MR. STANKEY: Thanks, David. It’s good to be here and spend some of my Friday afternoon with you.
MR. IGNATIUS: I want to begin with an issue that you’ve thought a lot about. It’s one of the most painful realities of the pandemic that we’re living through, and that’s the inequality in access to the broadband technology that makes it possible for kids to learn at home, for parents to work from home. You’ve laid out in the last several months a plan for trying to bring the entire country the kind of broadband internet access that would make it possible for people to connect better. Tell us about that plan and the basic elements of it.
MR. STANKEY: Sure. And you know, first I’d say that it’s not all bad news coming out of the pandemic. I think if we step back and we think about what occurred here in the United States where, you know, some day in March immediately everybody goes home and starts trying to conduct business from their residence and, you know, we see spikes in traffic of 30-35 percent and a shift from urban centers out to suburban centers, you know, the network has performed remarkably well in that regard and has allowed our economy to carry forward and do the right things. And I think much of that is based on what has been astute pro-investment strategies in the United States.
But the reality is, as you just alluded to, that those strategies, while dealing a lot for, you know, the core part of our population has left segments of it behind. So, what we’ve talked about is the need to look at, you know, three key areas to get the policy right moving forward to address the gap. As, you know, you said 21 million not connected homes, maybe as high as 24 million, depending on what data you look at. Probably 17 million of those homes have students in them on an active basis. We’ve said we should focus on accessibility, affordability, and sustainability.
On the accessibility side, we think that as Congress has suggested should be done, really detailed maps of what the current state of infrastructure in the United States need to be created. So, a funding mechanism to finish that work that Congress has ordered so we know what problem we need to solve, and that’s particularly important in rural America.
Then second, to drive the level of accessibility that’s necessary, which is primarily a rural issue, although there’s certain pockets in urban communities that truly do have an accessibility problem, would be to make sure that we put the right investments–policy in place that encourage, where we can, private industry to go in with some degree of subsidy to want to invest to solve that problem. And there could be some smart policy built that allows for that to happen in a public-private partnership. And there still may be even a couple of small areas where it has to be strictly public money that solves the problem, but that’s probably a very small percentage of the overall population.
On the affordability side, there’s really probably two key things to look at. One is modernizing the universal access policies in this country. What do I mean by that? We had an overt policy in the United States to ensure that every U.S. household could have voice telephone service, and that modernized a little bit when wireless technology came out, but we’ve largely achieved that. You know, 97, 98 1/2 percent of U.S. households can use a telephone every day.
But as we all know, making voice calls is not the basis of society moving forward. And we should think about overt policies, just like we did for universal access for voice, where there were subsidies that came in that allowed for people to get access to voice service, for the internet. And we want universal access to the internet. And doing that in an overt way with the right policies to subsidize that is critical, and part of that is to think about a base of how we get that support that is broad. We’re only funding universal access today through a very archaic and old way of doing it. It’s an excise tax on voice fixed-line telephone service. And you know, that’s a–that’s a very small base that continues to shrink. And if we want to expand that base, we need to think about who are all the great economic participants in the internet today that should provide a base of services that we think about drawing support from.
And then finally, let’s make this sustainable. So, replace that excise tax I talked about with something that’s more broad. And then secondly, let’s make sure we maintain those pro-investment policies where we can so that there’s private money coming in and sustaining this in a way where markets do it on a consistent fashion and we’re not dependent on government routine and fiat to make sure that we maintain a state-of-the-art broadband infrastructure in this country.
MR. IGNATIUS: So, John, that’s a big idea, that in the future, if I understand you, we ought to think about access to broadband internet the way we think about access to water or electricity. It’s just a basic, almost a right that we have. I’m curious whether you’ve begun conversations with the Biden transition team, whether you have active conversations going on, on Capitol Hill, to think about exactly how to do this, and more specifically, as you said, how to pay for it.
MR. STANKEY: So absolutely. I mean, we believe this is a topical issue today because of the pandemic. It’s probably even more topical with a Biden transition because we know from a policy perspective, while I think everybody supports the notion that there should be broadband access, clearly, you know, from a platform perspective there’s a lot of energy behind it with the incoming Biden administration. You know, naturally this is a place where we know a lot of the players in the space. They don’t disappear. They just tend to go into different jobs over time. And we’ve been actively, over the period of the last several months, having those conversations and sharing those ideas.
And frankly, inside of our company, you know, as I looked at our business, I think there’s certain datasets that, you know, we needed to update and we needed to look at that could make sure that this debate and the thought process on how we solve this is informed and based on the facts of what’s occurring today in the environment. And so, we’ve been doing a lot of work reaggregating information on what are traffic patterns on our network, what consumption looks like, what services are people using in their homes that are most critical, what’s the nature of downstream bandwidth requirements versus upstream.
And all this is being done for the basis of having an informed and intelligent debate of how to get the policy right, because I do not believe that it’s in the taxpayer’s best interest nor those of us that are citizens of the United States to just make some broad sweeping statements like everybody should be connected to the internet by fiber. You know, while that sounds really good. The reality is, is I think we would strand a lot of investment and a lot of money to get less return than if we were smarter about being open to all forms of technology to serve problems and resolve this issue and make sure that we’re investing just the right amount to get the proper amount of bandwidth to get the most economic and social value back from them.
So, we’ve been working really hard to bring that fact base forward and start to inform people about engineering solutions so that as these policy options show up, maybe opportunistically in some relief bills associated with the COVID pandemic, that that can be a better and more informed process.
MR. IGNATIUS: And just to be clear, it’s your sense, based on the conversations you’ve had, that the incoming Biden administration will support this idea essentially of universal broadband access.
MR. STANKEY: Well, I think there’s certainly a goal that everybody wants to see that happen. I don’t believe that there’s what I would call a unanimous view of what the right way is to accomplish it or achieve it. There clearly are different policy points of view of what is appropriate, you know, ranging from some that believe it’s only a problem that the government can solve and, you know, maybe others that are outside the Democratic Party that might suggest that it should be entirely 100 percent a free market approach. And I would tell you my point of view, as being a practitioner in this industry, I think the answer, frankly, is somewhere in the middle.
MR. IGNATIUS: Let’s talk about another political issue that’s ahead for your industry broadly defined, and that’s the question of government regulation of big technology. There’s been a lot of discussion, certainly through the election season, about whether there should be greater regulation on social media platforms. You’re not in that business, but you’re certainly linked to it. What’s your feeling about this issue of regulation of a technology industry that’s flourished with limited regulation, but people now think maybe it’s time for a little bit more?
MR. STANKEY: Well, yeah. I think they’ve flourished. I think they’ve gone beyond flourishing into the state of dominance in the portion of economic value that they create in the country. And what they represent is, you know, unparalleled, and I’m not sure that that’s healthy for our economy overall and for consumers over the long haul. And if I step back and I think about the Section 230 debate which is, you know, are social media platforms something other than, you know, a–just a technology solution? Are they really operating as media companies? And I would suggest, based on the dynamics that we’re seeing and what we’re experiencing in society today, that we know that there is, you know, an aggressive stance being taken to try to moderate what gets posted on these platforms because of the social impacts it has, they look like media companies to me.
And you know, if I think about that dynamic of a media company and practices that we’ve had in our society for a long period of time, it’s not a foreign notion that we should have restrictions on the clout of any one media company. We–if you go back to how many broadcast stations or newspapers any one company was allowed to own in the United States for decades, we’ve always thought it was important to have many voices in the editorial process so that we’d ensure that somebody who maybe didn’t manage their business effectively or was ill-intentioned didn’t ultimately dominate the public discourse or inappropriately steer the free expression of ideas and dominate that.
And you know, the reality here is, if this is where people are going to get their information today, through these technology platforms and social media platforms, you know, why should we not be thinking about them in a concentration of voice dynamic as we have for decades with typical media companies? And I believe we are at that crossroads to have to confront this and deal with this for sustaining many of our institutions in this society and ensuring that we truly have, you know, free and constructive free speech.
MR. IGNATIUS: And what about the basic antitrust issue? Your industry of telecommunications really began to modernize and grow in ways no one could have imagined when the old AT&T monopoly was broken up. It ended up having an enormous liberating, disruptive force. Do you think some of our tech companies now are just too big the way the Justice Department argued that Microsoft was too big a generation ago?
MR. STANKEY: I think, you know, I don’t pretend to be an anti-trust expert. But as I said earlier, if you step back and just look at the percentage of growth in the economy and wealth creation that’s occurring in the hands of, you know, these small number of companies, you can’t possibly draw parallels to other instances back in our history where there was just too much economic concentration, and that we ultimately concluded that that wasn’t healthy for our economy and for consumers. And I think our history would suggest, when those moves have been made, for example, to the company that I am part of or the, you know, portion of the company that I’m part of, that there was a tremendous amount of innovation, reinvestment and new businesses that came in as these policies were applied. And I have to believe there are segments of our economy that have developed that way over the last 10 years.
MR. IGNATIUS: So, I–this is going to be a huge issue over the next several years. I’m glad to get it started with you. I hope we’ll talk more about it. I want to talk about a part of your business that a lot of our viewers probably don’t associate with AT&T, and that’s the movie business. AT&T owns Time Warner, now Warner Media. And you made a big announcement yesterday that you had decided that next year’s major releases–Dune, other films that people have been looking forward to–would not just be in theaters but would also be streamed on HBO Max, your new streaming service. The reaction to this has been extraordinary, because a lot of people think it’s a turning point, obviously related to our COVID pandemic. But the people worry that the age of the movie theater is ending. Certainly, today the stocks of movie theater companies got pounded. Tell us a little bit about the decision, why you made it, and what you think is ahead in this streaming content part of your business.
MR. STANKEY: Well, you know, whether or not investors are reacting the appropriate way to what is going to happen in the future–and probably I’d be in a different line of work if I was an expert on that particular aspect of it–but, look, I think this is an appropriate decision for the moment we’re in. And in fact, if businesses aren’t examining the moment we’re in, coming out of this pandemic and the circumstances that we all find ourselves in right now and not just their business models, I think they threaten their longevity and sustainability. And as we’ve seen not just in our industry but others, you know, every one of these decisions to try to react to the circumstances tends to have some other, you know, counterreaction to it. And this would be one of those cases.
You know, hey, we have a bunch of movies that are ready to go, and they’ve been sitting on the shelf. And we’ve even tested a couple of different concepts, you know, what we did with Tenet in trying to introduce it into theaters and bring it out on a progressive roll throughout geographies in different parts of the globe, you know, we’ve tested some different models. We’ve watched some models that some of our competitors have used in bringing content directly to consumers over streaming or over incremental pay-per-view models. And you know, we’ve stepped back and said we don’t think leaving all these movies on the shelf that are ready to go and just pushing them until people feel safe to go back into theaters is the right answer. One is, it’s not the right answer for theaters because it’s denying them some content that potentially could throw them a lifeline to get some business back into their facilities almost immediately, as soon as Christmas Day this year. But two, you know, when we think about the dynamic of what’s happening with everybody who’s making good theatrical content right now, it’s kind of creating this big bubble that’s pushing. And so, you know, once we see that the consumer is ready to come back into a theater, if all of a sudden everybody releases their inventory, then that’s not going to be a good thing either, because, you know, we know that there’s only a certain amount of theater-going that the population is going to do at any one time.
And so, part of this is just a belief that, you know, we’re going to have some really good content here that’s spoiling and can be sued for other purposes, and that’s in this case to advance our streaming service. We can give customers a choice, which is to stay at home if that’s where they’re most comfortable watching it. Or if they really want to go and experience that great dynamic of seeing something on a big screen and they’re comfortable doing that, they can do that.
Our data would suggest that large numbers of customers are not going to feel comfortable, even if they’re movie lovers, doing that any time in the middle part of this year and that we’re going to be well into the late part of next year before we see infection rates and the population as a whole gaining the confidence to be out more dynamically in society and return to doing things like going to a theater to sit down for a two-hour movie. And so, we just think this is appropriate for this moment in time, in this circumstance, and we’re lucky as a business to have invested in a streaming platform where we can have the option of doing both and letting consumers choose what they want to do.
MR. IGNATIUS: So, the obvious question is, once you’ve made this transition, offering your top feature film entertainment on a streaming service, whether you’ll ever be able to go back. So often in this series, John, we’ve had chief executives say we really are at a new normal. People have learned how to do things differently. Our business will never be exactly the way it was. Is–do you suspect that will be true for Warner Media, that you’ll now be streaming your best content, for those who want it that way, pretty much indefinitely?
MR. STANKEY: Well, I think that was the case before yesterday. I think that, you know, in March we unleashed a new normal in society. And there’s certainly dramatic changes in our business on what the new normal is, whether it was the network part of the business and how we took traffic out of urban centers and move it out to people’s homes that we’ll probably sustain through the pandemic and it causes us to think differently about engineering things, to what’s happened to television subscription, how people engage with linear content on TV. You know, those–that horse left the barn. And I don’t think any of us are going to change that dynamic.
Some of our best content, you know, if you honestly look at it, I think some consumers would tell you they view some of our scripted series as being our best content, not necessarily the two-hour theatrical releases they do. They get more pleasure and enjoyment out of the stories and the longevity of the stories and their ability to pick when they watch it at home. So far be it from us to decide what the consumer choice is going to be and where they want to land on this. I think movie theaters continue to have a role moving forward in society. I think they’re an experience for the right kind of content that people are going to want to continue to have. But, look, storytelling on scripted content is getting better and better and better. Experiences of watching that content at home in comfortable surroundings with large screens and people having the convenience of watching it when they want to watch it is getting better and better and better.
So, there’s no question that we’re going to see consumer behavior shifts, and those are going to sustain themselves. But I don’t believe that, you know, yesterday was the day that was the end. I just believe it’s another day in a string of data points that’s heading in particular directions.
MR. IGNATIUS: Let’s talk about another transformative event, and that’s the arrival of so-called 5G telecommunications technology. We so often hear talk about 5G. I’d be interested in your candid assessment of whether this is going to change everything, whether it’s a game-changer in how we receive services. And secondly, how soon it’s really going to be available in the United States for consumers, for your customers in a significant way.
MR. STANKEY: Well, you know, I think it’s a really good question, David, and I do think it’s a significant innovation enabler. And I think it’s actually–in many regards, it’s available today in that factor. If you think about what’s happened, I think we’ve become so accustomed to great performance in our wireless networks, the facts–the fact that we have in some cases doubled or tripled the throughput and the speed on a network, you know, it’s kind of a yawn in some cases. I guess it the question of is 125 megabits of throughput so much more impressive than 50. And you know, that dynamic to a consumer may not seem like a lot. But you know, from a technical perspective, as little as a couple years ago that would have been viewed as, you know, just a monumental shift in change.
But there’s other things that come other than just the speed increases that we’re starting to see happen broadly and pervasively around the network. We’re–as we start to see these networks mature and get more robust moving in the next year and we start to see new devices emerge that can take advantage of them, these dynamics of low latency–you know, how much–how long it takes for a session to move from a device out to the actual processing point and back to the user–will have a big impact. We start thinking about the dynamic of how we can have pervasive states of many, many devices connected in a very small area will open up things. So you’re going to now start to see the innovators coming on top of that and open up their software development and app stores to begin building the consumer applications and the business applications that take advantage of these kind of characteristics that traditionally have not been broadly available outside of a fixed broadband connection or inside of a very, very robust wi-fi local area network. And now when you think about that happening broadly in society, it opens up all kinds of new applications.
And just like when Steve Jobs, you know, opened up the app store and you ask him, you know, where did he think the money was going to come from, from the applications, and he said, I have no idea. I couldn’t have picked which ones were going to ultimately emerge and development money for the business moving forward, but it happened. We are going to see that same thing happen with 5G.
MR. IGNATIUS: The Trump administration, with support from a lot of Democrats, has argued that the leading global supplier of 5G technology, the Chinese company Huawei, poses a national security threat to the United States and has designated Huawei on the so-called entity list, blocking it from receiving some U.S. origin technology. Based on what you know, John, do you think that Huawei poses a national security threat to the United States?
MR. STANKEY: You know, I think as a company we’ve had concerns about the dynamic of Chinese supply in our infrastructure for a lengthy period of time, and it’s no accident that there is no Chinese infrastructure from Huawei any place in AT&T network in the United States. And you know, that was a–as an individual that at one point in my career actually had the direct decision-making responsibility for that and ran the network and built the architectures around it, I can assure you that I had many attractive business propositions from a price value perspective in front of me that would have suggested that that might be a direction we should go.
But because of the more holistic concerns around our national interests, the interests, frankly, of our customers–and oftentimes the U.S. government is one of our customers, but we have really important companies that are concerned about their propriety of their data and information–we’ve always made decisions thinking about building secure networks that have sustainability and longevity and ensuring that there’s a robust supply base globally that are investing in building and we don’t only have one vendor as a choice to go to. Because we don’t think that’s a good thing for innovation.
So, you know, we clearly had long-term concerns, and our behavior and our approach to running our business even without the government telling us to do has always been to build those secure networks and make those informed and right decisions around what we do.
And so, if the government chooses to get more involved in this, add an entity to a particular list, it really doesn’t change our practice. But I certainly understand why they may take a closer eye to it, especially given what I just described in the capabilities of these networks moving forward and how important they are for innovation in moving, you know, new discovery forward in this country. And as a result of that, you know, I kind of get why the governments may be a little bit more involved now.
MR. IGNATIUS: Let’s talk–and this may be the last broad subject–about the relationship between AT&T and the U.S. government. Because of its old monopoly status, AT&T had a special relationship with government, government agencies. In the aftermath of the Edward Snowden revelations, your company, like every tech and telecommunications company, did a lot of soul-searching about what the proper relationships were. I’d be interested in your talking a little bit about how you think of that today at AT&T, whether you have an ongoing dialogue with government security agencies, whether that’s productive, and also how your employees feel about AT&T’s working with the government, working with the Defense Department. As you know, at Google, that ended up becoming a real firestorm, where Google engineers were protesting Project Maven, as it was called, that was providing software for the Pentagon. How do those issues look to you and your employees now in 2020?
MR. STANKEY: Well, first, I’d step back and say we have a long history of not only working with the U.S. government but law enforcement agencies all over the United States and all over the world. You know, our operations in Europe are governed by particular sovereign entities that we’re involved with, and we have to comply there. But in the United States, a country that we’re domiciled in as a company, you know, we pay very careful attention to what’s going on, and we comply with the law. And the law’s pretty specific, and we get thousands of requests every day of what we need to do to make sure that we’re consistently applying the law, and we trust that the government agencies we’re responsible to are operating consistent with that law and producing information to us that justifies our involvement and participation with them in a way that’s straightforward, accurate, and is consistent with the law. And we do that, and we do that at scale every day, and we will continue to comply with the law in the United States and the other countries that we operate in that sometimes have different constructs than what we apply in the U.S. We’ve always said that that activity should be transparent. In fact, we post publicly how many of those requests we get from the U.S. government and how we’re processing them so everybody knows what’s going on around that dynamic, that the government is clear around what the confines of those laws are and how they asked for those warrants that’s they’re clear and that we comply with that. We have compliance programs to ensure we’re doing that. And so, we will continue to do that.
I think there’s a policy issue that the U.S. has to deal with, which is, should there be certain companies that are exempted from that responsibility, or can they hide behind things like we’ll just encrypt all of our data and not comply? That’s a broader social policy issue that we’ve advocated that really Congress should take up and debate and decide what’s best for the United States as a whole, but then make sure it’s uniformly applied to people who hold that data. And there–you know, certainly as a company we have a lot of information given what we do as a business, but it’s nowhere near the data and information that many other companies that operate within the United States actually have.
So, you know, I would tell you that’s kind of how I view it going forward, and we’re going to continue to do what we need to do to support our country. We believe in what we do here. We believe that we have the right system of governance. We have belief in the U.S. government, and we will continue to support the U.S. government, because we think this is the right institution and society that we want to support moving forward in, and I think most of our employees understand that. And as long as we’re complying with the law, feel pretty good about that.
MR. IGNATIUS: Again, that’s a big question, part of a debate that I hope we’ll continue to have. Unfortunately, that’s all the time that we have. I want to thank AT&T’s chief executive, John Stankey, for joining us for a really interesting discussion of all the issues ahead in his industry. Thank you, John, for being with us.
MR. STANKEY: Thanks for having me in, David. I appreciate it. Have a good weekend.
MR. IGNATIUS: You too. Folks, join us next week for a great lineup, including Accenture Chief Executive Julie Sweet, former Democratic candidate for president Tom Steyer, and world-renowned economist Mariana Mazzucato. Once again, I’m David Ignatius. On behalf of Washington Post Live, thanks so much.