Q3 2023 Anterix Inc Earnings Call
Speaker 1: I.
Speaker 2: Good day everyone and welcome to the Anteric's Third Quarter Investor Update.
Speaker 2: At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments after the presentation.
Speaker 2: It is not my pleasure to turn the floor over to your host, Natasha Vakarelli. Ma'am, the floor is yours.
Speaker 3: Thank you and good morning everyone. I'm Natasha Becarelli, Vice President of Investor Relations and Corporate Communications, and I welcome you to the Ontario Third Quarter Conference call. Joining me today are Rob Schwartz, President and CEO , Ryan Gerbrant, COO.
Speaker 3: Tim Gray, CFO , and Chris Gutman-McCabed, Chief Regulatory and Communications Officer.
Speaker 3: Before we begin, I'd like to remind you that we will make forward-looking statements during this call regarding future events and our anticipated future performance, such as our commercial outlook and guidance.
Speaker 3: These statements are based on current expectations and assumptions that are subject to risks and uncertainties.
Speaker 3: Investors are cautioned not to place under reliance on forward looking statements.
Speaker 3: Additionally, we do not undertake any duty to update any forward-looking statements.
Speaker 3: Important factors and risks that could cause actual results to differ materially from the company's expectations are disclosed in our most recent SEC filings.
Speaker 3: These files can be accessed on our website or on the SEC's website.
Speaker 3: After Rob and Ryan provide their prepared remarks, we'll open the call for questions.
Speaker 4: With that, I'll turn the call over to Rob. Thanks, Natasha. Good morning, everyone, and thank you for joining us today. As our first call of 2023, I want to take stock on where we are as a company.
Speaker 4: We fully understand that this was a difficult past year for investors, both in the markets overall and specifically for enteric stockholders.
Speaker 4: Like any pioneering business to finding a new market, when we embarked on this journey several years ago, we made some initial assumptions. Some of it got right and some of it got wrong.
Speaker 4: To be clear, the value of our pipeline remains strong, with potential contract proceeds of well over $3 billion.
Speaker 4: As I said in the past, I am confident we have the right product driven by the right team and are pursuing the right sector at the right time.
Speaker 4: Today I'm going to talk you through a few of the lessons we've learned in this past year and describe how we've evolved our efforts to put that knowledge to use.
Speaker 4: We're also going to give greater transparency on our current customer progress with a measure we call demonstrated intent.
Speaker 4: And we'll discuss why we no longer intend to provide projections on contracts given the challenges of predicting contract timing.
Speaker 4: First, as we've elaborated upon previously, the process to get to contract with utility is incredibly more complex in many cases than we originally envisioned.
Speaker 4: Leasing spectrum is deeply interwoven into a growing list of disparate, yet significant grid modernization issues facing utility leaders, including resiliency, cybersecurity and decarbonization.
Speaker 4: While these act as a major force-implement change, they also dramatically expand the breadth of analysis, costs, and decision-making process each utility undertakes.
Speaker 4: This decision-making process requires us to obtain broad support from executive throughout the utility, including leaders in holding companies, operating companies, and functional areas.
Speaker 4: While this process continues to escalate and enhance the visibility of our value proposition, it is substantially increased the complexity of their decision making, and as a result, makes timing less predictable.
Speaker 4: Accordingly to support this broad and complex decision making process, we've realized that consistent and extensive education is critical.
Speaker 4: We support the utility decision making by engaging and educating across the entire organization to get to yes.
Speaker 4: Even including utility regulators and industry associations.
Speaker 4: These efforts do help ensure that we're on the right path towards completion, but they don't necessarily give us greater clarity on timing.
Speaker 4: We also continue to see that solutions are key to utility adoption. We have accordingly initiated several well-received programs.
Speaker 4: Many of our utility discussions have pivoted from spectrum to use cases that demonstrate the strategic and economic benefits of 900 MHz private broadband and become a necessary element of business case justifications on the path to contracting.
Speaker 4: We continue to widen the lens to share a range of these valuable outcomes with our potential utility customers through numerous forms, including the Utility Strategic Advisory Board, the Interox Active Ecosystem, Utility Broadband Alliance, EEI, EPRI and other major industry groups.
Speaker 4: And while there is some similarity of process and procedure between utilities, each has their own distinct way of approaching a private wireless broadband opportunity. And we need to clearly identify and adapt to each of utilities processes.
Speaker 4: So while we are not seeing necessarily a shortening of the cycle time and getting the contract, we do see a strong influence from existing customers to their peers that impacts the desire and intent to move forward.
Speaker 4: We set up believing that we could have some greater influence on the timing of getting a utility to contract and therefore an ability to predict within a range of certainty.
Speaker 4: But the reality is we can't do that with any real precision.
Speaker 4: The complexity of unique nature of each opportunity directly impacts the timing of the process.
Speaker 4: That said, we can see with greater clarity and measure is the total scale of the market opportunity.
Speaker 4: We are creating a market that previously did not exist. We are taking utilities through a broadband adoption process that they have not been through
Speaker 4: We've experienced and learned to manage through unforeseen issues, causing delays like CEO succession, procurement process changes, competitive actions, and more.
Speaker 4: While this pioneering role can mean a slower pace of adoption, for us it confirms that we know we have a unique product with unique value proposition at a unique time for the utility industry.
Speaker 4: All of these learnings do challenge us on how to give appropriate guidance to investors, on a business in a market in which we have a high level of confidence, but not a high level of control of timing.
Speaker 4: As a result, we determined that we should evolve the way we communicate to investors about our future customer opportunities.
Speaker 4: We've concluded that starting today and going forward, and Terriks will not provide timing projections, but instead will provide what we believe is a transparent and fact-based scorecard that we've defined as demonstrated intent.
Speaker 4: What we know is that we see significant signs of customer intent before we get to contract.
Speaker 4: It's why we say that it's not a matter of if but when.
Speaker 4: This intent is tangible at times publicly visible and is measurable.
Speaker 4: I'll now turn over to Ryan to take you through this in further detail and then I'll wrap it up with some concluding remarks.
Speaker 5: Thanks Rob and good morning everyone. Previously I have taken this time during the call to give you details on the status of the three phases of our pipeline.
Speaker 5: And in addition to the pipeline on each call, we've shared many other examples of the momentum we are experiencing.
Speaker 5: Whether it be in the form of experimental licenses, LOIs, participation in key industry events, or additional details on specific contracts, our goal has and continues to be to provide investors with a level of transparency that demonstrates the progress we were making and moving each utility.
Speaker 5: and the entire sector to execute on our goal of being the de facto private wireless broadband provider to utilities.
Speaker 5: One of the things we have learned and have concluded is that the phases of the pipeline alone do not reflect a full picture of customer progress and confidence we see. And quite frankly, the movement through the phases doesn't align well with these quarterly updates. And our goal of providing investors with a transparent, consistent...
Speaker 5: and measurable way to see the combined impact and development of this important market opportunity.
Speaker 5: Today we're going to share an additional way of quantifying and tracking our momentum.
Speaker 5: In doing so, we're not discarding the phases of our pipeline. They continue as they were designed to guide and measure our sales process.
Speaker 5: Just to be clear, we've not lost opportunities from the pipeline. The utilities within all three phases still represent more than 90% of our total addressable market, totaling well over $3 billion as a potential contract it proceeds. With more than 500 million now in phase three, and more than 1.2 billion in phase two.
Speaker 5: about the overall value of this opportunity.
Speaker 5: Now, already with the vast majority of the addressable market captured in the pipeline, we believe it's complementary to bring focus to how we measure a customer's demonstrated intent. And how will we report this to you going forward?
Speaker 5: For this analysis, we track many individual metrics for every customer in our pipeline, and proportionally score each based on our assessment of its importance and come up with a combined, demonstrated intent score.
Speaker 5: If the sum of the analysis places a utility over a certain threshold, we conclude that we have a high confidence that a customer has demonstrated intent to move forward with Interox on a 900 MHz contract.
Speaker 5: Today we're sharing several of these key metrics with you.
Speaker 5: A number of these are based on publicly available information, while others are based on the information utilities have shared with us under NDA.
Speaker 5: For the data in information that is publicly available, these metrics include things like regulatory or rate case filings, or public statements of intent made through participation on panels or interviews and articles.
Speaker 5: Membership in our Utility Strategic Advisory Board, active participation in the Utility Broadband Alliance, or filing for a 900-megahurtz experimental license, and more.
Speaker 5: For the metric supported by private data, many are very definitive and measurable, such as has the utility requested and received 900 MHz pricing, or has the utility issued in RFP where 900 MHz is defined as the primary spectrum band.
Speaker 5: If there is verbal agreement on deal terms or has the utility pursued BIL funding to support a private L.T. project or one of the top indicators, are we engaged in contract negotiations?
Speaker 5: While the significance of the metrics does vary, several are highly validating all on their own. However, many of these metrics in isolation don't confirm a contract with enterix as highly likely.
Speaker 5: It is the totality of the analysis that confirms our confidence that the utility is demonstrating considerable intent to proceed with deploying 900 MHz spectrum.
Speaker 5: The scorecard enables us to quantify the signs that we regularly see and that you hear us referencing when we say that we see momentum is increasing.
Speaker 5: At the moment, 15 utilities cross our threshold for the highest level of customer demonstrated intent, representing more than $800 million in potential contracted value.
Speaker 5: You won't be surprised to learn that these are the same set of customers we've been describing as are near-term opportunities in our projections. And at these utilities are part of the approximately $1.7 billion combined value we currently see in Phase 3 and 2.
Speaker 5: The remainder of our pipeline customers outside of these 15 are also being tracked for their demonstrated intent.
Speaker 5: Several fall just outside the threshold with the remainder of her pipeline on a graduated set of scores.
Speaker 5: Each corridor going forward, we plan to report on the progress of our demonstrated intent score card against our pipeline.
Speaker 5: so that you can measure our progress.
Speaker 5: to give you some more color on the 15 that crossed the threshold.
Speaker 5: 13 in this category have specifically named and made accountable a senior executive sponsor with the capability to progress a deal through their process.
Speaker 5: Nine have made public statements on industry panels or interviews about their development of private LTE for their utility.
Speaker 5: including recently as reported on panels at Distriby Check.
Speaker 5: 9. Who we've had and continue to have discussions on 900 megahertz spectrum deal terms.
Speaker 5: and six that have already established regulatory filings or rate cases to fund their pending private LT program.
Speaker 5: Five of the group have already released a completed network infrastructure RFPs, either identifying 900 megahertz as the sole source spectrum option or as the exclusive low-band option in a hybrid network model. And five have 900 megahertz experimental licenses.
Speaker 5: Notably highlighting the different journeys, utilities continue to take in their pursuit of private L.T.
Speaker 5: Well, these are just part of the indicators we see in track. The intentions are obvious.
Speaker 5: For an industry that is generally risk-averse and very deliberate, the full range of data we are tracking and the indications of intent we are seeing is very meaningful. And I hope gives you a level of confidence in our momentum and future contracts. And lastly, before I pass it back to Rob, I'd be remiss not to mention last week's seminal utility time.
Speaker 5: The fact that more than 30 of our technology partners were present in collaborating with customers in our booth is amazing.
Speaker 5: It is a testament to the importance of the Interox Active ecosystem that we have built, and a sign of the power of and demand for our solution.
Speaker 5: I'm proud of all of the accomplishments of our team at UNTERRICS and the combined contributions of our entire ecosystem who remain steadfast focused on ensuring private broadband networks and lock the most significant outcomes possible to ensure we are able to address the generational challenges faced with today's electric grid.
Speaker 5: I'll now turn it back over to Rob.
Speaker 4: Thanks, Ryan.
Speaker 4: We hope that by presenting you with the transparent details on how we measure demonstrated intent, we provided a clear picture about how we measure movement with the individual utilities and throughout the sector and how we define our confidence.
Speaker 4: While we are moving away from just updating the pipeline and for making any timing projections, we will continue to share with you details regarding how we are progressing with this new framework.
Speaker 4: In this last year, you've made great headway in that effort.
Speaker 4: We closed our largest customer-to-date Excel. Our active ecosystem grew to over 100 members with a robust collection of leading vendors that all have a stake in making 900 MHz private broadband solutions more valuable to the utility sector and beyond.
Speaker 4: We put in place several groundbreaking initiatives designed to enhance the value of 900 megahertz to utilities, including the launch of our platform, the creation of the Utility Strategic Advisory Board, and the introduction of our first product, Catalyx.
Speaker 4: We saw an incredible increase in engagement and demand across the whole sector reflected in the largest participation in the Utility Broadband Alliance conference and an extremely successful Distributec event just this last week. I know some of our investors actually had the opportunity to experience first hand.
Speaker 4: And before we move to Q&A, I want to share some additional good news.
Speaker 4: This morning we announced that Jeff Altman, a long-time interricks investor and founder of Al Creek, has been appointed to our Board of Directors.
Speaker 4: We've had a long and constructive relationship with Jeff and the Alcreek team since our first equity offering. I've gotten to know Jeff over the years and through our regular conversations, the Alcreek team's direct investor input has been very helpful to us.
Speaker 4: I'm looking forward incorporating Jeff's insight directly into our board's discussions as we continue to grow and expand in this important year.
Speaker 4: That concludes our prepared remarks. I'll now turn it back over to the operator for questions.
Speaker 2: Certainly. At this time we'll be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time.
Speaker 2: We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality.
Speaker 2: Once again, if you have any questions or comments, please press star one on your phone.
Speaker 2: Your first question is coming from James Ratcliffe from Evercore ISI. Your line is safe.
Speaker 6: Good morning. Thanks for taking the question. I've just been sort of in a big picture sense. I remember a couple of years ago when the story, the company was first going public and the like. The story was...
Speaker 6: very heavily, essentially sell the spectrum or release it in a longer basis and go home effectively. That's the long-term business was just cash in the checks.
Speaker 6: It sounds like it's much become notably more involved and more of a service provider. So can you give us an idea of just sort of long term what this business looks like and how and involve do expect to be in the operations of your customers.
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Speaker 6: Yes, why don't we go on to someone else here and answer my question. Thanks.
Speaker 19: Thanks, Jay.
Speaker 2: Your next question is coming from Simon Flannery from Morgan Stanley . Your line is live.
Speaker 5: Great, all right. Well, hopefully we can get through this one. The demonstrated interest is helpful. Thank you for that. The first thing is, did anything change in the last three months to move to this? Because a lot of the issues that you've talked about, Rob, you have been something that we've...
Speaker 23: We've heard from you for a few months now. So was there something, was it just the turn of the calendar and saying we'll have a different approach? And maybe to that point, maybe Ryan, just if we were to look at demonstrated interest three months ago, I don't know if you have a historical kind of reference point for that, but would we still be at the?
Speaker 23: 800 million give or take or has there been any change in that and I know you've talked about a handful of demonstrated targets that were very close to the finish line. Any updates on that will be great.
Speaker 14: Great, thank you Simon and again I apologize for the connectivity challenges here. There's a joke in there somewhere about how many telecommunications investors and executives it takes to connect to phone call. You know what's changed? It's just the continued evolution. You're absolutely right. We've been talking about these issues and recognizing and learning a lot from the customers.
Speaker 14: For us, what we realized is our mission of becoming the FACTO provider of these services to utilities. I consider that to be the war that we're winning and the Progwist we're making. What's challenging and more so all the time is predicting the Timing of the individual battles to get us there. And so we really decided it just doesn't make sense for us to provide those projections.
Speaker 14: on contracts going forward, but instead really focusing on what we see as a much more transparent and fact-based scorecard focusing on our demonstrated intent. And just one thing before I pass over to Ryan, I mean, what's unusual in this kind of conservative audience of utility executives?
Speaker 14: is to see them well ahead of a contracting process and demonstrating this intent through so many kinds of factors that we're going to go through. There's well over 20 factors that we measure in this demonstrated intent, but let me let Ryan talk about that a little further and maybe the historical reference point.
Speaker 5: Yeah, so I think the morning Simon. Yeah, so as we've seen, you know, kind of as we've been tracking, you know, the opportunities through, you know, and just for a little bit of reflection, as I said in the prepared remarks, you know, we're continuing the activities, you know, that go along with the pipeline. And you know, what we found is.
Speaker 5: These different indicators of a tent play out through many of the phases of the pipeline, but that the pipeline itself, and just having three categories, isn't overly granular in terms of how we can provide information and transparency to you. These elements give us more granularity and more ability to be able to track the change over time.
Speaker 5: And absolutely, we've seen significant changes over this, looking back over the last three, six, nine months. And a couple of the things that I'll highlight, few of the metrics didn't even exist as categories, frankly, until some initiatives played out for ourselves in the market, for example, with the activities that we've seen with ABBA or D-TAC where we see speakers.
Speaker 5: pursuing their opportunities with funding associated with broadband networks. We've also seen more regulatory filings progress. Granted, those don't happen quite as often as we see with some of the other metrics, but there are consistent signs we continue to see if they're putting most publications out and making their...
Speaker 5: They're financing available around what they're trying to do with broadband. Now, specifically to your other question around the other deals that we've been talking about. Obviously, we've spoken about four deals in contact to get some transparency to what we're seeing and the near-term opportunities in the pipeline. One of those, as we've discussed in the last call, was clearly Excel.
Speaker 5: The other three is you would anticipate, you know, are clearly, you know, front and center, you know, in this highest category, you know, have demonstrated and can't, they were continuing to seek good progress. In fact, a couple data points on those, you know, coming out of our model, you know, two of them specifically, you know, do have the rate cases, bundled, you know, all of them have capital plans, you know, and
Speaker 14: We've never been more excited about the opportunity and this demonstrated intent we're seeing. We've talked a lot qualitatively over the past calls about all of these elements. But what we really wanted to do was to be able to roll this up into a scorecard to really measure this demonstrated intent. For those of you, I know several investors, I mentioned where...
Speaker 14: the need for this to enable so many important use cases. The awareness now that there's a need for connecting the dots between all of these disparate systems that the communications divide a piece of that. It's clear evidence of the success we're having in moving industry forward, and that's what the intention of this demonstration intent is.
Speaker 14: just to be able to show a measurement of the success that we're seeing with the customers.
Speaker 23: Great, and one quick follow-up, if you take the 800 and the 15, you get 53 million average contract size. I think it sort of said 60 was your median, and it's not far off that, but is there any changes there? And I thought you said in the past you might see some.
Speaker 23: you might see some new records in terms of some bigger than average deals being signed than what you've done so far in the not too distant future.
Speaker 5: Absolutely, no change there at all Simon, you know, all still in play. Obviously there are larger deals that are still out there, but absolutely there's a disbursement of those values across a variety of different deal sizes.
Speaker 5: No change there at all Simon, all still in play. Obviously there are larger deals that are still out there, but absolutely there's a disbursement of those values across a variety of different deal sizes. Thank you.
Speaker 2: Thank you. Once again everyone, if you have any questions or comments, please press star then one on your phone at this time.
Speaker 2: Your next questions coming from George Sutton from Craig Hallam. Your line is live.
Speaker 4: Thank you. One of the key takeaways for me at Distributec was the robustness of the ecosystem in particular the catalyst and the catalyst and the utility provisioning system, the easy button are those types of things that make it a lot easier for the
Speaker 14: on, you know, first of all, the ecosystem overall, right? As I mentioned, not just over 100 companies that we actually brought together in an event out at DistributeTech, but also with, you know, well over 30 of them at our booth showing the valuable use cases, that is exactly what drives decision-making, right? It's not about...
Speaker 14: megahertz, it's not about spectrum, it's not about infrastructure, it's about the solution set that are being brought with this network, with a private broadband network, what it can enable. And so in our booth, you could see enablement of cybersecurity vendors with over a half-dozen vendors demonstrating the specific capabilities. And just to be clear, if you were there.
Speaker 14: went into mutual aid resiliency. So we had these categorizing ways to really be able to demonstrate, you know, you call it the easy button, but it's exactly that, that these networks that were built. I mean, one specific CTO who already moved forward with their system said to us, you know, can you come in and talk to our leadership about all the other things that this network that we've already put in place can do?
Speaker 14: because I don't think they have any idea about all the capabilities. And so, you know, it really is become kind of a Swiss Army knife of functionality. Often pulled through with one primary use case, and that's how they're justifying it. But what really is starting to come to fruition is the multiple blades of value on all the capabilities of this network can provide.
Speaker 14: and we're seeing that absolutely pretty growing momentum and understanding of what private LTE enables for utilities.
Speaker 4: One other question related to use cases.
Speaker 4: It was clear in talking to both utilities and some of your partners that these recent transformer attacks and concern about security have really highlighted a use case that private LTE serves very well.
Speaker 4: Could you talk about that in terms of how common that's become in your conversations and perhaps Could accelerate some conversation
Speaker 5: Hey George, Ryan here. I mean as you've heard, you know, certainly at the show and certainly from us before, security, you know, tends to elevate as one of probably the top one, if not top two things that we hear driving the need for private. And you know, whether that be in the form of cyber, which we also had on display, you know, at Distribute Check.
Speaker 5: I live in North Carolina and seeing the impacts of the physical attack on the substations there and the ability for that to highlight the urgency and utility decision-makers' mind is apparent. We've run into that now into a few different places where...
Speaker 5: similar attacks have happened or utility members in sharing their experiences and lessons learned are really focusing on how to enhance their capabilities. There's a lot of advanced technology out there that's already in the realm of either video for physical security or proximity detection, motion detection that can help utilities with more proactively managing the physical security around the borders and the you know
Speaker 24: At the Stubutec, one of your executives, Steve Ryan, he's the vice president of ecosystem partnerships, spoke on a panel with Ericsson regarding First Energy Corporation, which is a $44 billion IOU.
Speaker 24: that uses 700 megahertz spectrum for LTE. So is first energy one that fell out of your pipeline or is that one?
Speaker 24: Additionally, considering 900 megahertz.
Speaker 14: Yeah, good morning, Mike. Without talking about any utilities specifically under NDA, the 700 megahertz, I would say alternative was something that was a legacy spectrum available before we had broadband. And my perspective is most folks who committed to that were doing so prior to our offering. We have not lost any.
Speaker 14: anybody in our pipeline to date since we've had it available to our spectrum to that alternative at this time. And I'm glad you mentioned our presence on that panel. At Distributect, we had numerous executives really being able to talk about various topics.
Speaker 14: And importantly, as you said, with utility executives really talking about the value they're getting from broadband, there's always choices. Narrowband choices like 700 and broadband like 900. And so we see the, you know, to us.
Speaker 14: There are a lot of things that probably are interim solutions, but in the long-term broadband is really the only thing that will provide the breadth of capabilities that will be required to solve the growing list of challenges from cyber securities. We just talked about resiliency and importantly, the decarbonization or connecting of all the distributed energy sources.
Speaker 5: Yeah, Mike, let me just add it's Ryan here. I mean, we categorize, we can hear about the evolution of this utility networking. Obviously, there's a lot of legacy systems out there. And, you know, big part of that legacy, cordfully, you'll know what we've described as narrow bands. And, you know, narrow band, you know, leveraging 700, 700 megahertz is one example. The mesh networks, you know, or the dedicated skid and networks are other examples.
Speaker 5: But they all fit into that category. And I absolutely, I see them as actually opportunity creating as utilities have experienced what the limitations are of those systems in terms of what they can do and how do they drive future growth of digitization of assets over time. And definitely continue to see kind of how broadband then becomes a complement and or a lifecycle replacement to those technology.
Speaker 24: Given that next NA has pivoted from transmitting its terripoint timing signal from overg PS to over LTE using its 900 megahertz spectrum, of what it has, a megahertz, what percent of your customers do you think would benefit?
Speaker 14: opportunities for expansion of our business model. You know, specifically, you know, our understanding is there's some, you know, some technical and a conference challenges that that that band doesn't can't really be used for the same sort of unencumbered private broadband systems on on LTE 4G 5G.
Speaker 14: But I know we've had a conversation about that before and happy to take any more of that offline if you'd like.
Speaker 25: Rob, I'll just, I mean, I'll jump in as Chris. And as we look at spectrum opportunities, and that's a core of who we are. If we see opportunities to enhance our spectrum position, we look at it, we investigate it. Mike, the one you're referencing.
Speaker 25: It's not in our band, it wouldn't roll up to 5x5. So we appreciate the team at next nav, but that's not an opportunity that we see gives us additional value. But we do look at, we're open-minded, we look at all sorts of potential opportunities to expand our spectrum portfolio.
Speaker 19: All right, thank you.
Speaker 2: Thank you. Once again everyone, if you have any questions or comments please press star then one on your phone at this time.
Speaker 2: Your next question is coming from Walter Pysig from Lightshed. Your line is live.
Speaker 23: Thanks. I think Ryan may have answered this.
Speaker 4: on her Simon's question, but the worst in quite bad shape my brain so let me try and ask it a different way. When?
Speaker 4: Well, your spectrum or the spectrum you used to own or your car was leasing.
Speaker 26: be used in a radio by any of those of your existing customers.
Speaker 26: if that's not already happening.
Speaker 26: Yes, well, and I got to start a conversation with sharing my sympathies on the on the eagles and Chris field that well. But and my sympathies on your conference call maybe you guys should switch to zoom. Is this like some formal Microsoft teams?
Speaker 14: I think so. But just answer your question. Our spectrum is already in use in radios. If that's what you're asking, I mean, several of our customers have already deployed, ran and are already operating sites. My understanding of question correctly.
Speaker 26: Yeah, that's perfect. So then you have this opportunity to show these other utility companies that, you know, it's in use in a network. What further development is required of existing customers to provide an adequate use case to get people off the hump. If that's, you know, if that's part of the issue of why they're not moving forward, whatever next step you need
Speaker 14: I think look the complexity of decision-making is a lot more than just piloting. The piloting is a unique aspect of the utility journey.
Speaker 14: most utilities still want to stand up and kick the tires on their own systems. All I've got to say with this, the beauty of this sector is that they absolutely are working together. I mean, through the utility broadband alliance, through our own efforts with the utility strategic advisory board.
Speaker 14: We've met with numerous utilities this past week at Distributec, and they are all hosting and inviting in their brother and their fellow utilities to come see their deployments and talk about it. We were happy to be in San Diego where San Diego Gas and Electric is, and they've already deployed.
Speaker 14: private LTE systems and they had visitors from other utilities that could go and see and it's not just Seeing the physical assets out there. It's what we were talking about earlier. It's about the end to end to end connectivity So in San Diego's case, they're showing that they're deploying, you know, wildfire Mitigating sensors to be able to depower lines before they hit the ground
Speaker 14: They're showing that they're connecting up battery storage facilities that they're rapidly deploying and they can provision private LTE much faster than anything else they've ever had in their arsenal. And so it's not just about kicking the tires on the wireless network, it's about understanding the use cases that are being enabled. But it's absolutely a catalyst to getting through the process.
Speaker 14: but there's a lot of other complicated steps, right? These are large complex organizations that you have holding company executives that need to understand and apply on this. You've got operating company executives that have to do the same and functional areas. And this because, as I said earlier,
Speaker 14: This is not just a spectrum decision or a private LTE decision. These are often embedded in large rate cases that also include the costs of upgrades of the network overall. That's the electric grid. And so that could be an income reclosers to AMI systems, to cybersecurity capabilities.
Speaker 26: that are embedded into the rate cases along with with our spectrum purchase decisions. I think it was SDGEP, whatever it is that also bought CBRS.
Speaker 26: Do you have any visibility in terms of where they are with that deployment, how, if at all, it's been integrated with the lower band spectrum and just any visibility on that?
Speaker 14: Yeah, a couple thoughts. One is, without getting into any of the specifics of kind of how they're deploying, you know, I've compared it before, but having just met with that team this past week in San Diego, it's absolutely a compliment. You know, it's like having, again, Wi-Fi in your offices and you walk outside and you're using a cellular network. And is no BAL truth, and this is not proof of a digital nipples inee,
Speaker 14: CBRS has a specific, great broadband capability, but as you know, very limited range at the band where it is. And so it's an overlay, it's a capability, you know, if you're in a substation or in an area where you need more capacity as an overlay, it can be used licensed or unlicensed as you know, but for covering wide areas.
Speaker 14: As they said, the underlying spectrum has to be low band. From your past, the need to be able to cover vast areas of territories, often where there is no other cellular coverage, you need low band to cost the faculty to do that. That's really been the model that they've used and why they have the complement. By which, no different than the other complement of fiber. Right, five.
Speaker 26: discussions that you have with these utility companies that they use spectrum consultants, lawyers, whatever. I'm just curious if in those discussions or those consultants, part of that analysis involved the potential interest.
Speaker 26: by Leo Consolations to use low band spectrum as dedicated spectrum. You know, to obviously supplement phones, we saw what Apple has done initially with Globalstar. We see what gum would be doing with aoridium
Speaker 26: and their discussions with Qualcomm. I understand that's not something that, you necessarily want your spectrum to be used for because of your focus on the utility companies, but as it relates to the discussion over evaluation and demand for spectrum bands, narrow and low, I'm just curious if that has.
Speaker 26: entered into that dialogue over the past year, six months.
Speaker 14: Yeah, I know I wouldn't say we've seen it. I know it's a relatively new phenomenon in the carous space and cool everyone scrambling for their own solution to complement terrestrial wireless with some form of satellite coverage. You understand that these
Speaker 14: Critical infrastructure companies, including utilities, have used satellite for remote capabilities for a long time And so it's not necessarily new to them, but the breadth of availability and the integration I think of Delta is where it's capable I think it's a compliment. You know when we talk about our new product of Cadillac as an example, which is really Giving utilities the ability to integrate their own private networks
Speaker 26: I think generally, I don't think I asked the question properly. Let me let me try again. I think I worded it poorly as usual, but it was not about like whether the utilities are considering integrating satellite connectivity. It was more to the extent of if there's a dialog about, hey, am I paying you a dollar a pop, a dollar fifty, three dollars.
Speaker 26: Like anything, supply and demand of a limited asset is impacted by the, you know, what supply and demand. There's fixed amount of supply, but if there's now potentially increased demand because the interest to implementing some of these spectrum bits into leoconcilations.
Speaker 26: theoretically that should drive up the the valuation discussion, you know, I just kind of proceed forward. Is that not happening? There's no doubt that the demand from spectrum has never been stronger, right? And we continue to see, you know, increased interest across other sectors as well for private systems.
Speaker 14: whether it's terrestrial or satellite. So I think the rising tide of demand and obviously the scarcity of low band specifically absolutely continues to support valuation conversations and yes, you're spot on in that regard.
Speaker 26: And then just one plan of one for Chris. You know, Biden, I think talked a bit about infrastructure, I guess. I perceived some of that in his words.
Speaker 26: And then I think Stankius has talked about in terms of fix.
Speaker 26: in the six broadband world fiber, you know, the government funding of a lot of stuff. Key does refresh us on if things seem to be moving forward with a lot of these large funding programs.
Speaker 26: stuff that may start to have an impact that did not have an impact in 2022.
Speaker 25: Yeah, hey, Walt. Yeah, yeah. Hey, Walt, great, great, great question. I'm going to hit it at the macro then then go into the micro really quickly. At the macro level, everything that we see, whether it is the State of the Union from President Biden, whether it's the work we did to get language into the legislation, which was...
Speaker 25: So all of that macro messaging from policymakers and I spent the entire day yesterday at NARUC and there's their discussions happening there So at the state regulatory level so all of that macro messaging is fantastic at the micro level you know we we did I think it's fair to say we did participate in the in the
Speaker 25: production and submission of a number of concept papers with regard to the I.I.J.A. B.I.L. grip funding opportunities. And so we were part of it and as we have more information when we have more information to share, we'll put that out there. But we're seeing it at the individual utility and
Speaker 25: utility organization level, interest in private LTE, as part of the concept papers for these different programs. So, you know, I'm happy, I know we are happy collectively that it's progressed the way that it had from macro messaging to micro.
Speaker 25: opportunities and you know we're excited to see where it goes from here. Remember a bunch of these programs are five year programs so what we see come out of DOE over the next six to 12 months in terms of full answers can be replicated or enhanced over the next several years.
Speaker 26: So these organizations have those resources to Recognize that or is that you and your team kind of you know basically? Going to these people and educate them and saying look did you know you've got this money That's there that can be part of this project to help you move forward or is it like door number three where they're like you know
It's part of working into our cost basis. So that would complicate things. So let's just stay away from that rather than involve that stuff and just work it into the cost basis, which we're able to do. Yeah, no, it's a great question. So it's a little bit of all of the above. So I'll take the first half of the question.
We do with great team internally, they proactively have conversations with both individual utilities and some of the utility focused organizations. We've integrated some third parties and so some consulting firms and some others you can help them put together products and these concept papers and submissions.
And then what we what we like to say is we sort of set the table with with our work on the legislation Some utilities participate and sit down and enjoy that opportunity and others, you know Choose the path that you just said that you know a dollar from the federal government offsets a potential dollar That can be capitalized and they can earn a return on so it's a it's sort of a combination of
with our difficulties. Just summarizing, you know, we couldn't be any more excited both about the opportunity and the pipeline and really being able to share this new measurement of what I think of as utilities demonstrated intent but also the sign of our confidence in a much more statistical way and we're happy to take any...
follow on questions and looking forward to conversations in the weeks as follows. So thanks again, have a good day.