Earnings Call Transcript - ATEX Q3 2023

Operator, Operator

Good day, everyone, and welcome to the Anterix Third Quarter Investor Update. It is now my pleasure to turn the floor over to your host, Natasha Vecchiarelli. The floor is yours.

Natasha Vecchiarelli, Vice President of Investor Relations and Corporate Communications

Thank you, and good morning, everyone. I'm Natasha Vecchiarelli, Vice President of Investor Relations and Corporate Communications, and I welcome you to the Anterix third quarter conference call. Joining me today are Rob Schwartz, President and CEO; Ryan Gerbrandt, COO; Tim Gray, CFO; and Chris Guttman-McCabe, Chief Regulatory and Communications Officer. 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. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Investors are cautioned not to place undue reliance on forward-looking statements. Additionally, we do not undertake any duty to update any forward-looking statements. 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. These files can be accessed on our website or on the SEC's website. After Rob and Ryan provide their prepared remarks, we'll open the call for questions. With that, I'll turn the call over to Rob.

Robert Schwartz, President and CEO

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. We fully understand that this was a difficult past year for investors, both in the markets overall and specifically for Anterix stockholders. Like any pioneering business defining a new market, when we embarked on this journey several years ago, we made some initial assumptions. Some that we got right and some that we got wrong. To be clear, the value of our pipeline remains strong with potential contract proceeds of well over $3 billion. As I've 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. 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. We're also going to give greater transparency on our current customer progress with a measure we call demonstrated intent. And we'll discuss why we no longer intend to provide projections on contracts given the challenges of predicting contract timing. First, as we've elaborated upon previously, the process to get to contract with utilities is incredibly more complex in many cases than we originally envisioned. Leasing spectrum is deeply embedded into a growing list of disparate yet significant grid modernization issues facing utility leaders, including resiliency, cybersecurity, and decarbonization. While these act as a major force to implement change, they also dramatically expand the breadth of analysis, cost, and decision-making process each utility undertakes. This decision-making process requires us to obtain broad support from executives throughout the utility, including leaders in holding companies, operating companies, and functional areas. While this process continues to escalate and enhance the visibility of our value proposition, it has substantially increased the complexity of their decision-making and as a result, makes timing less predictable. Accordingly, to support this broad and complex decision-making process, we've realized that consistent and extensive education is critical. We support the utility decision-making by engaging and educating across the entire organization to get to yes, even including utility regulators and industry associations. 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. We also continue to see that solutions are key to utility adoption. We've accordingly initiated several well-received programs. Many of our utility discussions have pivoted from spectrum to use cases that demonstrate the strategic and economic benefits of 900 megahertz private broadband and become a necessary element of business case justifications on the path to contracting. 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 Anterix active ecosystem, Utility Broadband Alliance, EEI, EPRI and other major industry groups. And while there are some similarities in 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 the utilities' processes. So while we are not seeing necessarily a shortening of the cycle time in getting the contract, we do see a strong influence from existing customers to their peers that impacts their desire and intent to move forward. We set out 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. But the reality is we can't do that with any real precision. The complexity of the unique nature of each opportunity directly impacts the timing of the process. That said, we can see with greater clarity and measure the total scale of the market opportunity. We are creating a market that previously did not exist. We are taking utilities through a broadband adoption process that they've not been through before. We've experienced and learned to manage through unforeseen issues causing delays like CEO successions, procurement process changes, competitive actions, and more. While this pioneering role can mean a slower pace of adoption, for us, it confirms that we know we have a unique product with a unique value proposition at a unique time for the utility industry. 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 over timing. As a result, we've determined that we should evolve the way we communicate to investors about our future customer opportunities. We've concluded that starting today and going forward, Anterix will not provide timing projections, but instead, we'll provide what we believe is a transparent and fact-based scorecard that we've defined as demonstrated intent. What we know is that we see significant signs of customer intent before we get to contract; it's why we say that it's not a matter of if, but when. This intent is tangible. At times publicly visible and is measurable. I'll now turn it over to Ryan to take you through this in further detail, and then I'll wrap it up with some concluding remarks.

Ryan Gerbrandt, COO

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. And in addition to the pipeline on each call, we've shared many other examples of the momentum we are experiencing, 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 are making in moving each utility and the entire sector to execute on our goal of being the de facto private wireless broadband provider to utilities. One of the things we have learned and have concluded is that the phases of the pipeline alone do not reflect the 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, and measurable way to see the combined impact and development of this important market opportunity. Today, we're going to share an additional way of quantifying and tracking our momentum. 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. 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 of potential contracted proceeds, with more than $500 million now in Phase III and more than $1.2 billion in Phase II. Adding just these bottom two phases and their total of $1.7 billion in potential proceeds to our signed deals worth over $200 million in contracted proceeds demonstrates why we remain excited about the overall value of this opportunity. 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 we will report this to you going forward. For this analysis, we track many individual metrics for every customer in our pipeline and proportionately score each based on our assessment of its importance and come up with a combined demonstrated intent score. If the sum of the analysis places a utility over a certain threshold, we conclude that we have high confidence that a customer has demonstrated intent to move forward with Anterix on a 900-megahertz contract. Today, we're sharing several of these key metrics with you. A number of these are based on publicly available information, while others are based on the information utilities have shared with us under NDA. For the data and 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 in interviews and articles, membership in our Utility Strategic Advisory Board, active participation in the Utility Broadband Alliance, or filing for a 900 megahertz experimental license and more. For the metrics supported by private data, many are very definitive and measurable such as: has the utility requested and received 900 megahertz pricing, or has the utility issued an RFP where 900 megahertz is defined as the primary spectrum band, is there a verbal agreement on deal terms? Or has the utility pursued BIL funding to support a private LTE project, or one of the top indicators are we engaged in contract negotiations? 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 that a contract with Anterix is highly likely. It is the totality of the analysis that confirms our confidence that the utility is demonstrating considerable intent to proceed with deploying 900 megahertz spectrum. This 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. 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. You won't be surprised to learn that these are the same set of customers we've been describing as our near-term opportunities in our projections. And that these utilities are part of the approximately $1.7 billion combined value we currently see in Phase III and II. The remainder of our pipeline customers outside of these 15 are also being tracked for their demonstrated intent. Several fall just outside the threshold with the remainder of our pipeline on a graduated set of scores. Each quarter going forward, we plan to report on the progress of our demonstrated intent scorecard against our pipeline so that you can measure our progress. To give you some more color on the 15 across the threshold, 13 in this category have specifically named and made accountable, a senior executive sponsor with the capability to progress a deal through their process. Nine have made public statements on industry panels or interviews about their development of private LTE for their utility, including recently as reported on panels at DistribuTECH. Nine, whom we've had and continue to have discussions on 900 megahertz spectrum deal terms, and six that have already established regulatory filings or rate cases to fund their pending private LTE program. Five of the group have already released their 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, notably highlighting the different journeys utilities continue to take in their pursuit of private LTE. While these are just part of the indicators we see and track, the intentions are obvious. 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 Technology Event DistribuTECH. With over 12,000 attendees and having communication networks as a main track topic with at least a dozen specific sessions, it once again has proven the elevated role a broadband network has taken across the utility landscape. The fact that more than 30 of our technology partners were present and collaborating with customers at our booth is amazing. It is a testament to the importance of the Anterix Active ecosystem that we have built and a sign of the power of and demand for our solution. I'm proud of all of the accomplishments of our team at Anterix and the combined contributions of our entire ecosystem, who remain steadfast focused on ensuring private broadband networks unlock the most significant outcomes possible to ensure we are able to address the generational challenges faced with today's electric grid. I'll now turn it back over to Rob.

Robert Schwartz, President and CEO

Thanks, Ryan. We hope that by presenting you with the transparent details on how we measure demonstrated intent, we have provided a clear picture about how we measure movement with the individual utilities and throughout the sector and how we define our confidence. While we are moving away from just updating the pipeline and from making any timing projections, we will continue to share with you details regarding how we are progressing with this new framework. In this last year, we've made great headway in that effort. We closed our largest customer to date, Xcel. Our active ecosystem grew to over 100 members with a robust collection of leading vendors that all have a stake in making 900 megahertz private broadband solutions more valuable to the utility sector and beyond. 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 catalysts. 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 DistribuTECH event just this past week. But I know some of our investors actually had the opportunity to experience firsthand. And before we move to Q&A, I want to share some additional good news. This morning, we announced that Jeff Altman, a long-time Anterix investor and founder of Owl Creek, has been appointed to our Board of Directors. We've had a long and constructive relationship with Jeff and the Owl Creek team since our first equity offering. I've gotten to know Jeff over the years and through our regular conversations. The Owl Creek team's direct investor input has been very helpful to us. I'm looking forward to incorporating Jeff's insight directly into our Board's discussions as we continue to grow and expand in this important year. That concludes our prepared remarks. I'll now turn it back over to the operator for questions.

Operator, Operator

Your first question is coming from James Ratcliffe from Evercore ISI.

James Ratcliffe, Analyst

Just sort of in a big picture sense. I remember a couple of years ago, when the company was first going public and the like. The story was very heavily essentially sell the spectrum or lease it on a long-term basis and go home effectively, that long-term business was just cashing the checks. 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 involved do you expect to be in the operations of your customers?

Robert Schwartz, President and CEO

I think about what you said regarding the spectrum. From our perspective, it is clear that the key parts of our business are focused on this area.

James Ratcliffe, Analyst

I can hear you, but there's static.

Robert Schwartz, President and CEO

Okay. But I'm going to answer your question. We've always talked about the significant value of spectrum action. The first one is clearly the value of the spectrum with a facility to identify and develop it. At the same time, we're seeing the strength of that marketplace expanding beyond just spectrum value, as various companies engage in an active system program focused on valuable and proactive solutions. This could provide us with opportunities in structure, service application data, and more, going beyond spectrum. However, none of this is currently part of our primary business, which focuses on signing contracts for that spectrum. But to be clear, we do see potential beyond that. Historically, our networking services have also been significant.

Operator, Operator

Ladies and gentlemen, we will reconnect our speaker. Please stay on the line while I reconnect the speaker. Now we are back and we apologize...

James Ratcliffe, Analyst

Yes, I can hear you.

Robert Schwartz, President and CEO

Okay. Sorry about that. I can recommend the conference for future calls. I think I answered your initial question, are you able to hear that?

Operator, Operator

Your next question is coming from Simon Flannery from Morgan Stanley.

Simon Flannery, Analyst

Great. All right. Well, hopefully, we can get through this. One, the demonstrated interest is helpful. 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, have been something that we've heard from you for a few months now. So was there something or is it just a 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 $800 million, give or take? Or has there been any change in that? And I know you talked about a handful of demonstrated targets that were very close to the finish line. Any updates on that would be great.

Robert Schwartz, President and CEO

I apologize for the connectivity issues. There's a joke about how many telecommunications investors and executives it takes to connect a call. What's changed? It's the ongoing evolution. You're correct that we've been addressing these challenges and learning a lot from our customers. We realized that our mission is to become the primary provider of these services to utilities. I see that as the battle we're winning, but predicting the timing of each step to get there is becoming more complex. Therefore, we decided it doesn't make sense to provide projections on contracts moving forward. Instead, we want to focus on a more transparent and fact-based scorecard that reflects our intentions. One notable aspect in this audience of utility executives is that they are often ahead of the contracting process, showing their intentions through many factors we measure—over 20 in total. Now I'll hand it over to Ryan, who can elaborate on this further, along with some historical context.

Ryan Gerbrandt, COO

Yes. As we've been tracking the opportunities, I reflected in the prepared remarks on our ongoing pipeline activities. We discovered that various indicators of technology emerge throughout all phases of the pipeline, but having just three categories is too granular for effectively providing information and transparency. These elements allow us to gain more detail and better track changes over time. We've seen significant shifts when looking back over the past three, six, or nine months. Notably, some metrics only emerged due to recent initiatives in the market. For instance, we've observed considerable public engagement from utilities regarding their private LTE networks following a recent event. Similarly, there’s notable engagement surrounding BIL funding related to broadband network opportunities. We've also seen some progress in regulatory filings, which, while not as frequent as other metrics, showcase a consistent trend as utilities publish and make financing available for broadband initiatives. Regarding other deals we’ve mentioned, we've previously discussed four contracts to shed light on near-term opportunities in the pipeline. One of these is Xcel, and the other three are prominent in our highest category of demonstrated intent, with good progress continuing. Specifically, two of them have rate cases, all have capital plans driving their internal PLT programs, and one is pursuing an infrastructure RFP. Overall, we are seeing continued progress as they navigate their individual processes in pursuing broadband.

Robert Schwartz, President and CEO

And Simon, to conclude, I want to emphasize that we’ve never been more enthusiastic about the opportunities and the demonstrated intent we’re witnessing. We’ve discussed various elements qualitatively in past calls, but our goal is to consolidate this information into a scorecard to effectively measure this demonstrated intent. For those who attended DistribuTECH last week, the level of interest, excitement, and engagement from utilities and the ecosystem was evident. There were over 10,000 attendees at the event, highlighting recognition of Anterix's solution set and the necessity for these to support numerous important use cases. The awareness around connecting the dots between disparate systems, with communication being a crucial component, is clear evidence of the progress we’re making in advancing the industry. The purpose of measuring this demonstrated intent is to showcase the success we’re achieving with our customers.

Simon Flannery, Analyst

Great. I have a quick follow-up. If you consider the average contract size, you mentioned it was close to your median. Is there any change in that? I recall you indicating in the past that we might see new records for larger-than-average deals being signed in the near future compared to what you have achieved so far.

Ryan Gerbrandt, COO

Absolutely. 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.

Operator, Operator

Your next question is coming from George Sutton from Craig-Hallum.

George Sutton, Analyst

One of the key takeaways for me at DistribuTECH was the robustness of the ecosystem, particularly the utility provisioning system, which simplifies the process for utilities. Are these developments making it easier for utilities to move forward and accelerating the discussions?

Robert Schwartz, President and CEO

Great question, George. It was great to see you last week. Thanks for making the trip out to San Diego for DistribuTECH. You're spot on. Look, 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 DistribuTECH, but also 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 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 half a dozen vendors demonstrating the specific capabilities. And just to be clear, if you were there, we had CTOs, all levels of executives coming through there, being able to see that and understand connecting the dots, having those aha moments that we saw, this is the value that's being brought by this broadband wireless network and why they need it. It went into mutual aid resiliency. And so we had these categorizing ways to really be able to demonstrate, 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, 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 because I don't think they have any idea about all the capabilities. And so it really has 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 that this network can provide. And we're seeing that absolutely creating a growing momentum and understanding of what private LTE enables for utilities.

George Sutton, Analyst

One other question related to use cases. It was clear in talking to both utilities and some of your partners that these recent transformer attacks and concerned about security have really highlighted a use case that private LTE serves very well. Could you talk about that in terms of how common that's become in your conversations and perhaps could accelerate some conversations?

Ryan Gerbrandt, COO

George, Ryan here. I mean, as you heard, certainly at the show and certainly from us before, security tends to elevate as one of probably the top one, if not top two things that we hear driving the need for private. And whether that be in the form of cyber, which we also had on display at DistribuTECH, which is clearly looking at more how do we add a more robust capability to the existing inherent technology advantages that LTE brings. But in addition to that, you're right, kind of the physical security side of the use case. This is a conversation that I'm hearing come up more and more. Obviously, I live in North Carolina and seeing the impact of the physical attack on the substations there and the ability for that to highlight the urgency in a utility decision-makers mind is apparent. And we've run into that now in a few different places where 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 offenses of the substations, but I'm sure will become part of a set of use cases that ultimately move forward.

Operator, Operator

Your next question is coming from Mike Crawford from B. Riley Securities.

Michael Crawford, Analyst

At DistribuTECH one of your executive, Steve Ryan, Vice President of Ecosystem and Partnerships, spoke on a panel with Ericsson regarding First Energy Corporation, which is a $44 billion IOU that uses 700 megahertz spectrum for LTE. So is First Energy one that fell out of your pipeline? Or is that one that's additionally considering 900 megahertz?

Robert Schwartz, President and CEO

Without discussing any specific utility under NDA, the 700 megahertz option was a legacy spectrum that existed before the advent of broadband. In my view, most people who committed to that did so before we began offering our services. To date, we have not lost anyone in our pipeline since we made our spectrum available as an alternative. I'm pleased you mentioned our involvement on that panel. At DistribuTECH, we had many executives engaging on various topics, particularly utility executives discussing the benefits they are seeing from broadband. There are always alternatives, such as narrowband options like 700 and broadband like 900. We believe that many of these are likely temporary solutions. However, in the long term, broadband is truly the only option that can deliver the extensive capabilities needed to address the increasing challenges related to cybersecurity, resiliency, and importantly, the decarbonization efforts involving all distributed energy sources.

Ryan Gerbrandt, COO

Yes, Mike, let me just add; it's Ryan here. I mean we categorize, when you hear about the evolution of this utility networking. Obviously, there's a lot of legacy systems out there. And a big part of that legacy portfolio are what we describe as narrowband. And narrowband leveraging 700 megahertz is one example, the mesh networks, or the dedicated SCADA networks, or other examples but they all fit into that category. And 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 technologies as we start looking to higher end, more broadband-intensive or lower latency demanding applications starts really driving the conversation towards where broadband LTE comes into play.

Michael Crawford, Analyst

Okay. And then I have one final question. So, given that NextNav has pivoted from transmitting its tariff point timing signal from over GPS to over LTE using its 900 megahertz spectrum, which it has 8 megahertz, what percent of your customers do you think would benefit from considering a 5x5 LTE solution if that was available versus just the 3x3 that you're offering?

Robert Schwartz, President and CEO

Yes. Mike, we have discussed this before. You should know that we are actively exploring all spectrum opportunities and are always looking to expand our business model. Specifically, there are some technical and encumbrance challenges that prevent that band from being suitable for the same unencumbered private broadband systems on LTE, 4G, and 5G. I know we've talked about this previously, and I'm willing to discuss it further if you're interested.

Christopher Guttman-McCabe, Chief Regulatory and Communications Officer

Yes, Rob, it's Chris. As we consider spectrum opportunities, which are central to our identity, we explore ways to strengthen our spectrum position. We looked into the one you mentioned, Mike; however, it's not part of our band and wouldn't align with 5x5. While we appreciate the NextNav team, we do not view this as adding value for us. Nonetheless, we remain open-minded and are always looking for various potential opportunities to enhance our spectrum portfolio.

Operator, Operator

Your next question is coming from Walter Piecyk from LightShed.

Walter Piecyk, Analyst

I think Ryan may have answered this, under Simon's question, but the words didn't quite penetrate my brain. So let me try and ask it a different way. When will your spectrum or the spectrum you used to own or you're currently leasing be used in a radio by any of your existing customers if that's not already happening?

Robert Schwartz, President and CEO

Yes. So, well, I've got to start a conversation with sharing my sympathies on the Eagle. I know Chris feels that well.

Walter Piecyk, Analyst

And my sympathy is on your conference call; maybe you guys should switch to Zoom. Is this like some formal Microsoft teams?

Robert Schwartz, President and CEO

I think so. But just to answer your question, our spectrum is already in use in radios, if that's what you're asking. Several of our customers have already deployed, ran, and are already operating sites. Am I understanding your question correctly?

Walter Piecyk, Analyst

Yes, that's perfect. So then you have this opportunity to show these other utility companies that it's in use in a network or what further development is required of the existing customers to provide an adequate use case to get people off the hump, if that's part of the issue of why they're not moving forward with whatever next step you needed to move forward on.

Robert Schwartz, President and CEO

Yes. The decision-making process involves more complexity than just piloted initiatives, although piloting does play a unique role in the utility journey. Many utilities prefer to evaluate their own systems firsthand. What’s remarkable about this sector is the collaboration seen among utilities. For instance, through the Utility Broadband Alliance and our interactions with the Utility Strategic Advisory Board, we’ve engaged with multiple utilities recently at DistribuTECH. They are actively inviting their peers to observe their deployments and discuss their experiences. We were pleased to be in San Diego, where San Diego Gas & Electric has implemented private LTE systems, showcasing a prototype for other utilities to explore. It’s not only about viewing the physical infrastructure; it also involves the holistic connectivity aspect. In San Diego's case, they are demonstrating the deployment of sensors aimed at wildfire mitigation, which allows them to deenergize lines preemptively. They are also integrating battery storage systems that are being rapidly rolled out, enabling faster provisioning of private LTE compared to previous solutions. Thus, it's not simply about testing the wireless network but understanding the new use cases that are made possible. This undoubtedly acts as a catalyst for progress, yet there are many other intricate steps involved. These organizations are large and complex, requiring input from holding company executives, operating company leaders, and various functional areas. As mentioned earlier, the decisions regarding spectrum or private LTE are more than just technical choices. They are often part of larger rate cases that incorporate the costs associated with upgrading the entire network, including the electric grid, which could involve elements like reclosers, AMI systems, and cybersecurity capabilities alongside our spectrum acquisition decisions.

Walter Piecyk, Analyst

I think it was SPGEP, whatever it is, that also bought CBRS, 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?

Robert Schwartz, President and CEO

Yes. A couple of thoughts. One is, without getting into any of the specifics of kind of how they're deploying, I've compared it before, but having just met with that team this past week in San Diego, it's absolutely a complement. It's like having Wi-Fi in your offices and you walk outside and you're using a cellular network. CBRS as 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. 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, as they said, the underlying spectrum has to be low band. As you know, from your past, they need to be able to cover vast areas of territories often where there is no other cellular coverage; you need low band to cost-effectively do that. And that's really been the model that they've used and why they have the complement. And by the way, it's no different than the other complement of fiber, right? Fiber is a great tool and an asset that a lot of utilities have and it complements their communications offering, but it's expensive and gets to very high-value assets; it can't give you the breadth of coverage that you get out of private broadband wireless.

Walter Piecyk, Analyst

Got it. I know in the 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 has part of that analysis involved the potential interest by LEO constellations to use low-band spectrum as dedicated spectrum. It's obviously supplement phones. We saw what Apple has done initially with Globalstar. We see with Iridium and their discussions with Qualcomm. I understand that's not something that you necessarily want your spectrum to be used for because if your focus is on the utility companies. But as it relates to the discussion of valuation and demand for spectrum bands, narrow and low, I'm just curious if that has entered into that dialogue over the past year, six months?

Robert Schwartz, President and CEO

Yes. I don't think we've seen it. Anyway, it's a relatively new phenomenon in the carrier space, and clearly, everyone is scrambling for their own solution to complement terrestrial wireless with some form of satellite coverage. You understand that these critical infrastructure companies, including utilities have used satellite for remote capabilities for a long time and so it's not necessarily new to them. Clearly, the breadth of availability and the integration, I think, into LTE is where it's capable. I think it's a complement. When we talk about our new product as an example, which is really giving utilities the ability to integrate their own private networks into public networks and be able to seamlessly migrate between them when necessary, whether it's for even on-ramp as they're building out their systems or for backup. I see satellite just being able to add to some of that resiliency, and we'll see how well integrated and where the costs end up. But I think generally....

Walter Piecyk, Analyst

I don't think I asked the question properly. Let me try again. I think I worded it poorly as usual, but it was not about whether the utilities are considering integrating satellite connectivity. It was more to the extent of if there's a dialogue about, 'Hey, am I paying you $1 a pop, $1.50, $3? Anything, supply and demand of a limited asset is impacted by the supply and demand; there's a fixed amount of supply, but if there's now potentially increased demand because of the interest in implementing some of these spectrum bits into LEO constellations.' Theoretically, that should drive up the valuation discussion. I just kind of proceed forward. Is that not happening?

Robert Schwartz, President and CEO

Yes. There's no doubt that the demand for the spectrum has never been stronger, right? And we continue to see increased interest across other sectors as well for private systems, whether it's terrestrial or satellite. So I think the rising tide of demand and obviously the scarcity of low-band specifically continues to support valuation conversations. And yes, you're spot on in that regard.

Walter Piecyk, Analyst

And then I have one final question for Chris. I believe Biden mentioned something about infrastructure, and I sense that in his remarks. Additionally, I think there have been discussions about fixed broadband, specifically regarding fiber and the government funding for various projects. Could you provide an update on whether these large funding programs are progressing and if they might start to have an impact that wasn't felt in 2022?

Christopher Guttman-McCabe, Chief Regulatory and Communications Officer

Yes, great question. I'll start at the macro level and then quickly address the micro. Overall, we see significant messaging from policymakers about the crucial role of communications in modern grid infrastructure, highlighted by recent discussions, including President Biden's State of the Union address and legislative efforts that were initially included and later influenced funding requests from the Department of Energy and the NTIA for broadband. We believe that a modern grid requires modern communication. I spent yesterday engaging in discussions that highlighted this at the state regulatory level. On the micro side, we have actively participated in drafting and submitting several concept papers related to the funding opportunities from the IIJA, BIL, and GRIP. We are happily observing interest in private LTE from individual utilities through these concept submissions. We are excited about the progress from broader messaging to specific opportunities and look forward to what unfolds. It's important to note that many of these initiatives span five years, so the developments from the DOE in the next six to twelve months can be built upon and expanded in the coming years.

Walter Piecyk, Analyst

So these organizations have those resources to recognize that? Or is that you and your team kind of basically going to these people and educating them and saying, look, 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 #3, where they're like, it's part of working into our cost basis, so that would complicate things. So let's stay away from that rather than involve that stuff and just work it into the cost basis which they're able to do?

Christopher Guttman-McCabe, Chief Regulatory and Communications Officer

Yes, it's a bit of everything. To address the first part of the question, we have a strong internal team that regularly engages with individual utilities and utility-focused organizations. We've also brought in third parties, such as consulting firms, to assist in developing products, concept papers, and submissions. Additionally, we lay the groundwork with our legislative efforts. Some utilities take part in this process and benefit from it, while others opt for the route where federal funds offset potential capital investments, allowing them to earn a return. So, it's a mix of various factors.

Operator, Operator

Thank you. That concludes our Q&A session. I will now hand the conference back to Rob Schwartz for closing remarks. Please go ahead.

Robert Schwartz, President and CEO

Thanks, operator, and thank you everybody for the patience on the call today with our difficulties. Just summarizing, 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 the conversations in the weeks that follow. So thanks again. Have a good day.

Operator, Operator

Thank you, everyone. This concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.