How Randall Stephenson Took AT&T into the Future of Digital

“My odyssey has been amazing,” Stephenson reflects. “Who could have ever conceived of a kid born in Moore, Oklahoma having the opportunity to run a company like AT&T? I get a little frustrated with a lot of the talk about inequality in our country today. I look at AT&T today and the people moving up in the company today are a lot like me.”

A voracious reader of books about Winston Churchill, he believes “there’s a lot to be learned about his leadership style, conviction, dogged determination and ability to rally an entire country to endure what was going on in that era and not give up and not lose hope.” Conviction and hope are attributes he appears to have in abundance.

Q: The communications industry industry has gone through waves of growth. Local phone service grew until the early 2000s and then started to decline. Wireless has grown for decades with the acceleration of the iPhone and Android. Now that growth of smartphones is slowing, what do you see as the next growth wave and how do you plan to capitalize on it?
A: We’ve been investing aggressively in pursuing the smartphone wave and trying to stay ahead of it. This required an enormous amount of investment. In fact, one of the hidden secrets of our industry is how much money companies like ours must pour into just buying licenses to operate wireless networks. Since I’ve had this job, we’ve spent almost $40 billion in just licenses to operate these wireless networks and building spectrum. It’s about fast, scaled ubiquitous networks that can handle incredible amounts of data to accommodate mobile phones and facilitating mobile video.

Video is the future—the ability for people to watch video anywhere, anytime on whatever device they want. We are at a point where this is now possible. Video consumption is moving to smaller and remote devices. Getting there requires not only the network commitment, but also a major investment in access to content to deliver.

The current ecosystem has not been conducive to this. That’s why we bought DirectTV. We bought DirectTV because it’s the largest pay TV provider on the globe, not because we like satellite technology. It gives us a unique place with the people who develop and make content.

By combining the largest pay-TV provider with one of the largest smartphone customer bases on the planet, you have a unique marriage to partner with the content folks. This fall, we will roll out a whole new category of video that’s “TV Everywhere.” It will offer inexpensive video for mobile-centric consumers all the way up to ultra-high-def consumers who want tons of sports programming and multiple TVs in a large home and everything in between.

In addition, we’ve partnered with the Chernin Group to form Otter Media, a joint venture offering subscription-based online video services, such as Fullscreen to deploy content targeted towards millennials. If you’re my age, you wouldn’t recognize any of them—I don’t recognize any of them, but this is a platform that’s growing very fast. This is the future.

The second major wave is sensor technology. Low-cost sensors are popping up everywhere. My hot water heater is connected to our wireless network. It can sense when water is leaking and will send me a message accordingly. The automobile industry is moving aggressively toward a world of sensors in every car. Think about healthcare with sensors on the body. I’m wearing one on my wrist right now. People call this the Internet of Things, but it’s just low-cost sensors connected to networks.

This second wave is not about changing how we think about networks; it’s forcing every industry to change how it thinks about itself. Think about the last car commercial you saw. What did they advertise? In all likelihood they advertised their connectivity, not so much the car. We’re moving towards smart cities where traffic lights and city infrastructure have these sensors and everything will be connected to cars.

Another good example is the shipping industry. Maersk, the big shipping-container company, has 300,000 of their containers all over the globe connected with sensors that allow the company to know where those containers are at any point in time anywhere in the world. Not only do they know that, but they know what the temperature is inside, whether the container is being jostled or if it falls off the ship. Maersk can even reroute the shipment.

There is not an industry that is being untouched in a radical way by what is called the Internet of Things, especially when these low-cost devices are paired with cloud technology and Big Data. This world is all meshing together in ways we haven’t fully anticipated.