CNBC Exclusive: CNBC Transcript: Verizon CEO Hans Vestberg Speaks with CNBC’s “Squawk Box” Today
WHEN: Today, Wednesday, August 15, 2018
WHERE: CNBC’s “Squawk Box”
The following is the unofficial transcript of a CNBC EXCLUSIVE interview with new Verizon CEO Hans Vestberg on CNBC’s “Squawk Box” (M-F 6AM – 9AM) today, Wednesday, August 15th. The following is a link to video of the interview on CNBC.com:
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All references must be sourced to CNBC.
Andrew ross sorkin: verizon’s new ceo taking over the reins just two weeks ago. And joining us now for an exclusive interview on his plans for the company starting big news with 5-g: Hans Vestberg is here, Verizon new CEO, formerly Verizon chief technology officer. Thank you for being here on this morning.
Hans Vestberg: thank you.
Sorkin: we have about a million questions. But do you want to start with the 5-g news?
Vestberg: yeah. So what we announced yesterday was our fourth city that we’ll do residential broadbanding with 5-g, and that’s Indianapolis. We have already announced Los Angeles, Houston and Sacramento. And we want to launch that this half-year. So, it is exciting. We’ll be the first in the world.
Sorkin: so here’s the fundamental question of 5-g. And Joe and Becky and I were talking about this is during commerical break in the 6:00 hour, which is: do you believe that 5-g is fundamentally long-term going to up end of what may be described as the traditional cable business. Now I’m thinking of the parent of this network Comcast, Charter, effectively everybody. Does the technology of being able to effectively cut the wire up end the business — or and I’ve heard Brian Roberts say this before, you will always need the wire or at least wires under the ground. That ultimately 5-g or any wireless technology are still based on getting as close to the home as possible?
Vestberg: you’re still going to have fiber coming close to the technology that we’re sending out the radio. — but when we started to design the 5-g, we decided we’ll have a cordless world, everything is going to be wireless. Cordless. That was the whole idea with the 5g. And remember, 2g, 3g, and 4g only have speed and throughput as the two currencies. When you come to 5-g, you have eight currencies. You have latency, security, battery lifetime. You can slice the network in eight slices. That is of course giving you totally new innovation, how you can disrupt industries, change the way you’re thinking about technologies. And I think that that’s what people haven’t really understood yet, that 5-g is so different in design —
Sorkin: — it’s not just a classical phone. It is going to fixed line wireless, which could be like a cable service effectively without the wire –
Sorkin: but it’s also going to be all of the internet of things.
Vestberg: absolutely. Autonomous cars. Things that you have not thought of could be actually wireless. So that’s with 5-g–
Joe Kernen: there is no concerns of technological walls that could be hit in the development? I hear if it rains, trees, foliage and I don’t want to be in an autonomous car when it, you know, starts raining and –
Vestberg: now we’re talking about different types of spectrum.
Kernen: so it’s only a matter of time until the technology gets rid of all of these bugs? It is not a problem with the technological barrier, it’s very small — it’s what, millimeters –
Vestberg: millimeter – spectrum very high up, so of course, the distance is short. But the throughput is enormous and that’s what we are using for some of these use cases on fixed wireless.
Becky quick: can I just ask a stupid question, though?
Vestberg: no, that’s fine.
Quick: because I’ve got phones – both Verizon and at&t cell phones. I’ve got Verizon FIOS as I was telling you, at my home, beforehand.
Vestberg: lovely. Thank you.
Quick: and I love the constant connection. In my home my cell phones don’t always work. And is this definitely –
Vestberg: — the slices – differently, so of course, you’re going to get the connectivity that is 100% all of the time. That’s the — and the speed that you have never seen before wireless. That’s what we are going to do. The limitation is going to be that the 5-g is coming into the home and then Wi-Fi is spreading it in the home. And that’s the limitation basically because you have one gig coming into the house.
Sorkin: realistically, how quickly is 5-g going to emerge as a real technology, not just in a handful of cities but on a nationwide basis? And this goes to the larger debate, not just about the investment you’re going to make, it’s about the investment at&t is going make, it is about whether we ultimately think that regulators will want to approve the sprint t-mobile deal which I want to get to it in a minute.
Vestberg: oh, you are coming to that. That’s why. No, I think that first of all, we are ahead of the game. I mean, Verizon is first in the world. We are actually doing this now commercial launch on the proprietary software of 5-g. So the global software on 5-g is coming by the end of the year and then you start rolling it out and then you need devices, sheep set for IOT coming out. So you need to be a little bit understanding that it is going to take some time when you have —
Sorkin: what do you mean some time? Is that a three year project or is that a decade?
Vestberg: no, no, no. We are building everything right now. I mean we are going to have mobile phones in the hands of people in the next year that is 5-g.
Kernen: and it will cover everybody? — look, it’s — it’s — so to cover everybody and make it usable, how much money for the industry are we talking about? Just an estimate?
Vestberg: remember where I come from. I come from the manufacture of equiptment of technology. I’m fortunate the price is coming down all the time. It’s more efficient all the time. It’s going to happen the same –
Kernen: hundreds of billions of dollars.
Vestberg: no, I think it’s the same – remember the four era.
Kernen: how much did that cost?
Vestberg: no. The enormous spending that we’ll have today, we will – I’m not guiding what we’re going to do next year, but we have seen the last couple of years the very seamless investment in cap ex, even though we’re investing in lots of 5-g right now. You need fiber. You need passive equiptment. You need switches. You need a lot before you come to a radio-based station, which is a small piece of the total investment.
Sorkin: let me ask you the big question which is this sprint t-mobile proposed merger. One of the thesis around this transaction is that they can effectively catapole the industry into 5-g on a nationwide basis in a way that they would not be able to independently and that they are going to actually be able to put more pressure on you and at&t to do so as well. Is that accurate, or no?
Vestberg: first of all, I can’t comment on the acquisition of someone. I am feeling confident with our assets. We are ahead of the game. We are be the first in the world with 5-g. I think the engineering team with Verizon is fantastic so —
Sorkin: do you think they have better spectrum?
Vestberg: spectrum you know is just one piece of transporting data, identification is not there. Technology advancement is the third. The combination of the assets we have is very very well fit for the 5-g.
Sorkin: do you think that is a transaction that regulators should approve?
Vestberg: again, you should ask regulators, I am not the regulator.
Sorkin: I am assume you have a team in Washington who has commented or have been asked to comment on this transaction. What’s the official position of Verizon?
Vestberg: we are neutral. We’ll let the ones that know about this, I will let them decide. I have no opinion about it. We’ll let that go.
Sorkin: you have no opinion on that. Let me ask you a separate question. Strategically you have chosen what might be described as –
Kernen: digital verses premium.
Sorkin: — a path that focuses on being the transmission mechanism as opposed to one transmission plus content. At&t clearly has moved towards content. Comcast has moved towards content. And you know there is — people say do you want to be the dump pipe, and by the way, there more be more value to being the dump pipe, or other people say they want to actually own the content that’s on the pipe. How do you think of those two?
Vestberg: first of all dump pump is a very, very bad word because it is such a high-technology that we are talking about. This is the most high-tech we’re thinking about. So I wouldn’t go there. But we think our technology and our network is our asset. And whatever partners we can get them and we announced yesterday, partnering with Apple, YouTube. I think we have another way to deal with our assets. Our distribution is fantastic. So I think people will take different strategies. They’re not doing wrong. It’s just we believe our assets —
Kernen: so you wouldn’t shop for premium content still — that’s the criticism for Verizon is that there is not many left that, you know, now — and fox is going to go it looks like —
Sorkin: does it put you at a competitive disadvantage?
Vestberg: no. I think that we’ll compete with what assets we have in the market we have. We are going to see differentiation from different carriers. It’s not – nothing strange.
Quick: — what does that mean –
Kernen: are you envious of at&t’s asset composition?
Vestberg: as I said, I’m very happy with our assets.
Kernen: really, so you’re not.
Quick: hans –
Vestberg: I’m saying I’m happy with our –
Kernen: or you are? Alright, so that’s nice, so you can be different but not –
Vestberg: no. I think that that’s going to happen. There are so many choices when you go into 5-g. So you can play in so many different areas. We have chosen where we’re going to be with great assets. And what’s what we are happy for.
Quick: what does it mean for oath?
Vestberg: oath is definitely a very important piece of it. First of all, fantastic combination of both a.I. And m.L. That we need in the network. And then on the front end we have distribution chain of wireless and wire line and we have of course the whole oath and of course doing things in between them is important.
Quick: so it is not for sale?
Vestberg: no, it’s not for sale. I’m not sure where you got that from.
Sorkin: there has been speculation and reporting around whether the company should either do a management buyout, whether others would want it. That’s something you would not –
Vestberg: it’s nothing I have heard about. No.
Sorkin: you haven’t heard about that.
Kernen: 20% spin-off so that you can have stocks issued to employees to keep them there.
Vestberg: no, nothing I have heard about. But it is all about the rumors.
Sorkin: separately when we look back at this period right now which is the golden age for television and content of all this. Do you think you are going to look back and think that the AT&T and Comcasts of the world who bought content will have made a mistake by doing that? Meaning that five years from now they’re still going to own the content or that they’re going to decide actually these things are going to be separate. Or do you that you’re going to look around the corner and say “you know what, I wish I might have thought about that”? Obviously you have taken a position —
Vestberg: of course — we are happy — I think about that. I studied all carriers in the world for many years. I mean, it is just the moment of the industry where you are going to have different choices. So I don’t think that you say somebody is stupid because they did that or that. Everybody is going to bet on their assets how they do it best. Verizon is taking the bet with our assets which I am really happy about it. So I don’t think you’re going to look back in ten years from now – I mean, remember, ten years ago every carrier looked exactly the same — the same offering. You didn’t need a segmented carrier business. Today all carriers are doing differently. Which is not strange.
Kernen: — you don’t sound like you need a big acquisition obviously. But looking at the at&t deal ones and again going back to that and now the appeal. Do you think there is merit in the appeal of the department of justice or do you think I got it right in the first place? Do you think at&t has been unfair managing and pricing now that they have those assets?
Vestberg: no, I would not go into comment on that.
Kernen: you have to be careful because you might want to do something like that.
Vestberg: again, I think there are dibs in the market, merger acquisitions, it is not for me to have an opinion on that. I am so focused on Verizon and doing the best for Verizon and take the lead on 5-g and bring all of our assets out there. That’s my —
Kernen: you are the chief technology officer. We have 30 seconds left. Can you explain to me how 5-g works. Just quickly? Just exactly — I need the detailed explanation. Do you understand it, Sorkin? Do you understand it?
Sorkin: I think I do. But if you can give a lesson by all means.
Vestberg: 5-g is dramatically different because the speeds are 20 times higher to 50 times higher. The latency is so low so you can have autonomous cars. The through puts are so —
Kernen: I want to know how it works because it is wireless. It’s going through the ether? — is it magic?
Vestberg: no. Remember, again, I started in 2009 of 5-g in my previous –
Kernen: I think it is magic. I know there is scientific basis for it but it is amazing.
Vestberg: it is amazing that you can bring out 7 gigs on a wireless line. It’s fantastic.
Sorkin: before we let you go, just from a management perspective, how do you think you are different than Lowell McAdam?
Vestberg: I am Swedish. – no. Of course I am different. We are different backgrounds. But the great thing is that we have a common mission on where Verizon should go. We spent a lot of time together over the last 14 months but over 10 years we spent time together. So of course, I am different. I am trained in a different way. I come from a different environment but we share the same visions and same ambitions for Verizon.
Sorkin: ok. We’ll end the conversation there. Thank you for coming in.
Vestberg: thank you.
Sorkin: let’s make this a regular thing.
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