Pod Insights Decoder Verizon’s consumer chief: Net neutrality ‘went literally nowhere’ About this episode As CEO of Verizon's consumer division, Sowmyanarayan Sampath oversees the biggest part of the company, which does business with roughly a third of the entire country. He's a longtime Verge reader, so we talked very directly about whether the huge 5G investment had actually paid off, and whether – whether the “race” we were supposedly in with China was actually worth it, and what kinds of new apps and services actually come to light.
And while Verizon fought tooth and nail against regulations like net neutrality, the current Trump administration isn’t nearly as hands-off when it comes to things like holding up deals because of DEI policies — something that’s happening to Verizon right now. So I had to ask Sampath if he was going to push back on that kind of government overreach as hard as Verizon has in the past.
Links:
The US government makes a $42 million bet on OpenRAN | The Verge
FCC scrutinizes Verizon’s $9.6 billion Frontier deal over DEI | USA Today
Verizon offers a three-year price lock — but there’s a catch | The Verge
T-Mobile updates its DEI policy to get Lumos deal approved | Fierce Network
We don’t need net neutrality; we need competition (2014) | Ars Technica
Wireless and cable industries sue to kill net neutrality (2015) | The Verge
Everything Verizon says in this terrible video against net neutrality (2017) | The Verge
Report: Most Americans have no real choice in internet providers | ILSR
T-Mobile’s merger promises couldn’t make a carrier out of Dish | The Verge
Transcript: https://www.theverge.com/e/652470
Credits:
Decoder is a production of The Verge and part of the Vox Media Podcast Network.
Our producers are Kate Cox and Nick Statt. Our editor is Ursa Wright.
The Decoder music is by Breakmaster Cylinder.
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Transcript 14,255 words · 10 speakers
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1:32 Speaker 04 Hello and welcome to Decoder. I'm Neil Anpatel, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. Today, I'm talking with Verizon consumer CEO Somai Narayan Sampath, who just goes by Sampath. As CEO of the consumer division, Sampath oversees the biggest part of Verizon, Verizon Wireless, which has more than 115 million wireless connections. FiOS, the fiber service, adds another 10 million or so consumer broadband connections to the mix. That's something a solid third of the country in business with Verizon and Sampath. Now, as you'll hear, Sambath is a longtime Verge reader. And in particular, he's been paying attention to my coverage of both 5G and the net neutrality debates for a long time. So we talked very directly about whether the industry's huge investment in 5G has
2:17 Speaker 04 actually paid off, whether the race that we were all supposedly in with China was actually worth it, and what kinds of new apps and services actually came to light. You'll hear Sampath say that network capacity isn't a small thing, and 5G really helped the explosion of mobile data, although I was told we would all be doing robot surgery in driverless cars by now. Even still, the mechanics of all that buildup are fascinating to me regardless of the hype. Building network infrastructure takes years. Everything from figuring out what spectrum to bid on, to making deals for tower space, to running fiber to them, is a huge process. And I wanted to ask Sampath how he balances all those very long-term, very tactical decisions against the decisions we all see and feel in very obvious ways, like pricing.
3:01 Speaker 04 I gotta say, Sampath had one of the best answers to the classic decoder question about decision-making I've ever heard. Like I said, you can tell he was ready to be on the show.
3:11 Speaker 04 Sampath and I also spent a while talking about the push and pull of integrating content and applications directly into the network, something that all the big wireless carriers flirted with in various ways, especially in and around the net neutrality debate. The idea of owning some content and treating it preferentially on your service was all the rage back then, and it led to some really big deals. AT&T bought Time Warner, Verizon bought Yahoo and started something called Go90. And for one brief moment of extreme weirdness, Verizon even owned Tumblr. The goal of all this was to differentiate these networks from another, and it basically didn't work for anyone, even though Verizon in particular fought the various net neutrality regulations that would have prevented this sideshow from happening in the first place. So yeah, Sampath and I got into the weeds on all that.
3:54 Speaker 04 You're gonna hear him say that he thinks no one cares about net neutrality. And if you know anything about me, you know that, well, I disagreed with him. And while Verizon fought tooth and nail against net neutrality regulations, the second Trump administration isn't nearly as deregulatory as the first one. Trump FCC Chairman Brendan Carr says he's going to hold up deals, including some of Verizon's deals, because he wants to review things like DEI policies. That's a pretty big change in how aggressively our government regulates telecoms. So I asked Sempath if he was going to push back on that kind of government overreach as well. I had a lot of fun on this episode because it's two telecom nerds just going at it. But that means it's a little wonky in places. So some notes before we start. You're going to hear us talk about something called local loop unbundling,
4:38 Speaker 04 which is when multiple internet providers can use the same fiber to reach customers in their homes. We don't really have this in the United States. There are not four or five different ISPs all competing to reach you on the same bit of fiber. But many other countries do as a way to increase broadband competition. The other thing you're going to hear us talk about is something called OpenRAN, which Rich House listeners are familiar with. That's a standard that would allow all of the different pieces of hardware in a cell tower to be more interoperable. So more companies can provide them and presumably provide more competition to that part of the market. It's a little complicated, but we did an entire episode about it. So we'll link to that in the show notes. What you need to know here is that it's a big bet in the mobile industry, and I wanted to hear Sempath's take on it. Okay, Verizon Consumer CEO Samaya Narayan, Sempath. Here we go.
5:35 Speaker 04 Samaya Narayan, Sempath. You go by Sempath. You're the CEO of Verizon Consumer Group. Welcome to Decoder. Hey, good to see you, Nai. I am very excited to talk to you. It's a topsy-turvy time in America, but telco stocks are doing great. Everyone needs internet service. And so there's a really interesting dynamic there that I want to explore with you. But first, we don't get a lot of telecom CEOs on the show. It's hard to understand how telecom companies are structured. So I want to start with the decoder question because all of these companies have been built by mergers and spin offs and sales and re combinations. You were the CEO of Verizon's business unit. Now you're the CEO of the consumer group.
6:17 Speaker 04 Explain how all of this is structured and what Verizon consumer actually is to people.
6:22 Speaker 05 The way we think about it is we are customer facing. So we have a Verizon business group which takes care of all businesses, small businesses, government, large enterprises, anything from Walmart down to Joe's Pizza. We take care of that. And then everyone else is a consumer. It's you and me in our private lives, the wireless service, the fiber service, the broadband to the home, all that's in a consumer. It's a little north of $105 billion revenue, the consumer business, and I'm responsible for sales, marketing, product, offering, customer care, digital. It's an end to end unit getting things done. Most telcos, at least Verizon, then we have a common network that serves all of us. We call it the intelligent edge network.
7:04 Speaker 05 It's a single network that serves different types of underlying networks, different types of businesses, so we don't multiply costs in it. That's it. It's a pretty simple structure. Go to market for business, go to market for consumer, and a common network that is a shared service that serves all of us.
7:18 Speaker 04 I've spent a lot of time covering telecom companies, in particular wireless and mobile companies. One thing that always feels opaque to me is that the differentiation that you can do to a business or a consumer based on the network, right? And this was a big fight in the neutrality days that you'd want to differentiate the actual network for different customers in different ways. And that has sort of waned. When you say you go to market for the customer, are you in charge of just things like pricing and promotion? Or do you actually get to say, here's what the network can and cannot do?
7:52 Speaker 05 Here's what the network can, cannot do. It's the whole end-to-end offering, including the product. See, the way we think about it is our product is our network. Look, there will always be a good operator and a non-good operator. It's historically always been the same. For a country as large as America, you will always look at the end of the day, us and my peers, we use the same steel to make the towers. We use common tower companies to, you know, take care of our tower business. We use pretty similar vendors. You know, we use Ericsson and Samsung, some may use Nokia, so there's a pretty commonality there. But the secret sauce is in the operations. When you're running a network this big, you know, how do you take care of outages? How do you plan for it? And even small things like how do you design your tower? The specs you put on your tower. So for example, almost all our sites have generator backup.
8:35 Speaker 05 So whenever a hurricane falls or there's a natural disaster, our sites are up and running because we have backup on our sites. Second, we like resiliency on our sites. So there will always be a better operator and not a good operator. We know it. We've got experience, 25 years' experience, 30 years, depending on how you count it, in the space. And there will always be a gap. Now, is the gap narrowing between us and the second network? Probably yes. But there is always be a gap, and that's why people always choose us for the network. If you go and ask people, "Who's the better network?", they'll always end up saying Verizon. We have to stay on top of it, you know, using more AI in our operations, self-healing networks. Spectrum is another thing, we have to keep buying a lot of spectrum to put it.
9:17 Speaker 05 So there is always a case for a better operator and a better network.
9:22 Speaker 04 Yeah, I think that's the heart of my question, right? Verizon is a company, in a very reductive way, has to go to the government, lease a bunch of spectrum capacity, go to a bunch of tower operators. I think, I always think it's funny that the biggest one is called TowerCo. It's just a very literal name that no one except you has to consider. You have to go to a bunch of tower companies and site operators, give them the spectrum so they can operate the towers, lease the capacity back from them to run your network. Your competitors might be on the same infrastructure, the same sites, in many cases, because it's so hard to build a cell tower in many places. And then somehow, at the end of that, the consumer perceives Verizon's network is the best one.
10:04 Speaker 04 But that is as much a function of consumer marketing experience. You know, when I moved to New York in the early 2010s, it was just everybody had a BlackBerry and Verizon and that impression has stuck with me for all this time. And maybe that's still the case that Verizon is the best, but what happened was I moved to New York in the 2010s and Singular had the best network in Chicago at that time where I moved from. And then Verizon was the best in the East Coast. And I'm still, I spend a lot of time thinking, where does that impression actually come from? Because no consumer holds two phones in their hands and says, this one has better service.
10:38 Speaker 05 There are two ways. One is, is it a better network and then what people perceive it? We talk about national networks. We are the largest network because more consumers are on us. But the end of the network is a very local thing. The vast majority of our customers, I would say 60, 70% of our customers, never go outside a five-cell site travel zone for the year. So think about it. You know, you may have a great network in Alaska, but 70% of your customers are not traveling within five or six cell sites outside their home or their workplace. So it's a very local conversation around how good your network is. Of course, there are some sections of people who travel, a lot of people like myself who are on the road, you know, 150 days a year. It's a different equation. But for most people, how good is the network at home? How good is the network at work?
11:23 Speaker 05 How good is the network at commute? And that's what makes the experience. So you cannot have national standards to do these things. A lot of it is a local game, you know, getting access to sites locally, getting access to better network technology at a local level, having the people who know the network topology at local. It's a very local game, this network thing. And that's why you see Verizon tends to do well when local networks come into play.
11:49 Speaker 04 How much impact do you have on the capital expenditure of building the network itself? Right? You have a number of customers, the business side has a number of customers. Do you jointly show up in front of the core network team and say you need to build more capacity in Connecticut?
12:03 Speaker 05 The consumer group has eighty-five, ninety percent of all the usage on the network. So maybe it's a slightly tilted conversation there. But the way it works is, you know, network is a little bit like scotch. It takes a long time to really get well. So decisions we make today on the network tend to show up three, four, five, seven years later down the line. And because it takes, there's a huge lead time to it. You've got to procure the fiber, the backhaul, the sites, the spectrum to do that. So the way we start is what is the network I need to deliver all my customer needs? And it's at a local level. You know, in Philadelphia, buy markets, what do I know? How much share do I have? What am I going to grow? Then we take that back to the network team and say, based on what assets you have, what's available, can you deliver this?
12:48 Speaker 05 Nine out of ten times, they can deliver it. The one out of ten times, they can't, then we move our marketing plans. You know, if they don't have capacity, they're not going to get capacity in this market in the next few years. The second thing is having objective metrics of network performance. You know, for a common person, if a call drops or a network data session goes, it's a bad. But we track it a million different ways by design. So having that common nomenclature, you know, back in the day it was dropped calls. You know, thinking, how many dropped calls did you have? We used to measure every single one of them. And then if a drop call happened, we used to go and do root cause analysis. Now it's data sessions. How many data sessions do you have? When did it drop? What were the speeds? How did the signal flow? So having really good instrumentation at a local level is really important.
13:32 Speaker 05 We've created basically a digital twin for every single customer. So every customer has a digital twin in the network where we measure their network twenty-four seven and we give them a score. So Nilay had a score, it's out of ten. You can say Nilay had a nine point seven score this morning on his commute from A to B. It's a good score. If he had a score of five, we go and understand why the score of five happened. So every single customer is monitored twenty-four seven from a network performance perspective and then we track them through the system.
14:03 Speaker 04 When you look at that kind of data at scale, you obviously have lots of customers who I'm guessing have lots of different scores across the board. Where's the median? Where do you want people to be?
14:15 Speaker 05 Look, you want people to be in the eights and nines for the vast part of their lives. Now, one of the things with network is it's a bigger issue as an industry we have to face is when things work well, nobody thinks of us. When things don't, it's a little bit like parenting sometimes, you know, when the kids are happy, they don't think of us and then when they're less than happy, they think of us. It's a little bit like that because ninety X percent of the time, the network works flawlessly, whether the fiber in the home or the network wireless. And we're largely forgotten, which is good. But when it doesn't work, whoa, all the emotions come out in front. So we are trying to solve for that one percent where the network doesn't work or we've disappointed the customer. So most of our work is isolating where it doesn't work.
15:00 Speaker 05 Because where it works, we know it and we've just got to let the machine run its course.
15:03 Speaker 04 We've talked a lot about the the mobile network. You also have oversight of FiOS, right? The fiber build out.
15:08 Speaker 05 Yes.
15:09 Speaker 04 Verizon has been up and down with FiOS over the fifteen years that I have covered this company. Right, there were huge investments, huge government-backed investments, disinvestment, reinvestment. Where are you at with FiOS now?
15:23 Speaker 05 Look, we love fiber. You know, some of it is personal. Look, I I built my career on fiber. Every role I've had at Verizon, we ended up building more fiber. Look, Verizon was the first, in two thousand and four, we created the FiOS network, was the first probably in the world to have fiber. And then in the middle, we slowed down a bit, but we slowed down a bit in the middle. It was mostly a capital allocation issue for us. We always liked the business. We committed to it at an OpEx level, but we had to invest in 4G. We had to buy the spectrum to invest in 4G. Then we had to buy the spectrum for 5G. So some of the capital that we would have put in fiber then, we ended up moving to the wireless side of the business. Now that the 5G is towards the back end of its build, we are back in the fiber business. We bought Frontier. We're going to close before the year end or maybe first part of twenty twenty six,
16:08 Speaker 05 first quarter of twenty twenty six, we'll close. That'll give us another ten million homes. We're going to have a path to get to forty million homes of fiber. And fiber is so resilient. The churn is very low. The customer satisfaction is crazy high. And then when you put the two together, mobile and home, the economics are fabulous. So we are really committed to a converged strategy on fiber plus mobility. And that's the business we are in. We are not distracted as a company. It's very simple. People ask me, what do you do? I said, I connect things, I connect people, full stop. You know, there's no other business we want to be in and FIVE was part of that story.
16:43 Speaker 04 Well, I'm on a FIVE's connection now, so if this drops, it's on you.
16:47 Speaker 05 It ain't dropping, it ain't dropping. I'm on a FIVE's connection too and it ain't dropping.
16:52 Speaker 04 We're going to get to distractions in a minute because there seem to be a lot and there are some in the past around where, how high up the stack of applications and connecting people you actually want to go. Describe the structure of Verizon broadly, right? You've laid it out kind of in a big way, right? There's the network, there's business, there's consumer. How many people do you have in consumer? And then how is that actually structured inside of Verizon?
17:14 Speaker 05 You know, consumer, you know, we work with partners as well as we work, you know, we have a lot of our call centers are have partners, some of our stores have partners. So we have probably around thirty-ish thousand people in the consumer unit broadly. But I probably end up managing directly or indirectly not of one thousand people between our call center partners and our agents to do the work what Verizon consumers tasked with. And the way we are structured internally in consumer is we have a gentleman Frank Bullbin who runs revenue for us. So he has product offerings. All the product offerings, the go-to-market sits with him. Then we have Kevin who runs our field. Look, people don't think we are the sixth largest retailer in America. We have eight thousand stores, exclusive stores between our brands.
17:59 Speaker 05 So Kevin runs all of that plus our relationships on the distribution side. Then we have Nancy, Nancy Clark, who runs our prepaid business. It's a fully integrated business. We've turned around that business really well. We should touch on that at some point. So she runs that. Monica Hammond runs all our customer service, customer care, customer success organized. And Brian Higgins runs customer experience and digital. So very typical structure that we have. I think most telcos end up something quite similar to this.
18:28 Speaker 04 Is there any innovation in that structure? A lot of, you know, we have a lot of startup founders come on the show, they have big ideas about structure and then maybe they land in one of two or three different ones. But then you see some companies show up and say, okay, we, there's actually efficiency from rethinking the structure. Telcos are big regulated companies. Obviously that shapes how you would run a company like Verizon. But do you see any efficiency there compared to your big competitors like AT&T or T-Mobile?
18:55 Speaker 05 You know, I was a management consultant. I was with the Boston Consulting Group for a very, very long time before this. And, you know, we had strong thesis on organization and structure. And then I became a day-to-day operator. As long as your structure is not crazy stupid, it works. It all comes down to people and taking friction out of the process. Because any structure will have a seam in it. You know, otherwise, the president of the country should be running every single thing on a single day-to-day basis. It doesn't work. So you break it up into a company, break it up into divisions. You will have a seam everywhere. The question is, how do you manage the seam? Because every time you ship a product out, you ship your org structure. We know it. Okay? So the question is, where are the seams? And how do you take friction to take those seams out?
19:40 Speaker 05 So, for example, you know, customer care and digital. One is the digital channel. One is, you know, human being getting called. When you call up, does the lady on the customer care know what you did in digital five minutes ago? There's a seam in the organization. You have to go and manage those seams, not get too bent about who reports to whom and what structure it is. And I think people tend to change structures a lot, hoping they're going to get magic out of it. But I think the magic is in friction, seam management, and never, ever shipping your org structure or your product. And a product should not look your org.
20:15 Speaker 04 The other big decoder question I ask everybody is about decisions. You have a lot of decisions to make, everything from going to try to buy spectrum to customer-facing decisions. How do you make decisions? What's your framework?
20:27 Speaker 05 Yeah, I have a framework for decision-making. So it's a two-by-two matrix. Of course, any recovering consultant has to tell you that. On the X-axis, it's what I call a one-way decision or a two-way decision. One-way decisions for me are decisions that are really big, that is very difficult to unwind. You know, it's things like buying other companies, even some big leadership decisions, pricing decisions, long-term pricing decisions, big product category that you want to be in. These are one-way decisions. The cost to unwind is very high, very painful, and will take a toll on the company and its finances. That's one. Then I have what I call two-way decisions. You know, it's a promotion. It's moving a few people around in the markets. It's trying different things with retailers, trying different compensation things.
21:12 Speaker 05 These are two-way decisions. They can be reversed, damage can be limited. You could get to a bad decision, but you can limit the damage. Then on the other axis, I have low dollars and high dollars. Low dollar, I have a certain threshold in my head. These are low dollar decisions. And then you have high dollar decisions. You never want to spend time with one-way low-dollar decisions. They're just bad. You should never even have one of those. But people spend time in companies on that. So I work very hard to not have those decisions at all. Because if something is a one-way decision, it's big enough. It better have high impact. If it's low impact, you shouldn't do it because there's risk in it and it's not worth it. Anything that is a two-way decision that is low dollar, you just got to delegate it. Someone else can take the decision, you'll be fine.
21:55 Speaker 05 And you have to trust the governance model that there's a checks and balance so nothing bad happens. I try and spend 60% of my time on one-way decisions that are high-dollar value. Where to invest, what categories to do, who are the big leadership positions I want to fill on talent. And I map every decision down to this framework and I actively manage it. And just moving from a staff role into a large ops role. The best way to understand how a company runs is to follow the decision-making style. How are decisions get made? Who makes them? Who has the pocket vetoes? You can understand every single thing about the group you've inherited by just following decisions. Take five decisions, track them through end to end. That's it, that's all you need to know.
22:40 Speaker 05 You know about people, you know about pocket vetoes, you know about who the no-seers are, you know who's not ambitious, and you know about talent. So for me, decision-making, it's a science and an art and one that I practice really aggressively every time I can.
22:54 Speaker 04 Yeah, it's fascinating. One, that was the best answer to the decision-making question we've ever gotten. But that's the thesis of the show, right? The inside of the question about structure and decision-making, I can tell you 80% of your company. I know it from the jump and then we can go on to the actual specifics. Yours is an interesting answer because you've devalued the structure question and you've raised the value of the decision question. Most folks do it the other way around. Why make the flip?
23:19 Speaker 05 Yeah, because I think organization is a people construct piece. When people like each other, when they feel like their work is well taken care of and it's appreciated and they're in a framework that is well-supported, they'll give it their best. I think people use structure sometimes to pit people against each other and give conflicting...
23:42 Speaker 05 Priorities to different people thinking they're going to get the best answer. I do not believe in that. I strongly believe, like I have extra time sometimes, rare, but I do have extra time. Like this afternoon from four to six, I don't have anything on my calendar today. I will go back and saying, where can I take friction out of the organization? Because when my role is, my best use of my time is when I take friction out. For example, there's maybe friction between two groups. I go sit down with them, tell me why is the friction? Oh, so there's a, we have an issue and priorities, let's go sort it out. The minute you take friction out, people work well together. So organization gets devalued completely. And then it all comes back to decision making. So, and second is, organization is always a moment in time issue.
24:26 Speaker 05 Because priorities change, people change, orgs change. So you can't use an org structure to drive performance in the field and priorities. So I like decision making as a more powerful tool to do that. And the second is, how much data is enough to make a decision? This is something, I, I think a lot more material has to be written. I promise I will not write a book on this when I retire. There are some groups who think they need hundred percent of the data to make a decision. Some make it on a gut. I don't think both are right or wrong, but we also need a good framework to that as well. Like when are you ready to pull the, the trigger on things? And it's difficult in, in big companies, but it's also very difficult in startups. And I think it's a very different construct because in my business, I know the market.
25:11 Speaker 05 I know the customer. I have hundred years worth of customer experience and customer elasticity models to work with. It's a very different thing. When you're in a startup mode, you're creating a category, the TAM doesn't exist. You're stretching PowerPoint to make your TAM real. And you have to rely more on the gut to make those calls. You know, when it comes to people decisions, you know, you can put them through Alves, you've got to make on gut. But when you're making pricing, promotion, product fit decisions in my world, I think it's a little more data driven. So that is another area where I think I'll become a better manager if I practice more of that.
25:46 Speaker 04 We have to take a short break, we'll be back in just a minute.
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27:31 Speaker 04 Welcome back. I'm talking with Sumanarayan Sumpath, the CEO of Verizon's consumer business. Right before the break, he was getting into some of the big, high-level decoder questions about org charts and decisions. So I wanted to know how he applies that to real-world situations. Let's put some of this into practice. Let's just walk through an easy one here. Verizon just announced a three-year price lock for customers. This is right on top of the Trump tariffs. I always wonder how these decisions get made. A long, long time ago, I asked another network executive, why is this pricing like this? And the answer, this is a real answer that I received from your other big competitor, but a decade ago, was, well, this is how the computer system works. To make it different, we would have to reprogram
28:15 Speaker 04 a bunch of billing systems, and that's costly. So this is how our pricing works. It was a very honest answer. It was also somewhat disillusioning in the moment, right? That the pricing of the network plan was more related to the structure of the computer system that ran the billing than anything consumers could perceive. I'm assuming it's been a decade. I'm assuming everyone has upgraded their billing systems. But you announced this three-year price lock right on top of the tariffs. The marketing is that you want to give customers predictability. Lots of people have lots of feelings about wireless pricing. I have lots of feelings about wireless pricing. But that decision, you're going to lock rates for three years. That touches your marketing, that touches your revenue, that touches your forecasting. How do you make that kind of decision?
28:58 Speaker 05 We are in the middle of a large turnaround in the consumer business. Verizon used to take the most share of growth. We had the lowest churn in '21. '21 and '22, we lost our way a little bit. You know, my chairman, Hans, spoke about it. We got sloppy. We know it. So since then, we are back on the turnaround track to do that. It's a three-step turnaround. Step one for me was to fix sales, fix our stores, fix our compensation system, become a local company. We came to national. Everything was decided in this building. It didn't make sense for a company our size. Step two was to take care of our price premium. We had a 40% price premium to the market on our plans. I think that is unsustainable for us. Look, we had a better network, we know it, but 40% was too much for us. So we tweaked it.
29:42 Speaker 05 We are now down to 10%, 10% to 15%, depending on how you look at it. I think it is sustainable. We are growing our non-connectivity business really well. The third journey for me was to get my churn back in shape. Churn is the number of customers who end up leaving us every single month. It's still very low. You know, it's like .7 or .8. So think about it, like 9% of our customers leave us every year, which means our average customer stays with us for 11 years, which is crazy, by the way. And in FiOS, that number is like close to 20, 30 years, depending on how you look at it. So it's a loyal base, but you want churn to go down every single time because it's expensive to acquire customers, given because we spend a lot of money upfront acquiring them. So. For me, it was how do you get churned in a much better place?
30:28 Speaker 05 And we went and asked customers, you know, for the last four quarters, we polled customers. And Neil, I'll give you a great tool that we built with AI where it's an internal tool we built. Every day I get half a million calls coming into my customer care centers every day. Every single day it comes in. And we take every one of those calls, transcribe them, put them in a generative AI machine. And at nine AM in the morning, I get a sheet of paper that tells me what was the sentiment, key themes, and what happened with all my calls yesterday. It is mind blowing because earlier I had to call people. We had analysts who used to listen to calls, transcribe them, make notes. Now every single call is put in a machine and I get a piece.
31:11 Speaker 05 We picked up two very clear themes when I did that. The first one for me was certainty. People are like, everything in my life is uncertain right now. You know, there's uncertainty about the economy, there's uncertainty about my job, there's uncertainty about work from home, there's just a lot of tension. I want certainty with prices and especially with categories I cannot live without. And phone is one of those categories. So certainty was one that kept coming up again and again in our reads from the market. The second thing that came up is flexibility. I never want to pay for something I don't use. That's one of the reasons why we took out all these inclusions. And you get this free, you get that free. And people are like, you know, I know Disney is good. My kids love Disney, but I don't watch Disney. Why should I have to pay for it?
31:55 Speaker 05 So those were the two really clear insights we got from customers. So that's one. Second is we've done a series of price ups over the last couple of years. You know, we've had one, we had a couple in January in price ups. And we know elasticity when we do a price up, we model it. I would say the last price up we did elasticity was a little more than what we had modeled. So that coupled with all the insights we got from the customer, we had to respond and tell the customers that, you know, we're going to lock prices for three years. Now, it gives customers certainty. It puts a little more pressure back on us because we have to drive revenue other ways. We have clear ways to do that, but I think it's an industry first, especially now.
32:38 Speaker 05 Look, we knew the tariffs were coming in the day before yesterday. I mean, it was announced, it was on TV. We were very comfortable doing that because at time of uncertainty, we want to be, give our customers some certainty and some peace of mind.
32:51 Speaker 04 All right, I'm gonna be pretty hard on you now. I have covered the telecom industry for a long time. I noticed yesterday, every other stock in the world dropped and telecoms went up. Because people have to have your service, right? It is a requirement of modernity to be connected to the internet and to have a phone. And it feels like one of the reasons fiber customers stick for a long time is there's nowhere else to go, right? The switching costs are very high, or maybe infinite, because there's literally not another competitor that can offer the service that FiOS offers in many places. And that's true for every, I think, residential broadband provider, that competition is generally low. In mobile, competition is basically you and AT&T, and then T-Mobile is a very strong challenger
33:33 Speaker 04 that's gotten bigger, but you, Verizon, AT&T are the biggest players still. There was supposed to be a fourth player, and the government created this dish network deal, which I will ask you about soon, that has gone nowhere, right? There's not actually a fourth national carrier that competes with you. So when you say customers stick around for a long time, what I see is, well, there's nowhere else to go. How much does that come to your thinking, that actually a FiOS customer can't leave?
33:58 Speaker 05 You know, a FiOS customer can leave tomorrow morning. Every single FiOS customer today can move to cable broadband that afternoon. Every single FiOS. There's very little FiOS customers who don't have a cable competitor in play. I just think FiOS is a better solution. It's a significantly better solution than cable, because of the pricing practices they've had and the quality of their network, but there is a-
34:21 Speaker 04 Sure, but let me, can I just, I hear you, and I've heard, I'm sorry to interrupt, but I've heard that line from many, many, many telco executives in the United States. I look at the United Kingdom, for example, where they've done local loop unbundling, and actually, my colleagues who live in London have 15 fiber providers at much lower prices and much higher speeds, because the presence of competition is so much higher, right? So it's not literally switching from fiber to cable, a different kind of network. It's within the same fiber network. There are different providers offering more competition. And that, we've not done that here. But they're always switching, and you can see the prices come down because of it.
35:04 Speaker 05 Yeah, look, I think it's a careful balance. Canada has moved to a local bloop unbundling scenario as well. UK has always had it. That's why European Telecom has one of the lowest investments in telecom ever in any country, almost in any region of the world today. Because they just don't have enough of a profit pool and cash flow to reinvest back in their network. I mean, think about 5G. We are going to get to 90% deployment in a country as large and diverse as us. Most European countries are not even at 40, 50% deployment of 5G. So I think one of the things, if America wants to be competitive, if America wants to compete with China, having high-quality broadband is super important to that, whether it's mobility or whether it's that. And you want to create enough profit pools in the system to go back and reinvest. I mean, think about it.
35:49 Speaker 05 I'm going to invest close to 18 and a half billion dollars of capital, just capital. In the last seven years, we've invested 200 billion dollars in the network. 200 billion dollars between spectrum and fiber and the mobility business you have. I don't see any European carrier investing 200 billion dollars in seven years. In fact, they invest a 10th of that, you know, they're going to get an award for that. So I think it's super important for a country to be really at that cutting edge of technology, the cutting edge of fiber, cutting edge of 5G. And look, when 6G comes, we will be the first. I'll tell you that today. We were the first in 5G. We beat the Koreans by 12 hours. We will beat whoever else, and most likely it's going to be China on 6G as well.
36:33 Speaker 05 So I think it's a national security issue. It's a national competitive issue. We need to keep reinvesting in broadband every single time. And we're not going to stop. You know, you'll see us investing at the same rate for a very, very long time. And all our investment is in America and LA. You know, I'm not investing in other countries. I'm 100% America. And I think the profit pool lets us do that.
36:55 Speaker 04 All right, we're here at the end, right? 5G is done, it's deployed, everybody has the phones. What were the stakes of losing the race to 5G? No one ever gave you an answer to this question. If China had somehow won the 5G race, what would they have gotten that we didn't get?
37:08 Speaker 05 So what, let's talk about what does it mean to lose the race? I think the first thing is standards. You want a standard that, you don't want a bifurcation of standards. And it may happen, you know, it could happen in the chipset, it could happen in AI, it could happen in operating systems and handsets. You're in an interesting phase where you could potentially see a bifurcation of standard between the Western world and China. On 5G, we aligned on a very similar standard. And I think it helped because you're able to take price of, you know, the technology down to do that. The second is, think of all the applications, the tech economy that you have today, the app ecosystem, the Amazons of the world, the Googles of the world,
37:50 Speaker 05 metas, they rely on the mobility network more than anyone else. And think about it, Instagram is worth zero without the cellphone and the connectivity.
37:58 Speaker 04 No, but specifically 5G, Instagram was worth a lot on the LTE network. And most of the 5G networks we have today are running 5G. They're not running it on millimeter wave 5G or whatever. They're running on LTE enhanced, right? Like, we're still running at the core of the network here in the United States as a hybrid of 4G and 5G.
38:18 Speaker 05 No, if we stuck with just LTE, we would not be able to take care of the capacity that's happened. Think about it, the pandemic happened. We all moved to work from home, people just, we were able to take care of those networks immediately because we had 5G, we could scale up. So 5G adds capacity in a way 4G could never have added because it comes down to spectral efficiency to do that. And we also ended up adding, look, at the end of the day, capacity is a very simple thing. You can either add more spectrum, which is expensive, but you can add it, we do it every X years, we do that. Or you can add more cell sites because you can reuse the spectrum. Or you can get back to spectral efficiency. That's the only three ways to add capacity. And 5G helps with, you know, one in three. It puts new spectrum bands into play.
39:02 Speaker 05 And it also helps with spectral efficiency. So you got a lot more capacity out of 5G. And also it took the cost of. Capacity down, every incremental bit that a byte, depending on you put it in the, put it up in the air, the cost went down significantly. You saw thirty, forty percent reduction in cost per bit when you move from four G to five G. Without five G, you could not have done that. The second is, we created a whole business around fixed wireless access, broadband using wireless. It's all on five G, it ain't on four G, I'll tell you that. It's a multi-billion dollar business for us. In a few years, you know, right now, probably fifty to sixty million homes could potentially get that. It's another competitor to broadband. And what has happened is, because of that, cable has not been able to raise prices. And
39:45 Speaker 05 so it's a lot more beneficial to customers because they have another competitor in spaces to do that. The third thing, which I think has been a little underwhelming for me personally, is new products and services using some of the five G capabilities. And you never get this right, because you got to get the network, the handset, and the apps all perfectly aligned. I don't think that happened very well on five G. So I think the third leg of the stool still has more work to do. I think a lot of the AR, VR type new form factors that we are seeing is going to require really low latency. That will require five G, you definitely can't do it on four G. So, sitting where I am, I'm so happy we did five G. I wish we had done it two years earlier, but that's always the scenario. And look, we'll keep building our network, adding more capacity till six G is up.
40:31 Speaker 04 I sat in all the demos of all the hyped five G applications. I went on so many self-driving car rides at CES powered by five G with a data center somewhere that was driving the car for me because the latency was low. I heard a lot about robot surgery, like an infinity amount about robot surgery.
40:48 Speaker 05 Yep.
40:49 Speaker 04 Those were the applications that were promised, right? That was the vision of the war, that if we lose the war, China will own this set of industries that is built on the new network. It was not about network capacity in COVID, right? No one was foreseeing that what we would need is a more efficiently run network. It was not really about bringing prices down in any substantial way, because the only thing that ever happens is prices go up. That's the spread, right? I'm just wondering, do you see the gap in how much hype there was for five G and how oversold it was? And the consumer reality of it, which is, yeah, everyone's phones might have a little more network capacity. Yes, it's great at the concert or the football game to have millimeter wave serving everyone really fast. I agree that that's a great use case.
41:33 Speaker 04 But it actually didn't pan out that this big set of applications we are promised to justify this enormous cost and all of this literal war hype, it never came to pass.
41:44 Speaker 05 Wireless is one of the categories that has had negative inflation over the last 15 years. Think about it, when you had 300 minutes on your phone, you were allowed, you know, evening and nights were free. You remember the time when you got maybe 300 texts?
41:58 Speaker 04 Yeah.
41:58 Speaker 05 You were paying more for that than you're paying today when you get a 5G phone with unlimited data, unlimited text, satellite messaging included. So there are very few categories. In fact, the only other category I can think which has had negative inflation over the last 15 years is TVs. You know, flat screen TVs have really crashed in prices. So TVs and us are probably the two biggest categories that have gone up. Everything else, price has gone up significantly, all the way from eggs, others, everything's gone up. Our prices have actually come down for what we provide there. So I think the industry is probably one of the most unique industries where we tend to give you a lot more for the same amount or a little less than we did two, three, five, 10 years ago to do that. The second thing is, technology is interesting. You know, for decades, nothing
42:43 Speaker 05 happens and then in months, decades happen. You saw that with AI, right? You and I have been listening to AI ever since we were in college and then suddenly, two years, a year and a half ago, the whole thing exploded. I think a lot of these kind of special cases and new applications that we are working on tend to be like that as well. It takes a while to work it. Look, I don't think autonomous cars or robotic surgery are going to be the ones that are going to break the bank or going to be the breakthrough services, but I see new form factors emerging. I think the phone as we know it, we may be in the last generation of phone form factor as we know it right now. I think you're going to see a lot more control of the phones using LLM models. I think it'll have huge implications
43:28 Speaker 05 on the operating system, huge implications on the app store. But I think this may be the last generation of smartphones that we see. And to power all of the other things, we just need a better network. The second thing is, we're doing a lot more work. On five G in the industrial space. You know, it's not something you and I end up using a lot, but in my old job, we used to do a lot. You know, private networks, low latency networks, you know, running robotics of robotics and factory automation. Based on wireless network, there's a lot more space happening in that space. So. You know, when you roll out such transformational technologies, you got to play the long game. And look, Verizon is a company, we are committed to America. Look, we don't do business in other parts of the world, except small business.
44:10 Speaker 05 We are committed to America and we want Americans to have the best network and we'll keep deploying capital to make that happen.
44:17 Speaker 04 I think most consumers saw five G as something that just sort of happened to them, right? They upgraded the phone, the network is there. And then I hear you on negative inflation and value over time. But the main thing that happened is you upgrade your iPhone, now it's five G capable, you need a five G plan and that cost more than the plan you had yesterday.
44:33 Speaker 05 That is not true.
44:34 Speaker 04 But that was true for a vast majority of people across the vast majority of the industry. Right? That the plans did get more expensive.
44:41 Speaker 05 I actually didn't. If you see phone price, phone ARPU, average revenue per user, which is. We every carrier reports it in some form of the other. ARPU has moved very little on a per phone line basis in the last 20 years that I've been in the space. And you're getting a lot more now than you got many years ago. So I think people have this notion, the phone bill is going up, but the phone bill is going up because they're straining up for new services. For example, in my, in my case, we're going to have a $2 billion business selling streaming services and entertainment services. You know, we give great savings. I mean, the Disney, we give you a 40% discount when you go, you know, when you buy Disney or Netflix, Max or all the cool services from us.
45:23 Speaker 05 But the core phone service as you know it has nearly not gone up in price. And we've delivered more than pretty much any other industry for the price point that we do. And I'm very, very comfortable with that equation. And it's my job as the CEO of the business to ensure that we give more to our customers. Satellite messaging is one, you know. It's something we found a way, we made it work and we included it on our plan, you pay zero for it. So I think we are adding significant value to customers, which is why our churn is so low.
45:53 Speaker 04 Yeah.
45:54 Speaker 05 You people can move wireless easily, but because of the value we bring to them every single day, they like and they stay with us.
46:02 Speaker 04 We have to take another quick break. We'll be right back.
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47:46 Speaker 04 We're back with Verizon Consumer CEO Samsona R. Senpah. Before the break, we were talking about the wireless side of Verizon's consumer business. But now, I wanted to talk about Verizon's various attempts to expand beyond that core business model into advertising and media and what it plans to do in the future. This is also a golden opportunity to ask Senpah about net neutrality, so get ready for that. One of the things that's interesting there is the comparison televisions which you made. The reasons televisions got so cheap is that the industry realized that putting a computer in the TV let them develop huge new revenue models. Right? So a $500 TCL TV is actually a revenue generator because there's advertising baked into every layer of that TV now. Or effectively free Roku box.
48:31 Speaker 04 Roku owns the entire ad stack. That's how they make all their revenue. It's easy for them to subsidize the TVs in that way. That's not really the case with mobile handsets, right? It might be the case on maybe the low end of Android phones that there's some subsidy happening there, but your iPhone 16 Pro, Apple's not going to let you monetize that device as directly as anybody wants to. The push has always been to go up the stack, right? To go into the application layer. A decade ago, we had a fight about net neutrality where the carriers really wanted to be in the application layer and modify the network to preference some applications over others. That has petered out. It's still in the back. I think it burbles every now and again, but it's mostly petered out.
49:13 Speaker 04 Now you're saying the opportunity is to bundle Disney Plus, right? To bundle other applications. Where do you think that's? Is that settled now that that is the strategy? Or is the push into developing custom applications for your network? Or the push to preference bandwidth for some applications? Is that still there? Is that incentive still there?
49:33 Speaker 05 What does Verizon bring to the table? We bring distribution. We bring billing, customer care. We know how to manage subscriptions. We bring a brand that is, you know, has got unaided awareness of close to 100%. Those are the big things we bring. And I think what we've decided is we want to build our non-connectivity business. I mean, my non-connectivity business is almost $15 billion. It's the size of Hilton Hotels. You know, my non-connectivity business, if you see if it's a standalone company. And we partner with the best in the world to do that. You know, I partner with Netflix, I partner with Disney. You know, I, we have an insurance protection product inside that. We partner with other folks to do that piece. I think we want to use our distribution, our ability to scale subscriptions, our ability to lower cost of acquisition and partner with the best.
50:18 Speaker 05 But second is, the more people use my network, the more excited I get. So we are working very, very closely with, you know, the likes of Amazon, Meta, Google, Apple, to ensure that they use our network more to develop more services. Because we will monetize it at the network layer really well and then on the top, on top of the network, we'll find adjacencies to sell in. But if people don't use my network more, all the cool services I build ain't going to matter much. So I think we've pivoted to a strategy, which is single network, scaled network, put as much traffic on it as people can, and we'll find ways to monetize it in a pricing construct that we do that. On top of that, we have adjacencies.
51:00 Speaker 05 You know, we have six categories we sell into, and there we use our scale, distribution, some integration back with our network to make it real to do that. So I think, in a way, we are probably the largest incubator in the world today because we work closely with companies for them to go and innovate services. So it's a pretty cool position to be in, and as we finish deploying 5G, we'll start seeing more and more of those cool services come out.
51:25 Speaker 04 One of the things that I think about is there was just an explosion of big carriers buying media, right? Because you have the distribution, you have the billing, it made sense to vertically integrate all the way up to the top. So at one point Verizon owned Yahoo, which was very confusing. You started a, what was like a prototype of TikTok called Go90, which failed almost immediately. It's a long-running joke in our other show, The Vergecast. You owned Huffington Post, you had Tumblr for a second. On the business side, you bought BlueJeans, which is a video conferencing solution. That notion that you need to actually own the icon that the user is pushing on, or the media they're consuming on the phone.
52:06 Speaker 04 AT&T bought Time Warner, another obvious disaster that collapsed almost immediately. Where did those incentives come from to do that? And do you think that they've gone away? Has everyone learned their lesson?
52:18 Speaker 05 Yeah, and look, it happens in every industry. Look, at the end of the day, you can either grow horizontally or you can go vertically. You know, there are only two ways to grow. And, you know, we went through a phase, and look, I was on the leadership team of Yahoo and AOL. I was sent from Verizon to help run those assets and eventually sell them. And part of the thesis was, we create data in the telco world, you know, whether it's clickstream data, location data, the network data, that if matched with, you know, online data, could create a better targeting engine for advertisers. That was our thesis going in all the way. But then we realized that customers trust us because we don't share data.
53:00 Speaker 05 And it was a deep, insightful conversation we had within ourselves. And we realized they should not be in a business we're in, so we sold that business. But again, for a company our size, I mean, if you look at our enterprise value, it was still a rounding error for us. Fine, it was something we should not have done, but it was still a rounding error for us. At the end of the day, we are focused on our core. Our core tends to be mobility, our core is fiber, and our core is cloud slash AI, enabling those things. That's it. Those are the only three businesses we are in right now. Carriers around the world have kind of sort of come to a similar place right now, but we are probably, I would say, the most focused of carriers anywhere in the world right now.
53:39 Speaker 04 Verizon fights the hardest against any net neutrality rules that appear at the state level, at the federal level. It just, you know, we can set a watch by the Verizon lawsuit against those rules. It happens every time. You're saying you don't need those rules, right? Like, if you, if I'm listening to you correctly, you're saying we've learned our lesson. We're not going to monkey with the network. We're not going to prioritize our own services or someone else's services. We just want volume, right? Pure volume is what will drive your growth. Why fight against the rules if you've already come to the same conclusion?
54:09 Speaker 05 I don't know what net neutrality does. I've been in this business for little north of 20 years. Before that, I was in college having fun. And I still don't know what problem we are trying to solve with net neutrality. I actually don't understand that. Because at the end of the day, if there are 300 people using a congested road, and if a firefighter needs to go through, people are going to move aside and going to let him go through. That's all we are saying. You know, for traffic management purposes, we need to have some controls in the network. Otherwise, in New York City, when the traffic corps or the, you know, the emergency services want access, it's congested. I'm going to have to move people off so they get priority service. That's all it is. And we need traffic management tools.
54:52 Speaker 05 Or you have one person in your town who's sucking up all the bandwidth. And we have places like that where they use 100, 200 times the average bandwidth. And because of that, 99% of the people are getting a shitty experience. We got to manage their traffic. That's all we are saying about it. I think this was a little bit of drama about nothing. And at the end of the day, we want to build networks and we want people to use it. We just want the ability to manage network management in a way that's good for the broad set of people. I don't think we really care about making one group better versus one group worse, which is why I think it got no traction, because I don't know what problem it was trying to solve.
55:29 Speaker 04 Well, to be clear, it did get traction. It passed the FCC under Title II. In one administration, it was undone by another administration. And I've never encountered a net neutrality rule at the federal or state level that hasn't allowed for reasonable network management practices, right? That's always the heart of the rule. It's really, can you preference some content and services over another, right? No blocking, no throttling is the heart of the rules. And Verizon has fought against those.
55:53 Speaker 05 Yeah, but I think
55:54 Speaker 04 I have seen your competitors do things like sponsored data, right? So I'll let you off the hook for one second. AT&T, when they owned Max, accepted Max from their own data caps, which was just sort of openly unfair, right? It's just straightforwardly unfair that using Netflix would cost a customer money and using AT&T's owned and operated service would not. And that was an advantage that AT&T wanted to give to Max at that time. And that is the sort of thing that isn't a firefighter on the road, that isn't one person's using all the bandwidth. That is a distortion in the market. That's what the rule is supposed to correct.
56:29 Speaker 05 What good did it do to AT&T or to any customer on that scenario? Look, I don't know what AT&T did. At the end of the day, I don't think a lot of these folks understand how networks work. Because at the core of the thesis, the network is a very complex set of technologies that you have. You have the access network, you have core, you have peering points, you have the backbone of the network. So congestion can happen anywhere in the network. And for example, if someone doesn't come and peer with me, they're going to get congested, but it has nothing to do with me. They are congested because they chose not to peer with me. And they chose not to peer with me because they didn't want to, you know, pay the $3 or $0.03 it needed to go and get a port in a particular porting hotel that was needed. So I think the network is a very complex thing.
57:13 Speaker 05 It's not a single pipe that starts at one end and ends at the other end. There are a lot of different interfaces and other things. So I think this whole concept that you're going to unfairly manage someone's network or give someone an unfair advantage, I actually think it doesn't work in reality that way. The second is an economic incentive piece. Look, in the case of AT&T, again, I'm being an academic here, which is they bought Max, or whatever it was called back then, and they were willing To give up their dollars, the network, because network costs something, they're able to give that up to drive sales of of content. That's a decision they made. In the end, it didn't work out that well because it didn't matter. So I think there's economic incentives in place to manage all of this.
57:55 Speaker 05 And that's why I think net neutrality has gone literally nowhere, because it doesn't solve any problem that I think is a problem.
58:03 Speaker 04 Well, again, I want to be clear that it's the law in New York, it's the law in California, it was the law at the federal level and it was rolled back. So it did go somewhere at one point. And the most instructive thing I ever heard about net neutrality. It was just the arc that Netflix went on. Netflix was once the loudest proponent of these rules. And then several years later, I saw Reed Hastings at the Code Conference. And he said, I believe it was to Peter Kafka, he said, oh, we don't need to have this fight anymore because we're big, we're so big, it doesn't matter. And all that indicated to me was they needed the rule, they needed the fight when they were small to preserve the access. And then they got so big that they didn't need the rule to give them access because they were so big that taking the access away would be a problem.
58:46 Speaker 04 That's the competitive playing field that I think you want at the application layer as well, that it's really hard for people to perceive.
58:52 Speaker 05 I think they didn't realize it was a problem because it was not a problem. I think it had nothing to do with size. You could be.
58:58 Speaker 04 Well, I mean, that's what Reed Hastings said. He said, I am so big, it doesn't matter.
59:01 Speaker 05 I know, but it, I think he's doing that, he probably said that to cover up something where he made a big ado about nothing. In the end, it didn't change anything. If customers want Netflix, they'll get Netflix. We make shitty content, no one's going to watch them. You know, I think it's the core of that issue. So he very soon realized, I remember that the conference. And he realized this was a fight about nothing, you know? At the end of the day, if you make good content, customers want it, they'll peer and you'll get access to it. If you make poor content that nobody wants to watch, nobody is going to watch it irrespective of all the net neutrality so-called rules you have. So I think that was the perfect example of it had nothing to do with size. It just had to do with the fact that they were chasing something that made no sense at that point.
59:43 Speaker 05 And he was the first to admit it. So he could focus his efforts on putting on new shows. By the way, I like the new show, The Residents, by the way, it's a good show.
59:50 Speaker 04 You live in a different regulatory environment now. You have Brendan Carr, who's the Chair of the FCC. I'm not a fan of Brendan Carr. I think he's wielding his power irresponsibly and he knows that I think that. You mentioned earlier your deal with Frontier. That's going to go through, and Brendan has been very clear that he will not allow these deals to go through unless you get rid of all your diversity initiatives. And he says there's an investigation against Verizon on these initiatives. That feels like straight coercion. Like Verizon wants to go body up and file lawsuits against the FCC imposing regulatory requirements, this would be where you do it. Are you going to fight that fight or are you going to roll over?
1:00:25 Speaker 05 No, I look, I think one look for Verizon, that couple of things. Internally, as a company for us, there are certain things that are non-negotiables for us. You know, how we treat human beings, human dignity, and ensuring that we have the best talent pool when we build and operate the largest consumer telco company in the world. We ain't walking away from that. I think that's there. At the end of the day, we have to follow rules and regulations of the land, and we will work constructively. We have a constructive dialogue with the FCC to ensure that we follow the rules and regulations of the land. And that's exactly the piece we are in right now with them. And we got the letter from them. We are working closely with the staffers out there. And whatever the letter of the rule, both regulations, rule of the land is, we'll follow that.
1:01:07 Speaker 04 Do you think that you will fight that as vociferously as you fought net neutrality?
1:01:11 Speaker 05 We will, look, it goes down to the rule of the law.
1:01:13 Speaker 04 Do you think the FCC commissioner has the authority to tell you how to hire and fire inside of your company?
1:01:18 Speaker 05 Look, it goes back to the rule and regulations that the administration puts in place. They have certain rules, they work through it, and we have to follow the rules of the way it lays itself out. So that's all we're going to work towards is a constructive dialogue with, you know, with Commissioner Carr, Chairman Carr on that piece, and we'll continue to deliver that. But at the end of the day, I want the best talent pool for my company. I will do anything that is needed to get the best operators, the best marketers, the best network operators in the world for Verizon to do that piece. I ain't walking away from that. I'm going to follow that. In the process, I have to follow rules and regulations. We'll do that. And if there's some changes that have to be made, we will make those changes. But let's not forget, this is about getting the best talent from us, and we're not walking away one minute from that mission.
1:02:02 Speaker 04 Literally, just a few days before we're talking, I think T-Mobile closed a deal to do a JV on some fiber initiative. But to get there, they had to delete the word diversity from a bunch of its webpages. Is that the level of meddling that you're willing to accept?
1:02:18 Speaker 05 We are still working with the FCC on what the rules are, how we develop the rules, how we execute the rules on that. It's a work in progress right now, so we are still working through that. But look, at the end of the day, we're going to have to follow the rules of the land. We did that before, we've done that, we're going to do that after that. So this is just one of those pieces, we're going to have to follow the rules that's there.
1:02:37 Speaker 04 So I want to be very clear, very explicit about this. When the government passed net neutrality rules, it wasn't we have to follow the rules of the land. It was we are going to file lawsuits for a decade to get out of these rules because we think they're dumb. And in this case, you're saying Brendan Carr, who is an openly censorious, openly chilling of speech, openly hostile to companies because they have diversity initiatives, you're saying you just have to follow his rules?
1:03:02 Speaker 05 We have to follow the rules of the land. I don't think those are his rules.
1:03:05 Speaker 04 Are you going to file a decade's worth of lawsuits about these rules?
1:03:07 Speaker 05 We don't know. We're going to work constructively with them to follow the rules that are needed. But at the end of the day, look, our role is to our stakeholders that we have. You know, my stakeholders are my shareholders, my customers, my employees, and society at large. We have to manage and we are going to deliver for those stakeholders what's needed for us. And we will do whatever is needed with the administration to deliver to all the stakeholders. It's a balance when you run a large company our size, you have to balance the different stakeholders, and we will balance those stakeholders. We've done it extremely well in the last 25 years that we've been Verizon, and we'll continue to do that going forward.
1:03:40 Speaker 04 Can you put this in your decision matrix? When you look at an administration that shows up and says, we're going to start meddling with your deals from an agency that traditionally has not done this specific kind of meddling into how you hire and fire, how do you think about that decision in your two-by-two matrix?
1:03:57 Speaker 05 Look, this is not the first deal we've taken through administrations. We worked with Democrats, we worked with Republicans, we worked with both sets of the administration. We've had good success working with both of them in that piece. Every time we take a deal through, there are trade-offs that have to be made. You know, when we bought Trackphone, we had trade-offs we had to make, you know, with California that were probably not perfect for us as well. So I do think there are trade-offs that need to be made in any large transaction. But at the end of the day, you have to follow the rule of the land. I think that's the more important thing, and we've got to manage the stakeholders, and that's pretty much all we're going to do here.
1:04:32 Speaker 04 All right, I want to wrap up by asking you about a very silly thing. From the first Trump administration. In the first Trump administration, T-Mobile bought Sprint. At the time, that set of players in the Trump one concocted a deal where Sprint would sell some assets to Dish Network and we would invest in a thing called OpenRAN to get away from Huawei and have more competition at the tower level. These are all good ideas in theory. Have you spent one minute thinking about the competition posed by Dish Network?
1:05:02 Speaker 05 We have three large wireless carriers in a very, very competitive market. We have Dish with its Boost Network that is competitive in the prepaid space. They're a pretty large player in the prepaid space. They're starting to build postpaid. And then you have the cable companies today. Comcast and Charter and Cox, actually, all offer wireless services at really competitive prices. In fact, in many cases, the first line is free and their average ARPU is significantly lower than ours. So it is one of the most competitive telco markets in the world today. Three full players, a fourth facility player who is building up, and then a cable who has 100% coverage of the country who's able to offer wireless.
1:05:44 Speaker 05 So it's a very competitive market that we have in this space right now.
1:05:48 Speaker 04 No, but I'm asking specifically about Dish, right? That was five years ago. I think July, June, July of 2020, that deal was completed. They had access to T-Mobile's network for seven years. We're coming at the end of that. They are supposed to have a next-generation OpenRAN 5G network that is a national competitor to you by now. Do you think they have a national competitive OpenRAN network that causes you to lose any sleep?
1:06:13 Speaker 05 They are a competitor to us. They have, I think, little less than... The Boost Network is pretty, I think, the millions and the tens of millions of customers.
1:06:20 Speaker 04 But that's just what they bought from Sprint. That was the existing asset they bought from Sprint. That's not the thing they were meant to build.
1:06:25 Speaker 05 Look, they have, they've built local networks. And do we compete with them? You know, we compete with them at this space. But think about it. We have three full networks, a network that's building up, and then we have competition. This is one of the most competitive markets. And look, OpenRAN is a completely different animal. We should definitely talk on that. Look, over a period of time, OpenRAN is a good thing because it deconstructs the network a little bit. You can have multiple players in a stack. And for folks who are not close to this, today, when we buy equipment from a partner, we end up buying almost the whole stack, you know, the head end that goes on to the tower, all the equipment at the bottom of the tower from a single provider. And Open RAN says, make those interfaces more standardized so that you can mix and match operators more
1:07:10 Speaker 05 easily. I think philosophically, Open RAN is a good concept. I think more work is needed to get to the performance that makes us comfortable using it at scale. But what we've done is we've virtualized our networks more than any other carrier in the world. So what does that mean? We've put, you know, generic hardware in our sites, and then the equipment providers have to load their software on it. We think that's actually a more powerful tool in mix and match and scaling and lowering cost than sometimes de-standardizing or standardizing these interfaces. But over a period of time, it's important to have more diversity of vendors, have more people play in this space. It's good for us. It's good for the economy. So
1:07:54 Speaker 05 I think we are very supportive of ORAN. We are part of the alliance. We spend a lot of time, energy, money on R and D and making those interfaces stable. But I feel it has a little more to go before they are standardized and they give you the performance that I get to put it on my network.
1:08:09 Speaker 04 Well, Sam Path, you've given us a lot of time. I feel like you should come back and we should talk about Open RAN for a full hour, because I can. I think it is fascinating. So we'll have to have you back soon. Thank you so much for being on Decoder.
1:08:18 Speaker 05 Take care. Bye bye.
1:08:23 Speaker 04 I'd like to thank Sam Path for taking the time to speak with me on Decoder, and thank you for listening. If you'd like to let us know what you thought about this episode, or really, anything else, drop us a line. You can email us at [email protected] . We really do read all the emails. You can also hit me up directly on Threads or Blue Sky, and we have a TikTok and an Instagram. They're both @decoderpod. If you like Decoder, please share with all your friends and subscribe wherever you get your podcasts. Decoder is production of The Verge and part of the Vox Media Podcast Network. Our producers are Kate Cox and Nick Statt. Our editor is Persa Wright. The Decoder music is for a brake master cylinder. We'll see you next time.
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