Verizon says virtualization will enable it to reduce costs by $10B

Verizon sign from MWCA
The company has set a goal to take out $10 billion in expenses by 2020 to stay competitive and reduce operational costs.

Verizon CEO Lowell McAdam has set a goal to reduce the telco's costs by $10 billion over the next four years, and it is going to leverage one of its biggest investments, network virtualization, to drive that initiative forward.

McAdam said in September the company set a goal to take out $10 billion in expenses by 2020 to stay competitive and reduce operational costs.

That vision was touted by John Stratton, EVP and president of global operations for Verizon, who told investors during the Wells Fargo Securities 2017 Media & Telecom Conference that the value of network virtualization is a “very robust” opportunity.

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John Stratton (Verizon)
John Stratton

“We have a really, really strong technology team that has been engaged in finding ways to leverage the investments we make there, with an orientation towards virtualization of the network,” Stratton said.

Some of these initiatives include the rollout of NFV, pushing out the cloud to the edge of its networks, and new services like SD-WAN. 

“Hans Vestberg, who's joined the business about 7 months ago, is leading that and he's just getting started,” Stratton said. “The opportunity to unlock value there I think is very robust.”

But network virtualization is only one part of the overall cost reduction strategy. The service provider has also been working to improve how it interacts with customers, noting that it has reduced customer care calls into its centers.

While that’s a positive trend, Stratton admits the challenge with call centers is being able to effectively resolve a customer issue.

“It's not an easy thing to do because the calls into a call center is not, for someone, it's not like a dating line,” Stratton said. “It's not like a 900 number where you're generating revenue. This is, you broke something and you now need to go and fix it. You've created confusion, you need to solve it for a customer.”

Additionally, Verizon is working to enhance online self-service capabilities for customers by developing new service channels like the service provider’s My Verizon app.

“Our customers still would like to have a very intuitive, simple, easy experience online,” Stratton said. “We've done a ton of work with our mobile app, for example, that has really caused it to leap in terms of being a primary channel for [customer] service delivery.”

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