Verizon CEO Q&A

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Q&A | Verizon CEO is always looking at what's next

By Tricia Duryee
LAS VEGAS — As president and chief executive of Verizon Wireless, Denny Strigl runs the second-largest wireless carrier in the U.S.
He has been at the Bedminster, N.J., company since it was founded in April 2000 when the wireless operations of Bell Atlantic, Vodafone AirTouch and GTE were brought together. Today, his operation has 51.3 million subscribers (second to Cingular Wireless) and $32.3 billion in revenues.
Strigl, 59, sat down for an interview at the CTIA Wireless 2006 conference in Las Vegas last month. Here is an edited version of the conversation.
Q: One aspect of the wireless industry getting more attention is the mobile phone operating system. Are wireless carriers looking at adopting new operating systems to streamline the process of developing a new device?
A: Look at the Palm Treo [700w]. It has a Microsoft operating system on it. It's been a very good seller. As soon as we announced it in January, it has gone gangbusters for us.
We are open to considering new operating systems and new technologies, but we aren't disappointed with what we have at this point.
Q: Are some of the homegrown operating systems hard to support going forward?
A: We have over the last couple of year, tried to put our UI [user interface] in every one of our phones. It's a big cost savings for us and it makes it easier for customers to understand how to use a phone when they change to a new one.
Q: What do you see is the next generation of wireless technology after EV-DO, the new high-speed wireless network capable of broadband speeds?
A: It's [EV-DO] "Rev A." But I think the important thing to ask about Rev A is what advantage does it give us. It has better speed, but this is something we don't know. Of course, we have intentions of moving ahead with Rev A and we will do it quickly when it is available.
Q: What are the applications that require higher speeds?
A: Exactly, I don't know. There are many things you can think of with higher speeds; it's more large file downloads and uplinks. It's more of the same thing at higher speeds, and new applications. We have some ideas that aren't ready for primetime yet.
Q: One of the applications getting a lot of buzz in the industry is TV on the phone and all the different ways it can be broadcast to a lot of users, rather than streamed to individuals. What is Verizon Wireless doing with TV?
A: We've partnered with Qualcomm and are moving ahead with MediaFLO [a service that delivers audio and video to handsets without affecting regular voice service]. We have not made any specific timeframe announcements, but we've been testing it. In fact, Paul Jacobs [CEO of Qualcomm], as recently as two hours ago, gave me a phone. It's neat. It's a great service.
Q: As I understand it, carriers will have to move to broadcast (rather than streaming) because the current data networks will be tapped out if too many people start streaming content to the phone. Is this correct?
A: Essentially, that is correct. Broadcast services are a huge spectrum hog, and of course, we have a reputation for providing the most reliable network in the U.S., and we intend on keeping it reliable, and not to load it down with broadcast.
Q: When does adoption start to weigh down the EV-DO network?
A: I don't think it does. We have enough spectrum and capacity to take us to the end of this decade. We've said before that we will participate in the AWS [Advanced Wireless Services spectrum] auctions coming up later this year, or the 700 megahertz digital auctions in the next couple of years, but I honestly don't see any deteriorate in our current platforms.
Q: Another hot topic in the industry involves Mobile Virtual Network Operators, or MVNOs, where another company launches a different brand on top of an existing operator's network. You have Amp'd Mobile, targeting a younger generation; Sprint has several, including Virgin Mobile and Disney Mobile. What do you think of them?
A: Yes, we have Amp'd. We also have a big reseller partnership. We look at everyone of these MVNO opportunities that come down the pike, and I must tell you, for us, it has to be an MVNO that significantly differentiates from what we ourselves offer our customers.
We don't need to have an MVNO that cannibalizes our own customer base. I must tell you that 90 percent of our subscribers are retail post-paid customers, 8 percent is prepaid and 2 percent is reseller. We know that retail postpaid is the most profitable customer you can get and has the lowest churn rate, so we feel good about that.
Q: Do you think there is a lot of room for more MVNOs?
A: No, I don't. There has to be a differentiation. Frankly, I don't see a lot of them. Frankly, I wish them well, but it's also a very tough and competitive market.
Q: Could you ever add an Amp'd phone to a Verizon Wireless family plan, so the parent could use Verizon and the child could use Amp'd?
A: No. It's their own operation. It is not the Verizon Wireless name, and it is not the Verizon Wireless billing system, and it's not our customer service. The agreement we have with them is that they stand on their own.
Q: It seems that it would be hard for people to leave a family plan to another service, like Amp'd.
A: Family plans create a strong bond. That's one of the advantages of family plans. You are exactly right.
Q: Time Warner talked about how it is integrating its cable division in with Sprint to create quadruple plays — Internet, TV, phone and wireless. What are Verizon Wireless's plans?
A: We have a parent — Verizon Communications — that offers land line service and Verizon business services. I think we have a great advantage over those who don't have joint ownership with a wireline company and will not be able to do the kinds of integrated service offerings that Verizon can.
Q: Do you already offer integrated services?
A: Yes, we do have some, but we are doing a lot more. The IMS [IP Multimedia Subsystems, a technology that allows wireline and wireless to run on the same architecture] platforms are futuristic, but will provide the opportunity to do that much more. In the meantime, there's other things we can do, like providing a single bill and sharing and packaging of services.
Q: So you are currently looking at IMS?
A: Yes, it will allow the ability to use a cellphone in conjunction with land line phone. So when you are without good wireless coverage, perhaps in a stone house at the bottom of a canyon, you will be able to combine your bucket of wireless minutes to get economic advantages.
Q: But there's always talk about Verizon Wireless potentially spinning out?
A: We have no plans to spin out. The good news is we are performing really well and we are of high value to both of our owners — Verizon Communications and Vodafone. There are no plans to spin out entirely or partly.
Q: What about plans to become No. 1?
A: We are No. 1 by almost any metric.
Q: By subscribers?
A: No, not that one.
Q: Do you plan to grow by acquisition or grow internally?
A: We aren't focused on driving the most number of customers in this industry. My focus is on winning in the marketplace, by having the most reliable network. If someday we surpass the largest carrier, then so be it.
Q: Does that mean you don't have any acquisition plans?
A: I have no comment to make on that. We have combined many companies that have made up Verizon Wireless, and we feel good about our market share and leadership position.
Q: How often do you come to Seattle?
A: Probably a couple of times a year.
Q: Do you see a lot of wireless activity there?
A: It's a very good market for us. Seattle and Portland and the Pacific Northwest is very good for us. Since AT&T Wireless has left, we have done great in the Pacific Northwest. I go a couple of times a year to visit Microsoft or to visit our own regional operations there.
Q: Do you see a lot of work on the development side coming out of Seattle?
A: Do I go there for that? No, we have people who do, and I know for example, Jim Straight, who runs data operations, goes often.