Verizon CEO to IBM's Rometty: Industry Disrupted by iPhone, 5G, Fiber, IoT

IBM THINK — Verizon CEO Lowell McAdam was one of three top business thinkers who took to the IBM Think 2018 conference stage in Las Vegas Tuesday for a Q&A on disruption in the industry.

Ginni Rometty, chairman, president and CEO of IBM, specifically asked McAdam about the evolution of telecom and what to call it today.

“There really isn’t a name for it anymore because it’s become amorphous. When we started Verizon back in 2000 we controlled the vertical and we monetized the entire stack,” McAdam said. “The day the iPhone was announced, it just turned that around. There’s been a move for us to become more horizontal – just a communications company – and you see us competing with, but partnering with, those trying to disrupt us. We’re trying to make sure that we can monetize above the capital, above the network layer, and it’s an ongoing, day-to-day struggle,” McAdam said.

Verizon’s Lowell McAdam

Rometty then asked about having to make choices – business, consumer, media, content – how do you do it?

“We invest about $17-$18 billion a year, and most of those investments really don’t pay off for five years. You mentioned 5G: We declared 5G in 2015, and we won’t launch commercially – only in a small way later this year – and in a big way next year. We’ve always said that the network was going to be the number one thing for us – that’s what we built the brand on – so staying on leading edge [is important], but being able to monetize above that, that’s where things like Oath come in. We decided not to do the linear approach because we see the pressure it’s under. A lot of people thought we should go out and buy a satellite company … but we wouldn’t. But there are things like digital media — AOL and Yahoo are examples of where we think that we can combine it with the best network to be successful.

Verizon combined the assets of Yahoo’s operating business with its existing AOL business to form Oath, a Verizon subsidiary of more than 50 media and technology brands.

“Tim [Armstrong, Oath CEO] and his team, want customers to get what they want how they want it. And, they are going to take Oath for those customers to deliver that service to them,” McAdam said.

Rometty asked him to talk more about making bets on the platform.

“We made two big bets. First, we’re already the largest fiber provider in the U.S., and about a year ago we went out and bought 12 million miles of fiber a year for the next five years. So, we literally have enough fiber to go to Mars. I told Elon Musk that when he lands there, we’re going to have fiber service.”

“On top of that, the plan for fifth-generation technology – I don’t use hyperbole – but I think 5G will usher in a fourth industrial revolution.”

McAdam gave a few examples of 5G’s power. Today, a handset does about 10 MB of throughput; going forward, expect 1 GB to your device. In field trials, Verizon is doing 25 GB of throughput over wireless. 5G allows the big wireless companies to attach 1,000 times more devices to every cell site than what’s possible today.

“Think about smart cities and intelligent lighting. We’ll be able to save cities 70 percent of their energy usage because cameras and facial recognition – and object recognition – will turn the lights up and down when needed,” he said.

Partnering with companies is …

… critical for Verizon, which sees the possibilities of 5G as endless.

“We know our limitations. We see the opportunities building on that new platform and we’re committed to being a leader,” said McAdam.

He pointed to three options for partnering: Do what the folks who monetize on the current 4G network do, which is provide the connectivity and let others build on top of it — however, McAdam said this wasn’t a much-liked option; publish APIs and allow others to publish applications; or work with strategic partners in vertical industries, look at the capabilities of the network and work with specific groups around specific variables of the network.

What does the future hold for Verizon?

“We’re going to be very focused on solutions for our customers, working with our partners, and providing that high-speed linkage in a very responsive network as we move forward,” he said.

Dave McKay, president and CEO of the Royal Bank of Canada (RBC), and Michael White, CEO designate, IBM-Marersk Joint Venture, also took part in the executive panel at IBM Think.