Verizon | Fairleigh Dickinson University's Media Innovation Conference

Fairleigh Dickinson University's Media Innovation Conference

Dennis Strigl
Madison, New Jersey
September 27, 2007

[Introduction by FDU President, J. Michael Adams.]

Thank you, Mike, and good morning, everybody. It’s always a thrill to come back here to FDU and support the Rothman Institute, which – as Caren Franzini just noted -- is doing so much to promote the innovation that’s driving New Jersey’s economy. As a company with over 18,000 employees in the State of New Jersey, Verizon is very proud to be part of that growth story, as we create the high-tech networks that lie at the heart of the 21st century economy.

When I began my career in communications nearly 40 years ago, I never imagined that I’d someday be speaking before a conference on “media innovation.” I was in the telephone business, after all. “Media” was something else entirely. The phenomenon that we now call “convergence” – the blending together of the communications, computer and entertainment industries – was still many years in the future.

But hindsight gives us a different view. And as we look back on it now, it’s apparent that the seeds of today’s media revolution were there from the start.

In 1969, the Department of Defense launched ARPAnet, the precursor to today’s Internet – more than 20 years before the invention of the World Wide Web, which would turn the Internet into a true mass-market medium.
In the ‘70s, we saw the first digital switch, the first use of fiber-optics and lasers in communications networks, and huge breakthroughs in the capacity of transistors and microprocessors.
In 1984, IBM introduced its very first personal computer, which weighed in at a sleek 30 pounds.
And around the same time, Motorola introduced the world’s first commercial cell phone, the DynaTAC 8000X – also known as “the brick.” It weighed about two pounds and retailed for a cool $3,995. In 1984, I was the president of the company that built the nation’s very first cellular telephone network, in Chicago. Since the official Bell System forecast was that there might be a million mobile phones in use by the year 2000, it was not at all clear that this was a great career move. Luckily, that forecast was off by about 150 M, and the wireless industry has proven to be one of the most dynamic growth engines the global economy has ever seen.

In fact, the last 25 years have been one of the great periods of invention in history. The technologies that have transformed communications -- digital, broadband and mobile -- are also the building blocks of today’s media industry. Together, they have changed how people live and made communications one of the most innovative forces in the 21st century economy. And in the process of deploying these technologies, Verizon has become a critical part of the 21st century media industry as we deliver the benefits of these innovative technologies to our customers.

This morning, I’d like to talk to you about what Verizon has done -- and is doing -- to create these new platforms and tell you where we see the digital media world headed. I’ll also share how we think about innovation, which for us means putting technology to work for customers – because at the end of the day, it’s customers who are driving the media revolution:

More than 50 percent of Americans have a broadband connection today.
About 80 percent have a wireless device.
Close to half of cell phone owners use them not just for phone calls but also for data, video and the Internet.
A typical family with a couple of kids uses some or all of a growing array of digital devices – HD TVs, laptops, game players, mobile phones, BlackBerrys and more. The heaviest users consume – and increasingly, produce – more media in one weeknight than we ever dreamt of a few short years ago.
Increasingly, customers want to be in control of their choices. Whether it’s music, video, news or voice, they expect it to be delivered anytime, anywhere, to whatever screen they have at hand.
Customers are also increasingly interested in using the media to create communities. YouTube, MySpace, Facebook, Second Life, Flickr – all of these represent the marriage of media and communications and transform the user from a passive consumer of information to an active participant in the creative process.

At Verizon, we have spent the last decade creating the platforms on which all of these new media experiences depend. We have invested billions of dollars in innovative technologies to remake our wireless, landline and Internet backbone networks and expand the range of products, applications and services we can deliver to our customers.

We were the first wireless company to deploy a national broadband network, which now reaches some 200 million people across the country. Mobile customers can now do much more than make phone calls. They now use our network to download music over the air, watch broadcast-quality TV, map their location with GPS, share photos and movies, or surf the Web.

We’re already looking ahead to the next generation of wireless technology, which will embed wireless broadband into all kinds of consumer electronics. One forecast predicts that by 2012 there will be 50 million “smart” devices in use that will have wireless capabilities built right in. So the innovation curve in wireless is just beginning.

Same is true in the landline business. You may recall that we used to call this the “phone” business. With DSL, we got into the Internet business. Now, we’re deploying a high-speed fiber-optic network all the way to customers’ homes, which puts us in the TV and multimedia business.

We started this project, called FiOS, less than three years ago. By the end of this year, we will be halfway toward our goal of reaching 18 million homes and businesses. We already have more than 1 million FiOS Internet customers and a half a million FiOS TV customers – many of them here in New Jersey. And we are working, on our own and with partners, on the applications and services that will help put all this tremendous capacity to work for customers.

The third piece of our network infrastructure is less visible to the customer, but no less important. That’s the Internet backbone network itself, on which more and more of the world’s commerce takes place. We’re building a super-high-speed network across the U.S. that will make the Internet run better and faster, and we’re connecting business customers in cities in the U.S. and around the world to an IP network that can handle all their voice, video, data and Internet traffic.

Taken together, these networks comprise a powerful delivery system for the 21st century media industry. Because of our commitment to investment in these innovative technologies, the fastest-growing piece of our revenue stream comes from products that didn’t even exist for us five years ago:

Broadband.
Video.
Text messages.
Downloads of music, videos, games and ringtones.
Private IP services for big business customers.

I read that the chief technologist of British Telecom once said that, before the digital technology revolution, the “half-life” of the average corporation – the rate at which half its products would become obsolete – was about 50 years. Now, he says, it’s five. That means companies have to continually regenerate themselves. We’re doing that at Verizon, as I just mentioned. And the great thing is, the impact of these technologies goes beyond Verizon alone.

Content providers and programmers are devising new ways to tailor their video content for delivery to the mobile screen. Software developers are developing the navigational systems and controls that will help customers manage their digital information in a secure and intuitive way. Hardware manufacturers are hard at work on the next generation of fiber-optic cables, computer chips, switches and consumer electronics gear to accommodate the tidal wave of digital traffic and make it accessible to the consumer.

That’s how innovation works: when we innovate, our partners, suppliers and even our competitors innovate, and vice versa.

With all the change that’s occurred in the media and communications industry, it would be tempting to believe that the digital revolution has already happened. I am happy to tell you that I believe the opposite is true. I believe we have only scratched the surface of how information, business processes and human relationships will be transformed by broadband, mobile and digital technologies.

At Verizon, we see three big customer trends that are shaping the future of digital media:

The first trend is the wireless web and the massive growth in applications that deliver a full-fledged multimedia experience to the mobile customer. With hundreds of millions of wireless consumers worldwide, the opportunity for growth here is huge.
The second trend is the shift to what you might call “big broadband.” Today, most customers connect to the Internet at less than 10 mbps. With fiber, we can deliver speeds of 100 mbps or more. Speeds like that will transform the broadband experience and make possible all kinds of 3-D, virtual reality, interactive content that up to now has been the stuff of Star Trek episodes. This kind of radical interactivity will further break down the barriers between industries and create new opportunities in entertainment, education, commerce, medicine and the arts.
The third opportunity – which may be the most powerful of all – is integrating all of these digital experiences for customers in ways that make their lives more manageable, more convenient, more productive and more enjoyable. Think about the range of digital devices, experiences, networks and services you juggle over the course of an average day. Multiply that by those of your family, your friends, your co-workers, your on-line communities … you basically have to be your own IT department just to schedule dinner with your kids, sometimes. Giving customers the tools to manage their digital lives – anytime, anywhere, on any device – will be one of the great business opportunities of the next decade … and beyond.

That’s where we believe the customer is leading us, which – as I said at the outset – is what we at Verizon think innovation is all about. Just to be clear, I’m not saying that innovation is a simple matter of asking the customer what he or she wants and then giving it to them. Most people – me included – probably couldn’t tell you if you did. But in our experience, if you stay close to your customers, their behavior, their buying decisions, even their frustrations can help lead you to the future.

So what does that say about managing innovation in a big company like Verizon? I’ll offer you three closing thoughts:

First, it means that innovation isn’t just something that happens in the engineering department or off in some “skunk works” somewhere. It has to be a team sport. People in innovative companies are always looking for ways to improve a process, deliver a better service, identify an unmet need, or see the world in a different way.
Second, innovation has to be customer-driven. Technology for its own sake doesn’t move an industry forward. It has to address the things that people care about, deliver real benefits and solve real problems. This is great news for those of us in the information and communications business, which is so much a part of the daily lives of our customers. If we can use our technology to make their lives better, the potential – for us and for our society – is unlimited.
Finally, innovation is just as much about people as it is technology. All the billions of dollars we’ve spent on advanced networks wouldn’t mean a thing if we didn’t have the motivated, creative and educated people to design the applications and deliver them to the marketplace. Institutions like FDU are indispensable in creating the knowledge workers with the intellect, technical know-how and imagination to create value and open new avenues for growth.

The history of the communications industry is filled with great inventions, from the telephone to the transistor to cell phones and fiber optics. But invention is one thing … putting invention to work for people is another.

That’s the power of innovation. That’s what we at Verizon come to work to do every day. And that’s what we believe will keep us in the forefront of the 21st century media industry for many years to come.

Thank you, and now I’d be glad to take your questions.