adjust services without waiting for manual provisioning cycles that once took weeks. That operational shift matters as much as the pricing model to enterprises running time-sensitive AI inference or latency-sensitive multi-cloud architectures.
The Metrics Behind the Momentum
Lumen now counts 2,500 NaaS customers. More than 30% of them have made repeat purchases, and more than 60% of first-time adopters within the existing customer base chose to expand their footprint rather than simply move legacy services onto the new platform. That distinction matters: migration preserves revenue but does not grow it. Expansion does.
Upsell behavior adds further texture. Roughly 25% of NaaS customers are attaching multiple services per port, with security offerings - particularly DDoS protection - emerging as a frequent addition. Bundling connectivity with security services is a logical step for enterprise buyers who would rather consolidate vendors than manage separate contracts for network and threat mitigation. For Lumen, it translates to higher revenue per customer and deeper integration into operational workflows, both of which make churn more costly for the client.
Strength in off-net services and large enterprise wins during the quarter also broadened the platform's reach beyond Lumen's direct fiber footprint - an important capability for multinational customers whose locations do not always sit on owned infrastructure.
Revenue Reality: Promising Trajectory, Gradual Arrival
The financial picture requires some perspective. Digital revenues - the category most directly tied to NaaS and adjacent capabilities - came in at $37 million in Q1 2026. Other strategic revenues totaled $1.131 billion for the same period. These numbers sit against a backdrop of continued pressure from legacy voice and data services that are declining as enterprise and consumer customers migrate away from older technologies.
Lumen's management has framed the longer arc clearly. At its Investor Day, the company outlined expectations for digital capabilities - spanning NaaS, Edge Solutions, Security, and its Connected Ecosystem - to contribute between $500 million and $600 million in incremental revenues exiting 2028, rising to $800 million to $900 million by 2030. That is a meaningful target, but it also means the NaaS ramp will not offset legacy headwinds in any near-term accounting period. The company is essentially running two businesses simultaneously: one contracting, one growing.
How Rivals Are Positioning in the Same Market
Lumen is not building its NaaS business in isolation. The broader connectivity market is moving, and its rivals are moving with it - each from a different position.
Cogent Communications, a Tier 1 internet provider known for ultra-low-latency data transmission, reported total on-net revenues of $149.2 million in Q1 2026, up 9.1% year over year. Its net-centric business grew 14.2% annually, driven by AI-related traffic growth, video streaming, IPv4 address leasing, and wavelength sales. Cogent's model differs from Lumen's - it is less focused on enterprise NaaS and more on high-volume data transit - but the underlying demand driver is the same: AI workloads generating more traffic that has to move somewhere.
AT&T, operating at a far larger scale, is pursuing a parallel transformation through its 5G and fiber buildout. Its Advanced Connectivity segment generated $28.47 billion in operating revenues in Q1 2026, up 4.7% year over year, even as its Legacy segment fell 25.3% to $1.77 billion. The symmetry with Lumen's situation is notable: both companies are managing a transition where newer, higher-growth offerings must eventually outrun the decline in older ones. AT&T's scale gives it more runway; Lumen's NaaS specificity gives it a different kind of positioning among mid-market and large enterprise buyers who want programmable connectivity without purchasing the full scope of a hyperscale carrier relationship.
The structural shift driving all three companies is the same. Enterprises no longer want to buy fixed network capacity years in advance and manage it manually. They want infrastructure that behaves more like cloud compute - elastic, API-accessible, and priced by consumption. Lumen's bet is that its fiber assets combined with a software-enabled service layer can capture a durable slice of that demand. The Q1 numbers suggest the platform is gaining traction. Whether it gains it fast enough to rebalance the income statement is the question that will define the next several years.
