John Stankey, Chief Executive Officer, AT&T
In conversation with: Diane Brady, Fortune

Fortune Global Forum 2024: AT&T CEO on the Future of Communication

Photograph by Michael O’Shea for Fortune

Conferences

Good morning, everybody. And hello, John. I'd like to see you wore the company shirt in case we forget where you're from. So that's good. II I like that. So, um and, and also I, one thing that wasn't including your buy is that you are now an op ed writer because you did a piece that appeared in fortune this morning. So thank you for that. I had to stay up late last night. We will, we will get to that. The, the thoughts. Well, let, let's start with your reaction to the election. What's now, are you feeling optimistic or um I would say probably encouraged, maybe a little circumspect. I'm encouraged by the likelihood that we're gonna probably have a little bit more of a pro investment tax approach moving forward for a company that invest $25 billion a year. That's a big deal. Um I would say I'm encouraged by maybe having regulation targeted in the right places as opposed to everywhere. Uh for headline purposes might be good circumspect. Um You know, this is a, I think one of the elements of the election was somebody who was elected because inflation was really problematic for a lot of Americans and the economic dynamics were certainly an element. And yet I, I look at some of the policies that are in place and I listen to kind of what's in front of us and you ask if that's what's got you here, you want to make sure that that isn't what gets you out when you're done. Right? And so that piece and how it squares is my circumspection. Let's then let's live the dream. Let's say I'm from the government and I'm here to help. And so what give me advice. So say I'm from the FCC and I'm here to help. What, what advice would you have in terms of the right mix of regulation going forward since we're talking about America's digital future? Yeah, I'd pick up right where I left off is let's not spend time with taxpayer money and energy on regulation that really doesn't need to be fixed. I mean, why are we worried about anybody's internet being blocked or throttled or there's plenty of choices in the market yet, we spend all these cycles on things like net neutrality. Yet we spend our energy studying the spectrum and spectrum is where the future is for this country. It's where we're going to remain competitive. It's what's necessary to bring in the next generation of technology. It's essential to put more capacity into service to keep prices down because if demand is going up 30% a year and there's no more capacity coming out. We all know supply and demand and you end up with higher prices. So a looming airwave gap will bring higher cell phone bills. I think that was the title this morning. That can certainly be one of the outcomes from this. I mean, give us a sense as to why the average person. I mean, first of all, it's something that feels almost like you can't control it. Give me a sense of what's been happening to this point with regard to, you know, this airwave gap. Oh, I, I think it very much can be controlled. I think the notion that you can't control it is just it, it's patently false. So let's go back to the front end of the first Trump administration and uh GP walks into the FCC and we were all thinking that mid band spectrum was going to be auctioned sometime in three, maybe four years. He puts his muscle behind it. He works with the executive branch. They make some hard policy decisions. They kind of make the Pentagon kind of come to the table and play and lo and behold in 18 months, we're in an auction for the largest swash of spectrum that we've had in this country. And so I do believe that somebody can walk in and change the profile of what's going on here. And I don't think it's hopeless at all and I think we need to absolutely put our muscle behind it. So, one of the things that, um, well, let me, one thing I'm curious about since we're talking about the future is will we even need cell phones in a few years? They'll be cell phones? Um, I think the way to think about it is how does behavior change around using other devices to do maybe intents or things that you do today by naturally picking up your phone opening up and starting. And so when you start to think about the future, I expect there's going to be more devices on a person that you could choose to say my intent is to do this, but I'm going to launch it differently than going to my phone. I may have a voice assistant that sits with my lapel. I may have something in my glasses that helps me with a visual intent. Um Have you tried out any of those I have? And what do you think? Um I can see it? Uh I, I think we're getting, I think it's going to, it's not gonna be a revolution. They will evolve over time. And to my point, you're not gonna in five years, say I never use a cell phone, but there may be a half a dozen things you used to do here that you'll start somewhere else. And I think uh ambient computing will start to play in, it's not gonna be overnight, but you walk into your house, your presence in your house will alert you to other devices around that you can use to do things that you might have initially gone by going to the deck of your phone to get started on. So I think we'll be in a very different environment as it evolves and that's going to open up innovation in terms of software players and who's involved in search and who's involved in how apps get constructed and where they run. And those types of things that will be interesting to watch. You know, you, you raise a good point when you start to talk about software, which is basically when you think about digital future, the mind drifts to big tech, right? And so um you've created this infrastructure on which these players thrive, you know, give me some sense as to like um the platforms that are basically leveraging a lot of the investments that you've made. Um How, how do you think that they should be regulated? Well, I first of all, I think we all work together. It's a, it's a good ecosystem, right? And that we've gotten a lot of policy right. In the United States, we've had pro investment policies that have driven world class infrastructure in the US spectrum is one of those things that we've gone from being 1st, 2nd or third in the globe to like we're 14th in developed countries right now. We're sliding and we need to get back to doing the right thing. And this is not like infrastructure is built and we're done, we refresh it, you know, 24 to $25 billion a year at my company alone. And there's other companies that play in the space and you've got to make sure you have the right policy to continue that reinvestment. And so if I think about what we need to really contemplate is we built a great communications infrastructure in this country where we said every household should have a phone, everybody should be able to talk to one another with very overt policy. And the policy was make sure there's access in everybody's house. But we're going to use the incremental decision to make a phone call is the way to subsidize that infrastructure so that everybody could afford what would have been too expensive. Otherwise at the farmhouse in the urban areas, that was the overt policy, long distance calls, subsidized access to the home. We have never come up with an overt policy of how we make sure every home is connected to the internet. We've never made that decision. The core digital, the corollary to that is everybody should have a connection. But how do you make sure you have subsidy for those that can't afford it or the places that are too expensive to build to, that's the long distance phone call issue. And so if you have third parties that are riding that infrastructure that are making a lot of money on the long distance phone call that rides on top of it. Everybody should participate in that. And that's not just the people building the infrastructure, the app stores have revenue, there's services that come on top of it. If we need subsidy to make sure it stays cost effective. We should think about it in that, in that construct. So let's unpack this a little bit in terms of what can actually happen. So let's put it in. Perhaps, maybe Congress give me some sense since life is about priority. What would you prioritize day one coming into the administration that would help at the very least move America back up to being 12 or three. Well, number one, we need to restore auction authority for the FCC to put new spectrum into the market that lapsed. Congress has not renewed that authority. So if we wanted to put new spectrum out, the FCC actually couldn't even take action to auction because that's a refreshing thing that Congress has to do. They can decide what spectrum they wanna put out. They just have no authority to do it right now without being able to auction it uh to this issue of universal service that we just talked about. We're, we're still subsidizing universal service based on long distance phone calls. How many of you are paying for a long distance phone call these days? You think about it? That whole construct needs to be relooked and there there is reasons to do it because we want to solve the digital divide. We want to have a cohesive policy. Do you think Elon Musk will be a force for good or ill in this respect? I don't know. What's your suspicion? Look? I think anybody who starts out with the intent to maybe streamline government and get it more focused. That could be good, that could be good for our country. I think we should also step back and be really practical about this and understand that when you look at entitlements and defense, um without dealing with those two issues, you're not going to fix government, you're not going to fix the balance sheet problem of the United States. So great. Let's go look at government waste and let's understand what we can do to operate government more cleanly. But let's also be honest brokers in the political environment and understand that we need to come to grips with those other two things. If we're going to deal with the balance sheet, that possibly is one of the causes of this inflationary environment that I kind of opened with, right, that we need to really be mindful of. Um I want to talk about how you've transformed AT&T and I know time is ticking. But one thing that hasn't come up that much here is is the sustainability which I know is a big priority for AT&T and some of the conversations in the past, what are some of the tough choices that you see there because we're making these major investments in A I, obviously we're trying to do it in a way that is sustainable, that helps the planet. How do you think about that in terms of the digital future of the US? There's a lot about our infrastructure that aids sustainability. When you start to think about how we allow for work to be done from virtually anywhere and, but all the bosses want us back to work anyway. Well, you know, but think about how much more you're getting done over that period of time. And, and I, I would tell you that, I think that uh the biggest issue we have to deal with in our company, we consume power to allow for that capability that's out there. And we've worked really, really hard to make sure that our power consumption has been more efficient over time and working really, really hard has kept us about even, even though networks are getting bigger and there's more data and bits being moved. Um I worry about the next several years because I, I think broadly speaking, there's a little bit of a friction between, we wanna lead an A I, we, we think it's a national priority for defense reasons. We think it's important for global competitiveness. And at the same time, we talk about the fact that, you know, we wanna cut greenhouse emissions, um the power that's required here to do this. There is no plan on how to produce that much power without driving more greenhouse gasses. And I'm not saying that it couldn't be done if there was a well thought plan, but there is no plan right now. Would you prioritize? I think it's really important. I think this is going to become the next big social and economic issue in the United States. If $5 a gallon gasoline gets people elected or kicked out of office. Uh Two years from now, people are gonna be looking at the power bill in their house. You know, because there's going to be a shortage of power and people are gonna be consuming it to push the boundaries on A I. And we're gonna be asking ourselves, you know, how did this happen? Why do we not have a, an approach here that for critical infrastructure on power, it's gonna be necessary to make this happen. I tell you, we're probably further along on getting sounder communications policy that allows for data to be transported to enable the A I revolution. But I worry about whether or not we're going to have enough power to make all that work moving forward, especially when you lay it on with what's required in these data centers. So the answer is to prioritize nuclear power. What's the answer? I difficult choices. Yeah, I personally don't see a future that gets us to where we need to get on emissions without some equation of nuclear. And back to your question about government is like if we don't start permitting faster than we are right now, um We aren't going to solve that problem. I mean, we're well over eight years off for any kind of reasonable online nuclear power coming on and, and most people don't want to go build natural gas power plants right now. Anything quickly. But just the transformation internally, I think when I sit with the CEO on stage in terms of A I, how transformative is that for your business right now? I think it's look, I think this is a huge seminal moment for all of us. And again, it's not, you're not gonna wake up and just go well, it was fizzled out. It didn't happen this year. This is, this is as big as, you know, 1999 1998 and the founding of the internet and we had the internet bubble and all, you know, we had the internet bubble, it went away. It's like, well, I don't think we'd all sit here today and say the internet really didn't deliver much. I mean, it's completely changed how we live. It's completely changed all of our business models. The bubble burst maybe because of some investment misalignment, but it was fundamental. I think we're at the front end of one of those things we're gonna be sitting here 10 years from now. Looking back, there'll be some battles won and lost of money and didn't go to the right place in the capital allocation perspective. But will it fundamentally change us 100% if the parts of making your business more efficient, are going to be necessary just to survive those benefits will accrue to the consumer. When I operate my business for less money will become more price competitive, those benefits will accrue through to the product in the marketplace. The question is, how do you change your business model for competitive advantage? That's the harder part. It's the part we don't know about yet. That's the part that comes from having a unique data recipe that nobody else has. Um And that part of it is where you get some competitive advantage and differentiation that comes in. We haven't seen that part work its way through and it will take some time for that to. Ok. Food for thought, please join me in. Thanking John. Thank you. Thanks very much. Thank you. Thank you.