AT&T's de la Vega takes on net neutrality and the data crunch

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ATT CEO Ralph de la Vegawith AT&T Mobility CEO Ralph de la Vega

FierceWireless Editor in Chief Sue Marek recently visited the AT&T Mobility offices in Atlanta and sat down with President and CEO Ralph de la Vega to discuss how AT&T is battling the competition in advertising, dealing with its data capacity challenges, and planning for its next phase in its network migration.

FierceWireless: You recently published a book called "Obstacles Welcome: How to Turn Adversity into Advantage in Business and in Life." What was it like to write a book?

de la Vega: It was really hard. I have a full-time job so I worked on weekends for two years writing it. But I'm very pleased with it. It has received four out of five stars both on Amazon and Barnes & Noble.

FierceWireless: It seems as if AT&T has become the poster child for data capacity issues related to growth in smartphone traffic.  Do you think you have properly communicated to the consumer why those issues exist and how they can be resolved?

de la Vega: I don't think you can ever communicate it enough. It's a complex subject. I think what we need to do is just talk about what we are seeing internally--that our network is getting faster. We are performing better in some markets and we are very pleased. And now PCWorld verified what we were seeing in a recent study that they did.

And I think some of our competitors are starting to see some of the same effects that we were seeing because of our success with smartphones. But I don't want to underscore the significance of what we have done. We have made great progress and I'm bullish on our network.

When you look at the number of global broadband customers that are using the technologies that are widely deployed that really bring mobile broadband to life--HSPA and EVDO--the U.S. has 40 percent of the high-speed broadband subscribers and we have 30 million customers on HSPA. This is very high compared to other carriers around the world. SK Telecom has 12.5 million mobile broadband subscribers, O2 has 2.5 million. So we have two times, or in some cases, 10 times the number of customers that some other operators have.

Clearly smartphones have become all the rage and the place where smartphones got started was in the U.S. In the U.S. we have twice as many smartphones on our network than our nearest competitor. So we have the network capability. We have the smartphones and the third ingredient is the applications.

I'd like to quote a statistic from Strategy Analytics that last year the U.S. passed Japan in applications downloading. So we have all of the key ingredients to bring this next revolution in data to fruition: the network capability, the devices and the applications. I don't think there is anybody in the world that is seeing the mobile broadband capability along with the smartphone uptake that we are experiencing. The bottom line is that we are going to consume more spectrum to keep up with this demand.

FierceWireless: As the chairman of the CTIA, what do you think is the biggest challenge for carriers?

de la Vega: Spectrum is a big issue right now when you talk about capacity. The CTIA recommended to the FCC that they look at the 800 MHz of additional spectrum, and the chairman is trying to allocate 500 MHz. We see this as heading in the right direction. But it takes a long time to clear spectrum.

And we also need to make sure that we are making efficient use of the spectrum that is available. LTE will be spectrally efficient and we have to make sure that mobile applications are optimized for that spectrum.

FierceWireless: Do you think your ad campaign, particularly around the holiday season, adequately combated the negative publicity generated by Verizon's advertisements?

de la Vega: Absolutely. The campaign that we ran was very effective. When it comes to the network and we show our coverage at 97 percent of the U.S.  and our 3G coverage at 75 percent of the U.S., that is very memorable. But I don't want to continue to focus on us vs. them. Those [Verizon] ads were misleading consumers and we had to respond.

FierceWireless: AT&T is a member of the Wholesale Applications Community, which was announced last month at the Mobile World Congress trade show in Barcelona, Spain. Why is this organization important? Is it possible to get all these diverse carriers and manufacturers to work together?

de la Vega: I think when anything like that takes movement, you expect it to get more definition as time goes by. I think it's a great effort and it absolutely ties in with the comments I made over a year ago at Mobile World Congress 2009. At that show, I said that we basically needed to have common APIs to access the handsets. But if we combine that with common APIs to access the network elements, then for example presence and location developers can access the billing information that we have in the network and make location development easier.

I was talking with Rob Conway, who is the head of the GSMA, and he was telling me that they have this initiative called OneAPI that ties together and offers a common set of APIs that Web developers can use to access network capabilities. I think whether its OneAPI or the Wholesale Applications Community, the idea is that the movement is afoot to make it easier for developers to work with carrier networks. The way for that to happen is for us to work together to agree on common APIs.

FierceWireless: Is that realistic? This is a very competitive industry.

de la Vega: We highlighted this at the Mobile World Congress in 2009 and we talked with the GSMA board and had a very good discussion of the issues that our industry is facing. I think everyone has really embraced this.

FierceWireless: Are you concerned about Verizon's rapid deployment of LTE? Are you planning to change your timetable to meet their schedule?

de la Vega: I think our approach is rock solid. We will continue to use the technology that we have because it can be upgraded; thus it allows us to continue to give our customers superior service. We have deployed HSPA 7.2 throughout the country, and now we are moving to make the backhaul better, which will increase speeds. We will also deploy HSPA+ in certain locations.

When you look at LTE, our deployment is designed to fall back to HSPA. The beauty of our deployment is that it will come at the right time, when devices are available and devices will fall back to the high speeds that are available. With LTE, we think that there will be a lack of devices in the short-term. Our deployment is designed around those devices, so our network will come at the time when the devices are available.

FierceWireless: You said you are looking to do HSPA+ in certain locations. Where will you deploy it?

de la Vega: We are still working that out.

FierceWireless: At Mobile World Congress last month, we once again heard a lot of carriers talking about how they are "open." How does a carrier stay relevant in a world with open devices and open networks?

de la Vega: I think you need to continue to do things like the Wholesale Applications Community. The network assets that you have, such as location and presence, are what must be utilized and you are compensated for them. You use these assets so that you are providing more than transport.

At the Consumer Electronics Show we announced that we are going to use the BREW Mobile Platform to bring the level of applications that are typically only seen on smartphones today to mid-level and low-end devices that were once out of reach. That is a huge value add.

But the thing I'm most excited about is that after many years of work, we also have the ability to link wireline with wireless and to make the processes of multiple screens become a reality. You are going to see us make some announcements in the future that are pretty exciting. We can bring services to the customer that few other people can bring.

FierceWireless: So it sounds to me that if at some point you can't differentiate on the network, and you can't differentiate on devices--because they will go across all networks--then you will differentiate with the applications. Is that correct?

de la Vega: It's about how we can make life easier for businesses and consumers. It's beyond the network and about the experiences that you give the customer. If you are a business customer, we want to give you a good experience so you can run your business better and your sales force better. If you are a consumer, we need to be thinking solutions, not silos of networks. These are solutions that go across those screens to make your life better. 

You will see us focus more on the customer experience and bring that mobile broadband experience to the customer.

FierceWireless: What is your biggest challenge today?

de la Vega: There are a lot of challenges facing us but I think one of the biggest is net neutrality. We think we are in a good position, but the proof will be in the pudding. We are very encouraged by what we have heard, but we know that the FCC chairman is in a tough position. We hope that he can recognize that wireless is different than wireline and spectrum is a limited resource, and so we have constraints that wireline business does not have. 

FierceWireless: A year ago there were seven mobile operating systems to choose from. This year there are at least eight, maybe more. In the PC industry the operating systems consolidated. Why is this area becoming more fragmented in wireless?

de la Vega: I think it's going to take a lot longer to shake out in the wireless industry. Instead of reducing some, we are adding some. In light of that complexity, we have to figure out how to operate effectively and still give customers the choices that they want. That is the challenge. It's an increasingly complex world.

FierceWireless: The CTIA Wireless trade show in Las Vegas is rapidly approaching. As chairman, what do you think will be the big message out of the show, scheduled to start March 23?

de la Vega: I suspect you will hear us talking about the spectrum issue. Around CTIA, the [FCC's] National Broadband Plan will be rolled out. The other thing is that now we have three shows: the Consumer Electronics Show, Mobile World Congress and now CTIA. For the industry dealing with those three in a row is a challenge. It used to be that the Consumer Electronics Show didn't have that much wireless, this year it was all about wireless. It has dramatically changed.