Customers when they make a voice call in five years will be on whatever handset they are carrying; we’ll look for cheapest way to carry that call; in your house it will a VoIP call ultimately. People will be buying broadband and video from the same provider.
Since ‘96, ultimately buying AT&T, and bringing the wireless company into it; we’re saying we’ll take $9 billion of run rate costs out of this business. It is possible because the businesses grew up because of the regulatory framework…regulators did not want all that together. The rules are coming down. The cost structure fundamentally changes; approach to the market changes. Service gets cheaper, experience gets better.
Measuring success: close to a quarter of a million devices on the network. How many devices are hanging on this network is a measure of success.
Is this a commodity business? It has always been a commodity business. We move ones and zeros around the world, better than anyone else does it. It takes $18.5 billion of capital to do that every year…I want it to be lower. You have to have scale to make money in a commodity business. Scale is critical.
Who is important partner for you? Carlos Slim at America Movil. IBM. Obviously, Apple is a critical partner. And down from there.
New competitors? Google is a new one. Competitors change over time.
On Verizon opening the network: I think it was overblown. Go back in time, the wireline network became open, the broadband network, the same thing. We are one of the most open networks in the world. All the handsets we sell are Java equipped. If you want to buy handset without a contract, fine, just pay retail price for the handset. We feel like we are a very open network, and will continue to be.
End of the subsidized handset? Interestingly enough, we are in the business to make money. We have this model of subsidized handsets…the iPhone is the first shot across the bow. Make a device you can sell for a profit, and you can have the deal.
On the model with Apple: Won’t disclose how much they share with Apple in terms of revenue.
On the iPhone: told me that the way the industry has gone at the handset business has been so poorly done. Here is company with software intensive handset, and the quality is the best device we had. Not just going to just change the game in usability, also will change game in terms of quality.
On Google handset alliance. Six operating systems out today. Blackberry, Microsoft, Symbian, Palm. Here is new entrant that has never made an operating system. Will be interesting to see if they can develop a world-class operating system. If our customers want the phone, great. Our customers don’t say I want that operating system, they said they want a particular phone.
What does this do to the price of handsets? For wired phone, it costs $4.99. Price points of wireless handsets have to come down.
Quentin is asking him about U-verse. What is the vision: Stephenson said they had fundamental decision to make. Choice: proven technology, the cable model. Or IP model. Traditional cable model, all chasing this idea of biggest pipe into the house you possibly could. In cable model, sending 300-400 channels down the pipe at one time. IP model is just send the channel you want. So first thing was getting to Internet Protocol, suddenly you can get away with smaller pipe. Did that on TV; broadband is all IP; putting 3G throughout our wireless network. Once content in IP format, you can delivery anywhere you want as long as you have an IP device.
U-verse will be at 8 million customers by end of this year. Turning on one market every month. Turned on Austin this week. Dropped number from 18 million to 17 million by end of 2008.
Will Verizon have stronger network with fiber to the home? They wanted the big pipe into the house, we wanted IP. You get their quicker, with broader coverage. We have 30 million homes in our footprint; we want to offer it to most of them.
Will pricing come down? Well, competition has that effect. My prediction, selling TV service out of mobility stores here. Average household spend $127 a month on wireless. With broadband that becomes $200.
What else to buy or build? Voice minutes still growing at 10% every year. Mostly wireless. Broadband growing 40% consumer, 60% business. What do you need? The bandwidth glut of 1990s is gone. We are not completely obsoleting our IP backbone network.
On the 700 MHz auction: It is beach front property. It doesn’t get any better than this. (They will be bidding.)
Biggest threats: regulation. Mark my words, I will never ask the government to come regulate our business. If I had my wish, the government would just stay our of our business…Keep the government out of this, and investment will follow….it ought to be a mindset of deregulation in the industry…let the markets work.
Net Neutrality: It’s regulation.
National security and turning over phone records to the government: we are very limited on what we can talk about in these kinds of matters. Is agency entitled to the information, do they have the authority, whether a court order, or a warrant.
The 3g iPhone, when? You will have it next year, he says. "