Innovations like Watson were shown alongside other cloud projects at an event in New York this week. A project called Got My Stuff tags objects such as car keys or laptops, and a smartphone can alert a user if an object has been forgotten at home. An enterprise cloud project includes the ability for system administrators to locate specific devices in danger zones and backup data remotely from devices in case of events like tornados.

AT&T has a storied history with some key scientific inventions through its research labs. But the nature of research has changed in the Internet age, with the focus slowly shifting to services, Prabhu said.

"Today the inventions are not so much unique point inventions, they are more about bringing things together, to get more utility out of something," Prabhu said.

The cloud is a fantastic delivery model because it is portable, and can also be decoupled from the network to some extent, Prabhu said, adding that mobility and cloud are key for services like Watson.

However, delivering cloud services with low latency is an ongoing challenge, and AT&T is using a combination of technologies to make wiser use of available spectrum. Some include using software techniques for congestion management and placing antennas in selective places for wider reach.