“How can we enable industry to be transformed totally by digitalization, and how can society get the benefits from that?”
Hans Vestberg became CEO of Verizon last August 1, after spending his first year at the company heading up the telco giant’s work developing the next generation of wireless technology known as 5G. Prior to that, he had spent seven years as CEO of Ericsson, the telecommunications infrastructure company headquartered in Sweden which developed much of the fundamental technical underpinnings of 5G. Techonomy’s David Kirkpatrick and Josh Kampel recently sat down with Vestberg in Verizon’s offices in Basking Ridge, New Jersey, to discuss where he is taking the company.
Techonomy: It says something to the market about where Verizon is placing its bets, that someone like you, who came out of infrastructure, now has this job.
Vestberg: I’m an accountant. But I spent my last 20 years in deep technology. I’m not claiming I’m a super smart technologist, but I understand it.
Techonomy: So tell us what you are doing here.
Vestberg: We want to be first in the world to launch 5G commercially. We’re only seeing the early starts of it. We’re doing the first installation of a 5G home solution, for a commercial customer.
Verizon was built out of something like 20 acquisitions and a joint venture with Vodafone. So everything was purpose-built, in vertical networks. Now we have basically flipped all the vertical networks to a horizontal network and gotten to the multipurpose network. At the edge of it, I can select fiber or 5G or 4G to the customer – whatever they need. I have large customers, small customers, government customers, consumers, fixed mobile. But we have one type of network for everyone. It is a much simpler network structure. We need 5G for low latency and enormous throughput. [Note: Latency means how quickly the network reacts to an instruction.]So we call that the intelligent edge network, which we launched over a year ago. We wanted to transform all the networks to one network. And that’s a pretty big thing when you are the size of Verizon.
Techonomy: What is it about the 5G era that makes it easier to do that?
Vestberg: First of all, you have much more multipurpose technologies. You can buy a multiservice router that is handling all access. Five years ago, you needed to have a certain different kind of router for, for example, an enterprise customer. Now you can have unified transport. All technologies now go to multipurpose. But we also had some structural challenges. When we had Vodafone and Verizon running the wireless network together, we could not start sharing all the other assets. [Note: Verizon bought out its wireless partner Vodafone in 2014.] Now, with the technology and the business evolution, it has made possible a transformation of the network. And we’re over one year in on that journey. But it was all to enable a 5G experience, for both enterprise customers and consumers.
Techonomy: So by making you CEO the board was in effect making a statement about the centrality of 5G?
Vestberg: I know that’s my vision. And the network, our distribution, our brand is the strongest in the whole industry. And you build from strength with your strategy. We can attract the best partners because we have the best network, the best distribution, and the best brand, and anybody would like to work with us. So then it’s about – how do I leverage that?
The most frequent question I get is whether we’re going to buy a content company. No, I’m not going to buy linear TV content. But I can partner with anyone because I have the best network, distribution, and brand. And anybody would like to be part of it because they’re going to get 110 million mobile subscribers and six million fixed broadband subscribers, and a path to 5G. So of course, I can do it differently. We go from our assets and that’s what we think is right.
“Oath is coming closer, much closer.”
Techonomy: So does Oath become something like an arms-length asset?
Vestberg: No. It’s coming closer, much closer.
Techonomy: But how does that accord with what you just said?
Vestberg: First of all, they probably have a couple of thousand people working on artificial intelligence and machine learning. They need to be inside my network because we’re virtualizing the telecomm network. That’s number one. And then of course, we love content. Now we have short form, we have Yahoo Finance, Yahoo Entertainment. That’s perfect for us. But they have a broader market. They address the world. I have 110 million consumer wireless subscribers. Of course, you should expect that we’ll leverage that over time.
Techonomy: Where will the relationship between big carriers like Verizon and the giant internet companies go?
Vestberg: It’s great. It’s great.
Techonomy: Is that it? [LAUGHS] Is that the whole answer?
Vestberg: It’s great collaboration. I like Google. I like Facebook. I know them all.
Techonomy: Well, they create huge demand, obviously. So maybe there’s no structural change needed in terms of how those industries…
Vestberg: I didn’t say that.
Techonomy: Okay. Well, what would you say?
Vestberg: I would just say that we’re good friends. [LAUGHS] I, in general, think about 5G. But 2G, 3G, and 4G were designed for consumers. And there were two currencies you could sell – throughput and speed only. That’s the only two currencies you had. But 5G was designed from the beginning to be cordless. And taking away the cord in any industry or any part of society, that became eight currencies. So suddenly you have eight currencies. Besides the first two, you have latency; you have one million devices per square kilometer; you have security on it; you have battery lifetime that is far better than a consumer ever needs to have; you have service provisioning; and you have speed, meaning kilometers per hour – that is up to 500, 600, 700 kilometers per hour where we can cover things. Historically, speed and throughput were given to anyone and they could build anything on top of it.
But with the eight currencies, there are opportunities to do a far greater variety of things using the network. For example, in order to take advantage of the variations we can make possible in latency, we need to collaborate with the customer because we need to optimize the network. So you cannot give each customer all of these eight because that’s not feasible. But if you need low latency, then you and I make that connection, and I’ll give you low latency. If you need enormous throughput, say 20 gigs per second, I can optimize that for you. But in that case, I probably wouldn’t do much about the latency because it’s irrelevant.
And if you have those various capabilities of 5G in your mind, that means there are going to be many new types of collaborations using the network. Consumers are still going to have their throughput and speed, whatever their handset can handle. That’s going to happen. But all the other currencies need collaboration in the market between the players, whether that’s internet players, large service providers, large enterprises, or God knows what.
Techonomy: Does that imply that the whole concept of net neutrality is sort of an anachronism and won’t really apply to the technology landscape in which we are now going to live? It sounds like everybody’s got a special arrangement in that scenario.
“Net neutrality – we’re going to support it.”
Vestberg: First of all, we support net neutrality and all of that, so there’s no problem with that. The consumer is always going to get the speed and throughput they’ve always had. But just imagine if—I take the extreme, which will take a long time – autonomous cars are not going to need high speeds or high throughput. They only need extremely low latency. It has to be down to 20 milliseconds in order to communicate quickly enough between all the vehicles. So if we cannot optimize that slice of the network and only give them that slice, we can never do autonomous cars. So my sort of discussion with myself is, “Hey, if you want the social benefit of 5G, then you need to have slices.” If not, you’re not going to get all the social benefits we believe are possible, whether it’s an autonomous car or camera surveillance. Many things like you never thought about will come up here, too.
So net neutrality, we’re going to support it. Remember, 5G was designed for industries and society, not for consumers. Consumers are going to get the benefit, but the whole design was about how can we enable industry to be transformed totally by digitalization, and how can a society get all the benefits from that? That was the whole idea.
Techonomy: And you know a lot about that partly because a lot of that thinking was done at Ericsson when you were running it.
Vestberg: Starting in 2009.
Vestberg: If we cannot take advantage of all these currencies, we cannot give society what it needs from 5G. Then we’re just an extension of 4G. But this can be much more transformative. Even when I talk to Wall Street, they always come back to, “Consumer. Consumer.” Yes, that’s super big and it’s super important for us. But I see all these other use cases at the same time. We have enterprise customers, we have small and medium business customers, we have internet of things customers. We have consumers. For us, 5G plays a vital role for all our customer segments.
Techonomy: Another question I have about Verizon is I think about it as very much an American company. I don’t think of it as having nearly the global footprint of many other American giants of your scale in other industries. How do you think about that?
Vestberg: First of all, it’s not correct. We’re probably the second largest telecomm provider in the world. We don’t have wireless outside the U.S. But we have probably the broadest broadband network, transport network in the world – cable, undersea cable. But still, it is a US company compared to what I came from.
Techonomy: Is that something that needs to change?
Vestberg: No. That’s not the first priority. We have assets outside of US, we have a lot of employees outside the US. But from a revenue point of view, the vast majority’s coming from here.
“China’s going 5G as well? It’s good.”
Techonomy: One of the things that we think about a lot in our work as journalists and looking at the tech industry is this US-China dialectic. Does that worry you?
Techonomy: Why not?
Vestberg: So what should worry me?
Techonomy: Well, that they may be moving ahead on AI, for example. That they might outpace us on some key areas. And what about 5G? Could they get any advantage over us on that?
Vestberg: No. It’s the same standard in all the world. More countries, more volume, lower cost. I think that people just misunderstand that 5G is a global standard. They miss the whole idea that wireless technologies have always been based on global standards. You can take the phone anywhere. The more people that use 3G or 4G, the more people can afford it. It’s a good model. So if you get China, US, India, Korea, and Japan all going early on 5G, that means it will become more affordable for the rest of the world, because we’ll have more of the same standard equipment deployed everywhere.
Techonomy: The economies of scale just grow and grow, you mean?
Vestberg: So what could be wrong if China’s going 5G as well? It’s good. Then you think about, okay, which companies do we have that are suppliers in the US on 5G? That is something that you can discuss.
Techonomy: Are you working on embedding corporate social responsibility (CSR) in the corporate strategy here?
Vestberg: Yes, definitely. First of all, both customers and partners are expecting it. And we see a movement that investors are expecting it as well. And then we see more and more, especially in Europe, that people are only investing in companies that have a certain profile when it comes to sustainability, etcetera. It’s not really here in the US yet, but I know for sure it will come.
Techonomy: Do you think business is better able to make effective decisions that affect society because it understands the concept of a bottom line and is more pragmatic than government?
Vestberg: Corporations can scale things because they have key competence in certain areas. So at Verizon we can scale technology. Unilever, for example, is fantastic in distribution and food, and they can scale those things in a way that I don’t think a government can. When I worked in Africa at Ericsson, there were many people getting smartphones and becoming connected. So you could educate people and they could have healthcare. The big problem was that in order to leverage that private investment for citizens, you need the government to have competence. Governments need a CIO in order for them to have a chance, and that generally doesn’t exist.
Josh: So do we need public-private partnerships?
“Governments are afraid to work with corporations. Corporations won’t work with governments. But you can never solve the problems we have if you don’t get to that type of collaboration.”
Vestberg: Yes. We need to find new models that today don’t exist. Governments are afraid to work with corporations. Corporations won’t work with governments. I myself worked with the UN for 15 years. So I know how hard it is. But you can never solve the problems we have on this earth if you don’t get to that type of collaboration, because the deep knowledge will always be in private sector, driven by capital. And the responsibility for citizens and to provide public services is always going to be with government.
Corporations, in general, don’t like to say “Take my money and do something great with it.” But corporations are more and more willing to say, “Hey, I can do a contribution in kind. My employees are great at this.” Or “I’m okay with my employees working one day a month on this because it strengthens us. We see how we have an impact on society.”
Techonomy: Do you see signs that countries are moving towards the kind of attitudes and structure you’re describing?
Vestberg: Absolutely. Sweden has a CIO, a head of all IT investments and digitalization of the country. Estonia has had it for 20 years. Many countries are putting in a digitalization unit. They give it to a minister. The problem is that, historically, in a government, the minister of finance owns all the taxes, the minister of labor owns all the labor matters, etcetera. And all of them have built different systems. If you want to get digitalization for a government, you need to have an IT system across all of those areas, not separately embedded in each one. You need one unit—as you would have in a company. In general, governments need to think about their citizens as customers of their services. That way they will build things totally differently.
Techonomy: How does this affect how we should think about achieving the UN’s Sustainable Development Goals for 2030, to create a more inclusive and healthy society?
Vestberg: It’s impossible if you don’t scale the technology. Otherwise, if we want to reach a goal of full healthcare in Africa, for example, we couldn’t do it in a century because you would need so many new hospitals and doctors. But if you start scaling digital healthcare, especially preventive stuff, then you can do it. That cannot be private, because private corporations are not in the business of serving citizens. But they have the technology.
For corporations to “do good” sounds like you just want to give away money. But part of our strategy is to show our employees and our customers that we can have a much bigger impact. It’s a win-win if you find it. And that’s what I’ve been looking for in all my life. I have found it in pockets, and I want to find more.
Techonomy: Well, you have a bigger lever to play with here than you’ve had in past jobs.
Vestberg: Well, it’s a little bit bigger. [LAUGHS]