Stable Diffusion XL is only about 8 gigabytes and can render a shocking array of different images from very short prompts with very high fidelity.
1gbps might be enough for more than we think.
There are models that can be run in both directions. Take a source image and generate a token stream prompt for it. That's your compressed image. Now run it forward to decompress.
CPU intensive but massive compression ratios can be achieved... like orders of magnitude better than jpeg.
It's lossy compression, so we're not violating fundamental mathematical limits. Those bounds apply to lossless compression.
It's a cool idea, especially for high-bandwidth, low-value contexts like streaming video calls, but I don't think it's going to wholesale replace ordinary lossy formats for images or prerecorded video delivery (and this is without considering the coding/decoding performance implications).