International CTIA Wireless 2009
Ivan G. Seidenberg
Las Vegas, NV
April 1, 2009
Introduction by Steve Largent, President and CEO of CTIA.
Thank you, Steve, and good morning, everybody. It’s great to be here at CTIA and feel the energy fueling this convention and this industry. As a matter of fact, I wish everybody in
You grow by investing in infrastructure that drives the global economy forward.
You grow by innovating around new products, services and applications that expand the market and excite customers.
Most important, you grow by doing what CTIA companies do best: focusing on customers, expanding our value proposition, and enmeshing wireless ever more deeply into the fabric of customers’ lives.
As the theme of this conference indicates, the word “mobile” doesn’t just describe a technology any more … it describes a way of life. Wireless devices have become the world’s most ubiquitous phones and computers and a third screen for video and multimedia. Three-quarters of the world’s digital messages in January were sent over a mobile device, making wireless the glue that binds our texting and twittering society together. Going forward, the next wave of innovation will embed mobile connections into the core of our lives, making wireless connectivity part of everything we touch.
Everybody in this room believes in this vision. Here in the
The result is a vibrant, $800-billion-dollar global industry -- full of new products, new applications and new entrants. Customer satisfaction is on the rise. Innovation and competition are thriving. And a new business model is emerging that will make the next 25 years of wireless growth every bit as dynamic as the first 25 years – an outcome that will be hugely important for our country as well as our industry.
***
To get us in the right mind-set about the expanding universe for wireless, I’m going to start by giving you my “Cliff’s Notes” history of the communications business. Ready?
In the beginning was the phone.
It worked by connecting one place to another place. The way we measured growth in the traditional phone business was to count the number of households and businesses connected to the network, which put our addressable market in the millions. Under the traditional telephone model, we grew by adding lines. Today, we grow by adding value – specifically, by amping up the power and speed of the landline connection to deliver broadband, video and IP services. We’re big believers in broadband, and we’ve invested in that belief to transform the old analog model and re-invent our landline business for the digital era.
Next came the wireless phone. Instead of connecting places, the mobile phone connects people. With wireless, our universe expands to include the whole population … hundreds of millions here in the
Here’s one way to think about it. According to the latest Nielsen reports, the average American spends a little over 5 hours a day watching television and another hour a day surfing the Internet. On the other hand,
Less than half an hour on the wireless side … more than six hours on the TV and Internet side.
If we can get even a modest amount of that usage to migrate to mobile, we have lots of headroom to grow.
We know the demand for mobile Internet and video services is there. Generally, data already accounts for more than one-quarter of our service revenues. A recent survey says that more than 70 percent of wireless users expect to increase their use of mobile devices over the next couple of years for such things as Internet access, photo sharing, music and social networking. Sales of smart phones are growing by 30 percent a year, and the Consumer Electronics Association estimates they’ll account for one of every three handset sales by 2011. And just think what will happen when we start using smart phones for the really big things like education, energy conservation and health care.
Now wireless is about to enter a new era, where wireless will connect everything: not just people-to-people, but also people-to-machine and machine-to-machine. In this model, there is literally no limit on the number of connections that can be part of the mobile grid: cars, appliances, buildings, roads, sensors, medical monitors, someday even inventories on supermarket shelves … all of these have the potential to become inherently intelligent, perpetually connected nodes on the mobile web.
Why is this significant? Because it challenges the conventional wisdom about the growth potential of the wireless industry.
Call it the “100 percent” ceiling – the idea that 100 percent penetration of the population is the upper limit of growth for an industry. Countries like
But even that’s too limiting a view of the future; if we think in terms of the complex web of wireless connectivity that next-generation technology will bring about, then the opportunity to explode past the 100 percent ceiling to 300 percent, 400 percent, or 500 percent is not only possible … it’s probable.
Our industry has witnessed this dynamic relationship between bandwidth and demand before. For example, in 2002, we began deploying a 2G network. Since then, data traffic on the 2G network has increased by 300 percent. When we introduced 3G in 2004, we increased wireless data speeds by a factor of 10 … and saw data traffic multiply by more than 10 times. As we make the move to 4G, network speeds will increase by another 8-10 times, which we think will drive another exponential increase in data. In fact, our Verizon Wireless visionaries tell me that we can expect orders of magnitude increases in traffic on our 4G network in just the next couple of years.
***
That’s the growth dynamic that’s driving our technology plans, and that’s the new industry model we’re building our future on. At Verizon, we have several initiatives under way to help take our industry to the next level of growth.
First, we will deploy fourth-generation technology based on the Long-term Evolution, or LTE, standard throughout our wireless infrastructure. We think LTE has several advantages that will speed the transition to a truly globalized mobile broadband experience. It will deliver up to 10 times the capacity of today’s technology, which will open the possibilities for streaming video, videoconferencing, 3-D maps and graphics, and more. It’s quickly emerging as the global standard: according to one trade group, some 26 network operators around the world have committed to the LTE standard, which means we will be able to quickly amass the scale developers need to design products and services for LTE customers.
The speed, reliability and capacity of 4G networks will take today’s online experiences to a whole new level. Social networking will be enhanced by location services and 3-D graphics. TVs, PCs and mobile devices will be able to interact, share applications and move content seamlessly among different environments. And wireless will become so deeply embedded into the fabric of our world that it’ll seem less like a “product” and more like an extension of our thoughts and lives.
We’re moving fast to get to 4G. We’ve selected the key infrastructure partners who will help us build the LTE network. Working with Vodafone, we’ve completed the market trials and standards work. We will begin deployment later this year with a few commercially-ready markets and will roll it out to 25 or 30 markets in 2010, with the expectation of faster roll-out thereafter.
Of course, infrastructure is just one piece of the puzzle. It’s the combination of devices, applications and network capabilities that will really cause this market to take off. No single company – whether you’re a network provider, a manufacturer, a software company or anybody else – will be able to envision, let alone provide every aspect of this whole 4G ecosystem on its own. That’s why we’re working with partners, entrepreneurs and inventors from across the industry to create the next-generation products and services that will release the full power and potential of our network for customers.
At the end of 2007, we announced our Open Development program – a process for certifying new wireless devices, software and applications to run on our networks. By July of ‘08, the first device was certified and ready to go on our network: an inventory-management device that lets suppliers know when their materials get too low. About a month ago, we certified a “smart grid” technology that utilities can use to read meters and manage energy more efficiently. And most recently, we approved our first health-care device: a wireless tablet that nurses, doctors and lab technicians can use as a portable medical chart for accessing patient records, entering vital signs and managing medicines – all at the patient’s bedside.
All in all, we’ve certified 36 devices through this new commercial model, with more in the pipeline. We expect this process to really rev up as we deploy 4G, which we see as the on-ramp for all the innovation that, up to now, has been focused on the desktop but which will now be able to migrate to the wireless environment.
In another initiative designed to fill up the LTE pipeline, we plan to launch the
We’re also joining with some of the world’s biggest mobile operators in creating a global community for innovation on the applications side. About a year ago, Vodafone, SoftBank and China Mobile formed a Joint Innovation Laboratory to speed the development of mobile widgets and other content. Verizon plans to join in that effort. Together, our companies represent 1 billion customers worldwide. That critical mass of customers will accelerate this market to the tipping point and make these useful applications widely available across any device, any handset, anywhere around the world.
***
This is a tremendously fertile moment in the life of the wireless industry. You just have to walk around the convention floor here at CTIA to see the fantastic competitive drive that’s pushing the technology forward and creating new choices for customers.
But as you know, we can have the best networks, the best products, and the best intentions in the world and still get derailed by issues that put stones in our path and trip us up on our race to the future. We can’t afford … and frankly, our country can’t afford … to slow down our growth momentum. That’s why it’s critical for everyone who touches this industry to come together, focus on some common issues, and rally around some creative solutions that will create value for customers and opportunity across the whole industry.
The first challenge has to do with compatibility and standards. If you think about the PC world, the explosion of growth and innovation happened when the computer industry coalesced around a handful of operating systems, which standardized the environment for application development. The market is pressing the wireless industry toward openness and compatibility as well. LTE’s global standards are a big step in that direction, but we still have lots of different operating systems competing for supremacy. The sooner we come together around an open, interoperable environment for development, the faster we’ll innovate and the sooner we’ll provide the seamless interface across all technology platforms that customers are looking for.
We also have to ensure that we maintain the pro-investment, competitive environment that has been so vital to the growth of this industry. I’m sure all of us understand the pressures that policy-makers face in an era of big deficits and slow growth. But we need to be very careful that government does not to try to fix short-term needs at the expense of long-term growth, which happens every time it raises taxes or imposes new regulations. I’ll mention just two cases in point:
-
Taxes on wireless services in the period from 2003-2007 rose four times faster than for other goods and services. Five states have effective tax rates that exceed 15 percent. Our industry needs to unite behind the Cell Phone Tax Moratorium that would give us a 5-year period to work with state and federal authorities on a solution to these excessive and discriminatory rates.
-
We also need to remove roadblocks that stand in the way of capital investment. For example, everybody from the White House to state capitols to local authorities wants to speed the deployment of broadband to rural areas. As we know, wireless can be a big part of that effort. For that to happen, we need to build more cell towers and add new antennas – a process that can often take more than a year due to local zoning delays. The CTIA has asked the FCC to expedite this process by imposing a reasonable “shot clock” for getting these approvals. Our industry can be part of the solution to bringing the wonder of wireless broadband to communities across
Wireless consumers have benefited from federal policies that have promoted competition in the wireless industry. Continuing to build on that national framework for wireless regulation is good for consumers and the industry. Having said that, the only way we earn the regulatory freedom we need to run our businesses is by maintaining the relentless customer focus that has historically characterized the wireless industry.
We’ve done a good job with this in recent years. Customer satisfaction with wireless is on the rise, largely because our industry has worked diligently to improve call quality, customer choice, contract language and so forth. Even Consumer Reports – one of our harshest critics for many years – said recently that wireless customer satisfaction is “surging.” That’s a huge turnaround on the part of Consumers Union and a great acknowledgement of the good things happening in our industry.
But when it comes to meeting customer needs, there’s always more work to do.
Going forward, we need to continue to be even clearer and more transparent when it comes to disclosure of our practices, products and policies. We need to be even more vigilant about protecting the privacy of customer information in an increasingly interconnected world. We need to work even harder to ensure that our products and services are making customers’ digital lives more secure. And we need to continue to show that competitive companies duking it out in the marketplace produce satisfied customers and a healthy, innovative industry.
Finally, it’s time for us to use the technological resources of the wireless industry to ensure our national security and public safety by creating a 21st-century communications system for first-responders. The key is to give public safety agencies the spectrum they need to meet their current and future needs – and, eight years out from 9/11, we cannot afford to wade through another round of auctions and redundant network construction to get there. Fortunately, there’s another answer: assigning the D-block spectrum directly to state and local public safety agencies, then letting them work with local network providers to create the robust, interoperable system this country needs.
It’s time we came together and saw this as the national security imperative it is.
***
The sooner the leaders of this industry come together to address these challenges and solve problems for customers, the sooner we’ll reach the tipping point that will unleash the next wave of wireless growth. The benefits – for our industry and for our society – will be profound.
How big are we talking? The latest study done for CTIA says the productivity improvements over the next ten years just from the wireless services that exist today will amount to $860 billion.
I’m confident that we will prove that estimate to be conservative.
The revolutionary wireless services on the horizon will be hugely important in the lives of our customers and communities. As we harness the full innovative power of our industry, we will provide a brand new set of tools for addressing the major social issues of our time:
I do not mean to minimize the challenges we face – as an industry or a country – as we try to get our economy going again. But we all know that wireless innovation has been a foundation of our country’s prosperity for the last 25 years, and I’m confident that this great and vibrant industry will continue to be a leader as we put our economy back on the path to growth.
That’s why – for all our challenges – we are a fortunate industry.
Our products and services are indispensable to our customers’ lives.
Our infrastructure is an on-ramp to innovation for the whole technology sector.
And we have only just begun to show how our technology can make our society more productive, more equitable and richer with possibility.
Verizon is proud to be part of this vigorous and vital industry, and we look forward to working with all of you to unleash our full potential for the benefit of our customers, our communities, our country and our world.
Thank you, and have a great conference.
###
