Business as Usual Featuring FCC Chairman Ajit Pai and Crown Castle CEO Jay Brown

Thanks for having me. It's a real pleasure to be with you. We certainly appreciated the partnership we've had with the Pittsburgh Tech Council and excited about the things that are to come. And I would just start where our Chairman Pai finished in the end of his remarks. It's been incredible to watch as first responders have responded to the virus and serving all of us so well. Things that we take for granted in terms of doctors and nurses, because we don't see them day in and day out, putting their lives on the line in order to save so many, makes me proud to be an American. And as I think about our own company and our employees providing this critical infrastructure, we have employees that are continuing—not we have obviously office employees who are working from home, but we have well over a thousand employees who are in the community working, making sure that infrastructure is up and running and places where there's critical need that we're continuing to add additional infrastructure into the community so that all of the things that we're relying on in order to be connected at a time when we're not able to go to the office continue to work really well. So as a company, we're focused entirely in the U.S. We have over 40,000 towers in the U.S. We also have about 80,000 miles of dense urban and suburban fiber-optic cable. The combination of those two assets is what enables everything to be connected. So I know we're going to get into this a little bit more about 5G and you mentioned some of your opening remarks, but it's what enables that to work. So it's the invisible part when you pick up your device, whether it's a tablet or a phone, and you start to use it to communicate in some way, it leaves that device and it travels across our infrastructure, goes and gets either an answer or connects you to another person and then enables that connection between the two. We're very similar in a lot of ways to an office building, if you will. So everyone comes in, puts their technology onto our infrastructure, and we're providing the infrastructure in order to be a low-cost provider to all of the folks who are actually bringing the technology to bear.

Yeah, there's a combination of things that are being done. So part of it is that the network is designed to handle a significant amount of traffic. And as we design networks, if you think about normal traffic patterns in a day that would have been four months ago or five months ago, where traffic may have been relatively light in our neighborhoods during the day and then early in the morning and then after dinner at night we're on our wireless devices and we're starting to tax those networks, and the traffic was in a different location from say 7:00 in the morning till 6:00 or 6:30 in the evening. And now we're putting all of that traffic into concentrated areas that were previously just reserved for the evening hours. So the infrastructure is there and we're putting greater burden on it. And most of our responses currently are trying to hit the areas where the carriers have seen big spikes in activity that the networks really just aren't designed to handle that much activity. So there are some hotspots where we're working with the carriers closely and trying to continue to get infrastructure deployed. There are also some areas that the carriers have needed to and have been working to get covered. And so our folks are continuing to work in normal course to cover areas that they already know they had challenges on and we're on the drawing board and in the planning stages of construction even prior to COVID-19. And so we're working on a combination of both what's arising as a result of it, but then also some things that they knew were hotspots and working to resolve those now.

That's exactly right. And you know, one of the things in your last question, you remarked around how the world will change as we move from 4G to 5G. Certainly there's an aspect of 5G that will be—it's faster. And as we have gotten accustomed to talking about, when we went from 3G to 4G, that was faster. And all of the conversation around 4G was faster, and we went from 2G to 3G, a lot of that was faster. 2.5 to 3G, that was faster. And that faster translated in a lot of ways into us just moving from having either just text messages and voice conversations to where the idea of these things being a phone, it's almost weird that we could call them a phone because we push far more across them than we do really even our voice, although that's changed some in the most recent days. The big important move though when we go from 4G to 5G, it will be faster, but from a carrier standpoint, it's going to be far more efficient. And that efficiency will be realized for us as consumers and particularly many folks who are on this call as innovators. If you think about what's coming next in the world, as you referenced in your question, the number of devices that can be simultaneously connected, that's the real game changer in 5G. So if you took about 400 acres roughly, we can connect today in today's wireless networks, we can connect about a thousand people in that 400 acres. That number will be into the millions in terms of connected devices with 5G. So today, if you think about each one of those kind of thousand spots inside of the network, that's really valuable real estate and the carriers need to charge a certain amount in order to get a return on that. If as we move towards 5G though, if we can connect millions of devices in a relatively small area, each device, if you will, or each connected device I should say, each connected device doesn't have to provide a $50 a month or a $60 a month charge in order to justify using up that valuable real estate like we have to do in 4G. In 5G, what we can do is connect millions of devices and each device may only produce a few pennies a month of additional revenue. It could be anywhere from, you know, a few pennies to maybe a couple of dollars a month, but it doesn't have to bear its weight in terms of taking up valuable real estate. And that is where I think innovation is going to really be created and we'll see it as consumers. You referenced some of the apps and other things that will likely connect to our devices that we'll use in different ways, whether those be healthcare monitoring kind of devices that will change the way we live, but it's also going to be things that are very simple like clothing and shoes and other things that will connect. And then I think there's a whole industrial application that's going to be a real game-changer as we go from 4G to 5G. Not only will you be able to connect a lot of things, you could argue we'll nearly be able to connect everything. And in industrial settings, the latency that's going to come down in the network going from 4G to 5G will be a real game-changer. So latency is the component of the network where when we push the button on the device and want to gain additional data out of the network, how long does it take for that device to actually get a response? That's the latency, from the time I push go till the time I get something back. And that latency in 5G is going to go to basically 1 or 2 milliseconds, so imperceptible to the human eye. So things like virtual reality and augmented reality, which today have to be software that's stored actually on the devices because the network can't respond fast enough, now all of a sudden the 5G networks will be fast enough that it will be simultaneous. So if you just took a simple example of like a construction project and you put a pair of goggles on a construction worker and the goggles have recognition software on them, they can recognize that the construction worker has selected the wrong size bolt before he's even put it into the structure and then give feedback to that worker, 'Now you need the number 6 bolt, not the number 8 bolt to put into that beam.' Those kind of applications, again, very little revenue dollars per month, but the impact and the reduction of cost in settings like construction are going to be massive. And I think those kind of industrial applications are going to be really awesome to watch as we get into 5G.

Yeah, so we want to make sure the places where we live and work, as we've got employees spread out all over the country in all of these communities, we all want both, right? We want to be connected everywhere we go and we don't want to disrupt the aesthetic of the community. And so we work really hard with local municipalities and utilities and neighborhood associations to understand what are the aesthetic needs inside of that community. And then our goal is to bring in a solution that can be shared across all of the providers in order to reduce the amount of clutter that ends up getting put into the environment and then work with that local municipality to create an aesthetic that's hidden. I'm really proud of what we've done in a number of different places. In fact, Chairman Pai was in Houston with me not too long ago and we were in the downtown setting and we were showing him how we had hidden small cells. And so whether it's cabling, connections, antennas, there are a lot of different solutions that we can use in both small cells and towers in order to effectively hide the infrastructure. So it's a combination of making sure we're meeting the need and the desire for connection and at the same time coming up with the lower impact aesthetic as we possibly can. It's interesting to me if you think about the other place where we really need connectivity all the time, it's electricity. And when electricity was rolled out, no one really thought about the aesthetic. And so about half of the electricity in the U.S. is delivered by over-lined cabling and it doesn't look good. And so we have this opportunity as we're thinking about deploying 5G, as we have done with 4G, to really be thoughtful about in the local community. And obviously you can't get away from—you have to have some vertical infrastructure. So there's not some magic solution. We can't put it in a satellite, it doesn't have enough capacity or speed to put it there. We can't make it invisible, at least not yet. And so there's got to be some vertical infrastructure. And so working with the local communities to make that infrastructure have as low an impact as possible is something we want to make sure we do.

Yeah, the FCC has done a great job at this. So under Chairman Pai's leadership, and frankly even past administrations have done this really well, they've recognized the necessity of getting the deployment of wireless spectrum into the market. And so they've been helpful at a federal level to set some parameters around how we can engage and deploy the technology. In some cases, local communities have looked at this as a way of solving a budget crisis. And so the FCC really had to step in and prevent local communities from raising the price to where it became uneconomical. As it sits today, there's federal legislation in place that provides a return for the owner of those poles and covers their cost for handling the process of application and other things in order to approve our ability to put this infrastructure on their poles. And what's great about that is that ultimately the cost, well maybe at first touch it looks like this is a cost to Crown Castle, ultimately it's really a cost directly to the consumer. The cost is shared across all of the wireless carriers. And to the extent that the infrastructure can be deployed at the most cost-effective way, which is why our business is a shared business model, we don't charge the same amount as we would if we only had one wireless operator to provide the infrastructure from. We get a return by providing it to all of them, so they all pay a much lower cost than if each one owned their own. And as we do that, what we're in essence doing is lowering the price to the consumer as networks become cheaper to deploy and therefore they become more robust. There were a lot of questions in the last session about, you know, how do we ensure an equal provision of the infrastructure across the country, and ultimately that frankly comes down to a cost question. So everything that we can do to reduce the cost is passed on to us as consumers, and we also get the benefit of a much stronger and more robust connection as a result of a lower cost provision.

Well, you know, we've had two objectives during the COVID crisis that I've talked to our employees about from kind of the first time it started to really impact our country. Our objective number one was to make sure we were caring for the safety and well-being of our employees. Well before everyone started to work remotely and work from home, we had gone ahead and transitioned our office workforce to working remotely in order to make sure that we were caring for them. Part of that rationale was to ensure that we weren't spreading the virus inside of our offices. That was effective and certainly heading that off. The other aspect that we've got is we've got, as I mentioned earlier in the conversation, well over a thousand employees who are working in the community around the country. So we've done things like provide them with masks and goggles and gloves and in some cases gowns depending on where they're working. A big portion of our business is actually providing fiber services into hospital settings, particularly in the Northeast. And so as we've endeavored to keep those networks up and running and in a lot of cases provide even additional bandwidth in a lot of those places, we've had to work really closely with hospitals to ensure our safety protocols were in place, allowing them safe access to those locations. And our customers, the hospitals, have been great at assisting us and making sure those protocols were and are in place. We've also had the opportunity around the country as we've been caring for people that we have an initiative in terms of working in the community that we call Connected by Good. Historically, that's been to spend a significant amount of funds in improving park systems. We're all about connecting people, and parks are a place where people connect not on their devices but connect socially. And we took all of those funds for this year and we moved them into providing technology to schools. So around the country, what we've done is putting technology in the hands of underprivileged kids, whether that's laptops or tablets in their hands so that they can go to school remotely, has been a big focus of our efforts over the last few weeks. And really proud to say in a number of markets it's had a huge impact. We've done some of that even there in the Pittsburgh market with some of our IT folks, which has been great. Been a joy to be able to participate in that. And then the second component, after we care for the safety and well-being of our employees, is making sure that we're delivering for our customers. And I'm just so proud of our team. We figured out a way to work remotely. We transitioned quickly and we've done a great job for customers thus far and we'll continue to do that as we go through this. So it's always a learning experience when you're aiming for making sure that you deliver for customers, as customer environments change, their needs change, and their ask of us changes. And we've certainly been through this, but proud of our culture that has been designed to be responsive to when a customer needs something, we respond to that. And so we've been trying to do that in really unique ways over the last several weeks.

So the Chairman talked about a couple of things that are really important as you think about—and just stepping out of maybe directly my own business but just thinking broadly—there are two things that you have to have in order to have wireless connectivity in the world. Number one, you have to have funding, and number two, you have to have wireless spectrum. On the funding side, the big movements that have happened in the world in the last few months that are really encouraging towards this end is the combination of Sprint and T-Mobile means that there's now a third provider in the wireless industry in the U.S. that is well capitalized. And the FCC and the DOJ did a terrific job of setting forth some parameters in terms of their build-out for 5G. So they now have a mandate, if you will, that they've got to build out a significant amount of 5G network. And T-Mobile has talked extensively about what that's going to look like. That's going to be great for all of us around the country. And I believe that will be paired with a lot of investment from AT&T and Verizon as they build out their 5G networks. There's also a new entrant in the market in terms of Dish, who is getting some additional spectrum and some funding and will be in the process of building out a 5G network. So we're going to end up with four operators in the U.S. all building 5G networks with significant amounts of capital. It's really important. The second thing that Chairman Pai mentioned, and he rattled off a number of spectrum bands that the FCC has worked on in order to get those deployed, I think about that as like water in the garden hose, if you will. So we keep exhausting all of the water that comes out of the garden hose because we all keep using so much of it for various things. And the reality is we can't put enough infrastructure into the market to cover everyone who wants to use that spectrum. We've got to have more water, if you will, added to the garden hose. And so they're adding significant amounts of flow of water to the garden hose by these additional spectrum bands. And those spectrum bands combined with capital mean that the wireless experience is going to be greatly enhanced over the coming years. I know there's a lot of questions about, you know, how does the U.S. stack up to the rest of the world. And I think as Americans we should be really proud of not just the current administration's FCC efforts that they've done, but something that has happened over a couple of decades. When I look at where the U.S. is positioned relative to Western Europe, for instance, we are in a great place because of the amount of spectrum that we've allocated to it as well as creating avenues where both public and private funding of these networks can be done in a way that's going to benefit all of us over the long term. So I'm really excited about where we're positioned. And right here at the launch and the start of 5G, we're headed towards something that's going to be really awesome for us as consumers, but then also as you think about those folks even on this call who are entrepreneurs, who are innovators, you're gonna have a playground and a sandbox, if you will, that's going to just be awesome in terms of what you can create in terms of connected devices. And it's going to radically change the way we live and work for coming decades. So I'm really excited about the foundation that we're laying here for future entrepreneurs and innovators. It's gonna be really fun to watch over the coming years.

That's fun. I'm in. Don't even have to check with my lawyers. I'm good. I think I'm right on it. Romantics and witches and lots of coffee. Okay, thanks for all you're doing in the community. It's great, huge help. Glad to be a part of it. Thank you.