Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Dan Howley discuss how the telecommunications industry is navigating through the coronavirus crisis with AT&T Communications CEO Jeff McElfresh.

Video Transcript

- Let's say good morning now to Jeff McElfresh. He is the CEO of AT&T Communications. And Jeff, thanks for making time for us. Look, we're working from home. I would take it you're at home right now working as well. With so many millions of Americans, school kids and adults, now at home using the internet, I'm curious what your infrastructure has been like, what the bandwidth has been like for your company.

JEFF MCELFRESH: Well, good morning, Alexis. And thanks for having me. I can tell you that I, as you can see here, am working from home as well. Really pleased with how the performance of our AT&T network has done here during this pandemic. And it's quite interesting, Alexis. We're seeing shifts in traffic moving from work locations to residential locations, as one might imagine. And our network has proven to be extremely resistant.

The tens of billions of dollars that AT&T has invested over the last several years into our network, it's proven to be the capacity enhancements that have been needed. And the capabilities that we're bringing to our first responders are really shining right now. And just a couple of stats, because I know your viewers are probably interested in this. We're seeing wireless demand on our networks up roughly about 40% over a normal week. And interestingly, we're seeing a lot of Wi-Fi calling from homes. That's up roughly 80%.

Then our core backbone network, it's the pipes that connect the world to the internet-- we're seeing traffic up roughly 30%. But all in all, very comfortable levels of performance for our network. And I'm really proud with how it's performing.

DAN HOWLEY: Hey, Jeff. Dan Howley here. I just want to ask, you know, we have these reports coming out of Europe that they're seeing-- or asking companies to slow down their bit rate for video services. So you have YouTube, Amazon, Netflix, the whole slew of them. Why aren't we seeing that here in the US? We haven't heard anything along those lines. I think YouTube said they were going to do it globally, but that was just a blanket, I think, for everyone around the world.

How come in the US we're not seeing those same reactions? Or could we eventually see it as potentially more cities lock down?

JEFF MCELFRESH: Well, it's-- good morning, Dan. You never can say never. But I do look at the level of capital investment telecom companies and technology companies have made here in the United States, and maybe look to that as a sign as to why other countries may struggle at certain ingress or egress points of networks. Generally speaking, the amount of fiber that's been invested and the amount of radio spectrum that's been deployed for our wireless infrastructure in the US is second to none.

And as you know, AT&T is investing $20 billion-plus for the last several years in this technology. And so I think you kind of got to look at the levels of investment and the capacity that the American infrastructure has. And I feel pretty proud about its ability to bear the weight of this pandemic crisis and support households and Americans working from home and students working-- learning from home.

- Jeff, certainly interesting times here, to say the very least. Brian here. Do you-- are you still on track with the nationwide 5G rollout? Or will that be delayed until early, mid-2021, just given the situation on the ground with the coronavirus?

JEFF MCELFRESH: Yeah, I mean, we've got some pretty good advancements in our deployment of our 5G spectrum. And we're currently still on track for the middle of 2020. But I do got to say, as the slowdown in work permits, construction permits through the local municipalities-- which is understandable given the crisis-- it's going to slow down a little bit the actual deployment of infrastructure. Having said that, I think you've got the economy in the context of some new unemployment numbers today. That may soften or dampen subscriber demand here in the short term.

AT&T remains committed to getting the nationwide 5G network turned up this year. And currently, right now we see no reasons why we'd come off of that midyear commitment.

DAN HOWLEY: Jeff, I just want to ask, you know, we're seeing different reports about Apple potentially delaying the next iPhone, the potential 5G version. I guess for carriers, what does that mean? You know, we have this cyclical kind of deployment of the iPhones every year. Consumers stop purchasing them as much towards the end of the fiscal year for Apple. And then they come back in when the new phones are announced.

But if there's a crunched time frame for that this time around, what does that mean for the likes of AT&T and the wireless carriers?

JEFF MCELFRESH: Well, Dan, I think I would probably approach that question from a broader question. I think the world's thinking 5G is an event. That it occurs, and there's one phone that comes out to the marketplace, and then 5G is over. We don't share that view at AT&T. And I think most of the wireless industry proudly recognizes we still today are in the process of upgrading subscribers in this industry to kind of state of the art 4G LTE smartphones. So a technology evolution is going to take multiple cycles. It's not going to occur in any one given moment in time.

And so if, in fact, a supplier inside of the ecosystem happens to delay the launch of a handset or a device, it just probably affects the time factor. But it doesn't actually affect the impact. It'll just occur later. Having said that, we're on schedule to launch 20-plus devices here this year that are 5G capable from a myriad of handset providers. And so I just-- I think you got to think about this as an evolution in time. We're going to start this year in mass. 2021 will be also a very big 5G adoption year.

The second lens that I would put on 5G, Dan, is the early wins for 5G are predominantly in the enterprise space where the technology itself is enabling hospitals to serve patients in a different manner, to make their operations a bit more efficient, or factories to become much more efficient in use of this technology that we call network edge compute, mobile edge compute-- and being able to slice the 5G spectrum into very highly specialized use cases. And the deployment of our millimeter wave spectrum in these physical locations such as factories, warehouses, and hospitals, I think that's really going to be the early big wins with 5G, much more so than the average consumer space.

So when you keep that in mind, coupled with the technology transition is something that will take quite some time, I'm not concerned about the current impacts of COVID on the United States's overall ability to lead in 5G.

- You know, Jeff, you laid out earlier the spike in demand you're seeing for many of your services. But the reality is for millions of your customers paying their bill at the end of the month, their AT&T bill, is going to be challenging, to say the least. What kind of assistance, if any, are you extending to those customers in need during this pandemic?

JEFF MCELFRESH: Alexis, that's a great question. And in fact, we signed on to the FCC's Keep Americans Connected pledge. And essentially what it stands for is the following. For any household that's been impacted by this crisis that finds itself in hardship, we promise not to disconnect any critical services to that family for the period of the 60 days that the pledge covers. That includes home broadband and home telephone service, as well as our wireless offers, where some customers that are not subscribers to our unlimited plan may in fact peak past their limit of megabits or gigabits that their rate plan offers. In that mode, we've offered to those customers that are in hardship that we'll waive overage fees.

We're doing everything that we possibly can, Alexis, to soften the burden and to keep Americans connected at a time when they must be connected here during this crisis.

- All right. Jeff McElfresh, CEO of AT&T Communications. Thanks for spending time with us this morning.

JEFF MCELFRESH: Thanks, Alexis.