John Stankey, Chief Executive Officer, AT&T
In conversation with: Diane Brady, Fortune
In conversation with: Diane Brady, Fortune
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TechTranscript
00:00Good morning, everybody, and hello, John.
00:02I'd like to see you wore the company shirt,
00:04in case we forget where you're from.
00:06So that's good.
00:06I like that.
00:08It's a hard decision this one.
00:09And also, one other thing that wasn't included in your bio
00:12is that you are now an op-ed writer,
00:14because you did a piece that appeared in Fortune
00:16this morning.
00:17So thank you for that.
00:18I had to stay up late last night finishing.
00:20We will get to that, the thoughts.
00:22Well, let's start with your reaction to the election.
00:26What's now?
00:26Are you feeling optimistic?
00:29I would say probably encouraged, maybe a little circumspect.
00:34I'm encouraged by the likelihood that we're
00:38going to probably have a little bit more of a pro-investment
00:41tax approach moving forward.
00:43For a company that invests $25 billion a year,
00:46that's a big deal.
00:48I would say I'm encouraged by maybe having regulation
00:52targeted in the right places, as opposed to everywhere.
00:58For headline purposes, it might be good.
01:01Circumspect, I think one of the elements of the election
01:07was somebody who was elected because inflation was really
01:10problematic for a lot of Americans.
01:12And the economic dynamics were certainly an element.
01:16And yet, I look at some of the policies that are in place,
01:19and I listen to what's in front of us.
01:22And you ask if that's what got you here.
01:25You want to make sure that that isn't what gets you out
01:27when you're done, right?
01:28And so that piece and how it squares is my circumspection.
01:33Then let's live the dream.
01:34Let's say I'm from the government,
01:36and I'm here to help.
01:37And so give me advice.
01:39Let's say I'm from the FCC, and I'm here to help.
01:41What advice would you have in terms
01:44of the right mix of regulation going forward,
01:46since we're talking about America's digital future?
01:49Yeah, I'd pick up right where I left off,
01:51is let's not spend time, taxpayer money, and energy
01:54on regulation that really doesn't need to be fixed.
01:58Are we worried about anybody's internet being blocked
02:01or throttled, or there's plenty of choices in the market,
02:05yet we spend all these cycles on things like net neutrality?
02:08Yet we spend our energy studying the spectrum.
02:13And spectrum is where the future is for this country.
02:16It's where we're going to remain competitive.
02:19It's what's necessary to bring in the next generation
02:22of technology.
02:22It's essential to put more capacity into service
02:26to keep prices down, because if demand is going up 30% a year
02:31and there's no more capacity coming out,
02:33we all know supply and demand, and you end up
02:35with higher prices.
02:37A looming airwave gap will bring higher cell phone bills.
02:40I think that was the title this morning.
02:42That can certainly be one of the outcomes from that.
02:45Give us a sense as to why the average person,
02:48I mean, first of all, it's something
02:50that feels almost like you can't control it.
02:52Give me a sense of what's been happening to this point
02:56with regard to this airwave gap.
03:00Oh, I think it very much can be controlled.
03:02I think the notion that you can't control it is just,
03:04it's patently false.
03:05So let's go back to the front end of the first Trump
03:07administration.
03:09And as Xi Pai walks into the FCC,
03:12and we were all thinking that mid-band spectrum was
03:15going to be auctioned sometime in three, maybe four years.
03:19He puts his muscle behind it.
03:21He works with the executive branch.
03:23They make some hard policy decisions.
03:26They kind of make the Pentagon kind of come to the table
03:29and play.
03:30And lo and behold, in 18 months, we're
03:32in an auction for the largest swash of mid-band spectrum
03:35that we've had in this country.
03:37And so I do believe that somebody
03:38can walk in and change the profile of what's going on
03:41here.
03:41And I don't think it's hopeless at all.
03:43And I think we need to absolutely put
03:45our muscle behind it.
03:46So one of the things that, well, one thing I'm curious about,
03:50since we're talking about the future,
03:52will we even need cell phones in a few years?
03:56There'll be cell phones.
03:57I think the way to think about it
03:59is, how does behavior change around using other devices
04:04to do maybe intents or things that you do today
04:07by naturally picking up your phone,
04:09opening it up, and starting?
04:11And so when you start to think about the future,
04:13I expect there's going to be more devices on a person
04:16that you could choose to say, my intent is to do this,
04:20but I'm going to launch it differently than going
04:22to my phone.
04:23I may have a voice assistant that sits with my lapel.
04:28I may have something in my glasses
04:29that helps me with a visual intent.
04:32Have you tried out any of those?
04:34I have.
04:34And what do you think?
04:36I can see it.
04:38I think it's not going to be a revolution.
04:41They will evolve over time.
04:43And to my point, you're not going to, in five years,
04:45say I never use a cell phone.
04:47But there may be a half a dozen things
04:49you used to do here that you'll start somewhere else.
04:52And I think ambient computing will start to play in.
04:55It's not going to be overnight.
04:56But you'll walk into your house.
04:58Your presence in your house will alert you
05:00to other devices around that you can
05:03use to do things that you might have initially
05:05gone by going to the deck of your phone to get started on.
05:09So I think we'll be in a very different environment
05:12as it evolves.
05:12And that's going to open up innovation
05:14in terms of software players and who's involved in search
05:18and who's involved in how apps get constructed
05:21and where they run and those types of things
05:22that will be interesting to watch.
05:24You know, you raise a good point when
05:26you start to talk about software, which is basically
05:28when you think about digital future,
05:30the mind drifts to big tech.
05:32And so you've created this infrastructure
05:37on which these players thrive.
05:41Give me some sense as to the platforms that
05:44are basically leveraging a lot of the investments
05:47that you've made.
05:49How do you think that they should be regulated?
05:53Well, first of all, I think we all work together.
05:55It's a good ecosystem, right?
05:57And we've gotten a lot of policy right in the United States.
06:00We've had pro-investment policies
06:02that have driven world-class infrastructure in the US.
06:06Spectrum is one of those things that we've
06:08gone from being first, second, or third in the globe
06:11to, like, we're 14th in developed countries right now.
06:14We're sliding.
06:15And we need to get back to doing the right thing.
06:18And this is not like infrastructure's built
06:22and we're done.
06:22We refresh at $24 to $25 billion a year at my company alone.
06:27And there's other companies that play in this space.
06:30And you've got to make sure you have the right policy
06:33to continue that reinvestment.
06:35And so if I think about what we need to really contemplate
06:39is we built a great communications
06:42infrastructure in this country where we said every household
06:45should have a phone.
06:46Everybody should be able to talk to one another
06:48with very overt policy.
06:50And the policy was make sure there's
06:52access in everybody's house.
06:54But we're going to use the incremental decision
06:57to make a phone call as the way to subsidize
07:00that infrastructure so that everybody could afford what
07:04would have been too expensive otherwise,
07:06at the farmhouse, in the urban areas.
07:09That was the overt policy.
07:11Long distance calls subsidize access to the home.
07:15We have never come up with an overt policy
07:17of how we make sure every home is connected to the internet.
07:21We've never made that decision.
07:23Ergo the digital divide.
07:24The corollary to that is everybody
07:27should have a connection.
07:28But how do you make sure you have subsidy
07:30for those that can't afford it or the places that
07:33are too expensive to build to?
07:35That's the long distance phone call issue.
07:38And so if you have third parties that
07:40are riding that infrastructure that
07:41are making a lot of money on the long distance phone
07:44call that rides on top of it, everybody
07:47should participate in that.
07:48And it's not just the people building the infrastructure.
07:51App stores have revenue.
07:53There are services that come on top of it.
07:55If we need subsidy to make sure it stays cost effective,
07:58we should think about it in that construct.
08:01Well, let's unpack this a little bit in terms of what
08:04can actually happen.
08:05So let's put it in perhaps maybe Congress.
08:08Give me some sense.
08:09Since life is about priorities, what
08:11would you prioritize day one coming
08:14into the administration that would help at the very least
08:18move America back up to being one, two, or three?
08:21Well, number one, we need to restore auction authority
08:24for the FCC to put new spectrum into the market.
08:26That lapsed.
08:27Congress has not renewed that authority.
08:29So if we wanted to put new spectrum out,
08:31the FCC actually couldn't even take action to auction,
08:35because that's a refreshing thing
08:36that Congress has to do.
08:38They can decide what spectrum they want to put out.
08:40They just have no authority to do it right now
08:42without being able to auction it.
08:44Two, this issue of universal service
08:47that we just talked about.
08:48We're still subsidizing universal service based
08:51on long distance phone calls.
08:53How many of you are paying for a long distance phone call
08:55these days?
08:56You think about it.
08:57That whole construct needs to be relooked.
09:00And there is reasons to do it, because we
09:03want to solve the digital divide.
09:04We want to have a cohesive policy.
09:06Do you think Elon Musk will be a force for good or ill
09:09in this respect?
09:10I don't know.
09:11What's your suspicion?
09:12Look, I think anybody who starts out
09:14with the intent to maybe streamline government
09:16and get it more focused, that could be good.
09:19That could be good for our country.
09:21I think we should also step back and be
09:23really practical about this and understand
09:25that when you look at entitlements and defense
09:29without dealing with those two issues,
09:30you're not going to fix government.
09:32You're not going to fix the balance sheet
09:33problem of the United States.
09:35So great, let's go look at government waste
09:38and let's understand what we can do to operate government more
09:41cleanly.
09:41But let's also be honest brokers in the political environment
09:44and understand that we need to come to grips with those other
09:47two things if we're going to deal with a balance
09:50sheet that possibly is one of the causes
09:52of this inflationary environment that I kind of opened with,
09:56that we need to really be mindful of.
09:59I want to talk about how you've transformed AT&T.
10:02And I know time's ticking.
10:03But one thing that hasn't come up that much here
10:06is the sustainability, which I know
10:08is a big priority for AT&T in some of the conversations
10:11in the past.
10:12What are some of the tough choices that you see there?
10:15Because we're making these major investments in AI.
10:18Obviously, we're trying to do it in a way that is sustainable,
10:21that helps the planet.
10:22How do you think about that in terms of the digital future
10:24of the US?
10:26There's a lot about our infrastructure
10:27that aids sustainability when you
10:29start to think about how we allow for work to be
10:32done from virtually anywhere.
10:34But all the bosses want us back to work anyway.
10:37But think about how much more you're getting done
10:39over that period of time.
10:41And I would tell you that I think
10:43that the biggest issue we have to deal with in our company,
10:47we consume power to allow for that capability that's
10:50out there.
10:51And we've worked really, really hard
10:53to make sure that our power consumption has
10:55been more efficient over time.
10:57And working really, really hard has kept us about even,
11:00even though networks are getting bigger
11:02and there's more data and bits being moved.
11:05I worry about the next several years
11:07because I think, broadly speaking,
11:10there's a little bit of a friction between we
11:13want to lead in AI.
11:14We think it's a national priority for defense reasons.
11:18We think it's important for global competitiveness.
11:21And at the same time, we talk about the fact
11:23that we want to cut greenhouse emissions.
11:27Can't do them both.
11:28The power that's required here to do this,
11:32there is no plan on how to produce that much power
11:34without driving more greenhouse gases.
11:36And I'm not saying that it couldn't be done
11:38if there was a well-thought plan.
11:41But there is no plan right now.
11:42Which would you prioritize?
11:44I think it's really important.
11:45I think this is going to become the next big social
11:47and economic issue in the United States.
11:49If $5 a gallon gasoline gets people elected or kicked out
11:52of office, two years from now, people
11:55are going to be looking at the power bill in their house
11:58because there's going to be a shortage of power.
12:01And people are going to be consuming it
12:02to push the boundaries on AI.
12:05And we're going to be asking ourselves,
12:07how did this happen?
12:08Why do we not have an approach here
12:10for critical infrastructure on power?
12:12It's going to be necessary to make this happen.
12:14I tell you, we're probably further along
12:16on getting sounder communications policy that
12:19allows for data to be transported
12:22to enable the AI revolution.
12:23But I worry about whether or not we're
12:24going to have enough power to make all that work moving
12:27forward, especially when you lay it on with what's
12:30required in these data centers.
12:31So the answer is to prioritize nuclear power?
12:33What's the answer?
12:34It seems like you have difficult choices.
12:36Yeah, I personally don't see a future
12:39that gets us to where we need to get on emissions
12:41without some equation of nuclear.
12:44And back to your question about government,
12:46it's like if we don't start permitting faster
12:48than we are right now, we aren't
12:51going to solve that problem.
12:52I mean, we're well over eight years
12:54off for any kind of reasonable online nuclear power coming on.
12:58And most people don't want to go build natural gas power plants
13:02right now.
13:03Anything quickly about just the transformation internally?
13:06I think when I sit with a CEO on stage in terms of AI,
13:10how transformative is that for your business right now?
13:13I think it's, look, I think this is a huge seminal moment
13:16for all of us.
13:17And again, you're not going to wake up and just go,
13:20well, it was fizzled out.
13:22It didn't happen this year.
13:23This is as big as 1999, 1998, and the founding
13:28of the internet.
13:29And we had the internet bubble.
13:30And everybody, oh, we had the internet bubble.
13:32It went away.
13:32It's like, well, I don't think we'd all sit here today
13:36and say the internet really didn't deliver much.
13:39I mean, it's completely changed how we live.
13:41It's completely changed all of our business models.
13:44The bubble burst maybe because of some investment
13:47misalignment.
13:48But it was fundamental.
13:49I think we're at the front end of one of those things.
13:51We're going to be sitting here 10 years from now looking back.
13:54And there'll be some battles won and lost of money
13:57and didn't go to the right place in the capital allocation
14:00perspective.
14:01But will it fundamentally change us?
14:03100%.
14:05The parts of making your business more efficient
14:08are going to be necessary just to survive.
14:11Those benefits will accrue to the consumer.
14:13When I operate my business for less money,
14:15we'll become more price competitive.
14:17Those benefits will accrue through to the product
14:19and the marketplace.
14:21The question is, how do you change your business model
14:23for competitive advantage?
14:25That's the harder part.
14:26That's the part we don't know about yet.
14:27That's the part that comes from having a unique data
14:31recipe that nobody else has.
14:34And that part of it is where you get
14:36some competitive advantage and differentiation that comes in.
14:39We haven't seen that part work its way through.
14:42And it will take some time for that to occur.
14:44Food for thought.
14:45Please join me in thanking John Stanky.
14:47Thanks very much.
14:48Thanks.