Internet usage 'is up 60%' since the pandemic: DZS CEO

DZS CEO Charlie Vogt joins Yahoo Finance's Karina Mitchell to discuss how the infrastructure bill will help provide broadband internet services to all Americans, plus the outlook for 5G.

Video transcript

KARINA MITCHELL: Welcome back. Well, President Biden's massive infrastructure bill is helping usher in a new era of connectivity. Here to discuss the implications for the broadband industry is Charlie Vogt, DZS CEO. Sir, thank you so much for your time today. Really quickly just want to get your perspective on the overall-- your overall impression of this infrastructure bill, and then $65 billion devoted to building out broadband connectivity. Is that nearly enough money?

CHARLIE VOGT: Well, first of all, thanks for having me on. And, you know, I just got back from Seoul, Korea, a country, by the way, that is very well connected from a broadband perspective. Having been in the industry for 30 years, you know, the $42 billion, which is a subset of the $65 billion that you just mentioned, is certainly pretty significant, considering we haven't seen these kinds of funding stimulus support in this industry ever.

So, you know, we did a study several years ago. We thought that it would take about $80 billion to be able to provide broadband services to all Americans. And so, the bill here is certainly giving us a step in the right direction. And I think it's going to enable us to deliver broadband in an affordable manner to those who today are either limited or have no service at all.

ALEXIS CHRISTOFOROUS: And Charlie, who are those people exactly, and where are they in this country? I know we've talked a lot over the years about farmers not having adequate connectivity to do what they need to do because they're in rural areas. But give us an idea of who can benefit the most from this.

CHARLIE VOGT: Yeah, so there's 30 million people across America that, you know, have limited to no broadband. But if you look at some of the states here in the United States that are very well connected, you have states like California and Colorado, Utah. Those are states that are fairly well connected. But when you look at other states like Mississippi, Arkansas, Alabama, I mean, these are some of the states that are amongst the least connected.

And if you look at the bill, I mean, the bill basically is going to be doled out in a very unique fashion. I mean, there's $100 million that will go to each state. And that's 5 billion of the 42. So that leaves $37 billion that will be allocated based on each state's justified need, based on where they are and their ability to deliver rural services today.

KARINA MITCHELL: And then, Charlie, I want to ask you, what is the overall state of the broadband industry? Because we saw at the beginning of the pandemic, right, there were so many children shut out from being able to attend school, just because they didn't have the proper equipment. There was no internet access. So how much have we evolved since then? And then how quickly do you think that these funds will be deployed and we actually see real-time change?

CHARLIE VOGT: Well, that's a great question. I mean, the internet since the pandemic, you know, the internet usage since the pandemic is up 60%. And I think the pandemic did something very interesting for broadband services. And that is, it shed a light on the fact that, you know, broadband services, not just in rural markets, but even in major metropolitan markets are very underserved.

And so you think about today's internet services, and you look at some of the megatrends that are driving the need for more bandwidth. I mean, this thing we're doing right now was not a very popular thing, you know, 18, 24 months ago. Now we're doing every day. It's a pretty significant bandwidth requirement.

And then you look at some of the emerging trends around video gaming and augmented and virtual reality. You look at just the number of internet devices. I mean, by 2023, just internet of things, so devices will represent 50% of the entire internet usage. So broadband is-- obviously, we talk a lot about it as it relates to connectivity to the home, but it's also a very necessary element as it relates to wireless services as well.

KARINA MITCHELL: And then, Charlie, I want to ask you, how far along are we compared to competitors in Europe and China with 5G technology?

CHARLIE VOGT: Yeah, I mean, if you look at broadband in general, I think that you look at countries like Japan, like Korea, parts of China, these are countries that are well ahead of where we're at here in the United States. But I think when you compare the United States to some of the countries across Europe, like Germany, like France, like the UK, Italy, I mean, we're much further along than they are.

I think you're going to see a lot more stimulus across the globe. I mean, in Germany, they've got $14 billion that they just initiated from the government. And in the UK, there's about $7 billion. So the trend that we're seeing here in the US to support what I believe is becoming an essential utility service, we're seeing a trend around the world. And, you know, I tease often that given the choice of air conditioning or broadband internet, I think most people around the world today would take broadband internet over air conditioning. And I think that's a pretty important theme.

ALEXIS CHRISTOFOROUS: I just want to-- I want to ask about broadband and the ability to keep it safe, just because of all of the prevalence of hackers right now and how they're using the superhighway sort of as their playground. What's your role, do you think, in trying to keep all of our information safe on the internet?

CHARLIE VOGT: Well, it is a-- I mean, it's a great question, and it certainly is an ongoing issue. And from a DZS perspective and companies that are providing broadband infrastructure technology to service providers, including technology that's terminating fiber to the home and business, as well as Wi-Fi access points in the home, there's not a lot that we're doing as a technology company to address cybersecurity.

I mean, there's many companies that we partner with, that our service provider partners enable to provide the various cybersecurity software to mitigate it. But it is an ongoing issue. And as you continue to deliver more and more high speed broadband, I think you're going to entice and welcome a lot of challenges, as it relates to keeping the internet safe.

KARINA MITCHELL: OK, well, we have so much more to talk to, but out of time. Charlie Vogt, DZS CEO, thank you so much for your time, sir, today.