How Verizon’s CEO Plans to Double Aid to Underprivileged Schools

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Verizon plans to double the number of schools in low-income areas receiving free connectivity and other high-tech assistance under its philanthropic education initiative to 300 by the end of 2021, CEO Hans Vestberg tells Fortune. For 100 of those schools, Verizon will provide access via carrier’s new 5G network.

Known as the Verizon Innovative Learning program, the effort started in 2012 to help close the digital divide by offering underprivileged middle school students Internet access, computers and mobile devices, as well as a digital curriculum focused on science, technology, engineering and mathematics, or STEM. Already, about 150 middle schools from Holyoke, Mass., to Cincinnati, Ohio, to San Jose, Calif., are receiving aid from Verizon.

The effort started in 2012, six years before Vestberg became CEO; he’s the first outsider to run Verizon in the company’s history. But it struck the incoming boss, the former CEO of telecom gear maker Ericsson, as consistent with his own values. Under Vestberg, the education initiative and issues like combatting climate change will be priorities.

“I have brought in a social aspect to the strategy of the company both because it’s right for business, but it’s also what you should be responsible for if you’re the size of a company like Verizon,” he says. The company is committed to spending $400 million on the education program over the next six or seven years, he says.

The 5G wireless connectivity, which offers Internet speeds 10 to 100 times faster than the average speed of current 4G networks, will help connect schools beyond the reach of fiber optic networks, particularly in rural areas. Verizon’s expanding 5G network, only available in parts of a dozen or so cities right now, eliminates the need for a fiber connection all the way to each school building. Expanding 5G coverage will make it possible “to actually do the last mile, or the last miles, with wireless and that way we can cover many more schools,” Vestberg says.

As for the curriculum, society will need more kids with expertise in STEM subjects, especially companies like Verizon and others in the technology and telecommunications businesses, Vestberg notes. “With the degree of digital transformation we see right now, everyone needs to have some basic knowledge about STEM,” Vestberg says. “That’s why it’s important to prepare the children for being really interested in technology. And it’s important for Verizon because we need these types of competencies all the time.”

Vestberg, accompanied by popular musician Pharrell Williams, announced the expanded schools initiative at the Global Citizen festival in New York City over the weekend.

The state of broadband connectivity in schools has been improving along with Verizon’s efforts, thanks to the federal government’s e-rate program that subsidizes Internet service. About 2.3 million kids—equal to 4% of public school pupils, age kindergarten through 12th grade—go to schools with no real connectivity at all and only 28% of students have connections as fast as 1 Mbps, according to the nonprofit EducationSuperHighway’s annual report for 2018.

The savings Verizon gleaned from the 2017 corporate tax reform provided some of the rationale for expanding its education programs last year and in the future, Vestberg says. “We used some of our proceeds coming from the improvement on tax levels to invest even more in education,” he says.

Verizon is one of the largest beneficiaries of the 2017 corporate tax cut. The company’s tax expense dropped to $3.6 billion last year from $7.4 billion in 2016, the year before the tax law change, and its cash flow from operations shot up to $34.3 billion from $21.7 billion.

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