Anterix Inc.

Good day, everyone, and welcome to the Antarex Third Quarter Investor Update. 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. It is now my pleasure to turn the floor over to your host, Natasha Vaccarelli. Ma'am, the floor is yours.

Thank you, and good morning, everyone. I'm Natasha Vaccarelli, Vice President of Investor Relations and Corporate Communications, and I welcome you to the Antarex Third Quarter Conference Call. Joining me today are Rob Schwartz, President and CEO, Ryan Gerbrandt, COO, Tim Gray, CFO, and Chris Gutman-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.

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 Enteric 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 timings. 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. Leasing spectrum is deeply interwoven 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, costs, 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 forums, including the Utilities Strategic Advisory Board, the Enterix Active Ecosystem, Utility Broadband Alliance, EEI, EPRI, and other major industry groups. 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. 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 is 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 of 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, Enterix 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. 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 over to Ryan to take you through this in further detail, and then I'll wrap it up with some concluding remarks.

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 three and more than $1.2 billion in phase two. 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 wildly 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 will we report this to you going forward? 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. 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 Enterix 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 rape case filings, or public statements of intent made through participation on panels or in interviews and articles, membership in our Utilities 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 LT 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 a contract with Enterix 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. 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. 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 and our projections, and that these utilities are part of the approximately $1.7 billion combined value we currently see in Phase 3 and 2. 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 intense scorecard against our pipeline so that you can measure our progress. To give you some more color on the 15 that crossed this threshold, Thirteen 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 MHz 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 or 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 in our booth is amazing. It is a testament to the importance of the Enterics 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 Enterix 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. Thanks, Ryan.

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. 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 Excel, Our active ecosystem grew to over 100 members, the 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, Catalix. 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 last week that 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 longtime Interix 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 Al Creek team since our first equity offering. I've gotten to know Jeff over the years, and through our regular conversations, the Al 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.

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. We do ask that while posing your question, please pick up your handset, if you're listening on speakerphone, to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from James Ratcliffe from Evercore ISI. Your line is live.

Good morning. Thanks for taking the question. Just sort of in a big picture sense, I remember a couple years ago when the company was first going public and the like, the story was very heavily essentially sell the spectrum or release it on a long-term basis and go home effectively. The 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 you expect to be in the operations of your customers? Thanks.

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

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, have been something that we've heard from you for a few months now. So was there something, or was it just a turn of the calendar and saying we'll have a different approach now? 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.

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 a 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. For us, what we realized is, you know, our goal of our mission of becoming a de facto provider of these services to utilities is I consider that to be the war that we're winning and the progress 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 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 interesting, unusual in this kind of conservative audience of utility executives 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. You know, 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.

Excellent. Hey, good morning, Simon. Good morning. 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, you know, these different indicators, you know, of intent, you know, play out through many of the phases of the pipeline, but that the pipeline itself, you know, and just having three categories isn't overly granular in terms of how we can provide, you know, information and transparency to you. So these elements, you know, give us more granularity and more ability to be able to track the change over time. And absolutely, you know, we've seen significant changes over this, you know, looking back over the last three, six, nine months. You know, a couple of the things that I'll highlight, you know, a few of the metrics, you know, didn't even exist as categories, frankly, until some initiatives played out for ourselves in the market, for example. with the activities, you know, that we've seen with ABBA or DTAC, you know, where we see speakers, you know, that we just came out of the event last week. And so, again, a significant amount of utilities, you know, out in the public speaking about what they're doing, you know, opportunistically with their private LT network. Same thing with, you know, like BIL funding, which is another one that I referenced in terms of active engagement that we're seeing with utilities pursuing their, you know, 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 that they're putting those publications out and making their 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 context to give some transparency to what we're seeing in the near-term opportunities in the pipeline. One of those, as we've discussed on the last call, was clearly Accel. The other three, as you would anticipate, are clearly front and center in this highest category of demonstrated intent, and we're continuing to see good progress. In fact, a couple of data points on those coming out of our model. You know, two of them specifically, you know, do have their rate cases funded. You know, all of them have capital plans, you know, in place that are driving their internal programs for PLT. And, you know, one is pursuing an infrastructure RFP. But we do continue to see good progress on those as they're continuing to work through their individual processes in the pursuit of broadband.

And Simon, just to wrap up, you know, what I want to make sure is really clear here is that, you know, 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 were at Distributech just last week. I mean, if you can see the level of interest, excitement, and engagement of utilities and the ecosystem, there were There were over 10,000 people at this show. The recognition of Antarex's solution set, the recognition of 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 communication is a vital piece of that. It's clear evidence. of the success we're having in moving the industry forward. And that's what the intention of this demonstrated intent is, just to be able to show a measurement of the success that we're seeing with the customers.

Right. And one quick follow-up. If you take the 800 and the 15, you get 53 million average contract size. I think you sort of said 60 was your median. I mean, it's not far off that, but is there any changes there? And I thought you said in the past 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.

Absolutely. No change there at all, Simon. You know, all still in play. Obviously, there are larger deals that are still out there, you know, but absolutely there's a disbursement of those values across a variety of different deal sizes.

Great. Thank you. Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone at this time. Your next question is coming from George Sutton from Craig Hallam. Your line is live.

Thank you. One of the key takeaways for me at Distributech was the robustness of the ecosystem and, in particular, the catalysts and the utility provisioning system, the easy button. Are those types of things that make it a lot easier for the utility to actually provision and actually move forward, are those doing anything to accelerate the conversations?

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. You know, look, first of all, the ecosystem overall, right? As we mentioned, not just over 100 companies that we actually brought together in an event out at Distributech, but also, 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 megahertz. It's not about spectrum data. 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, 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 of 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 know, you called 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? Because I don't think they have any idea about all the capabilities. And so, you know, 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, 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.

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 concern 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 conversation?

Yeah. 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 privacy. And, you know, whether that be in the form of cyber, which we also had on display, you know, at Distributech, which is clearly looking at more, how do we add a more robust capability, you know, to the existing inherent technology advantages that LTE brings. But in addition to that, you're right, you know, kind of the physical security side, you know, of the use case, this is a conversation that I'm hearing come up more and more. Obviously, the, you know, I live in North Carolina, you know, and, you know, seeing the impacts of the you know, physical attack on the substations there and the ability for that to highlight the urgency in a utility decision maker's mind, you know, is apparent. And, you know, we've run into that now into a few different places where similar attacks have happened or, you know, utility members, you know, 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, you know, either video for physical security or proximity detection, you know, motion detection, you know, that can help utilities, you know, with more proactively managing the physical security around the borders and the, you know, and the fences of these substations that I'm sure will become part of a set of use cases that ultimately move, you know, move forward.

Perfect. Thanks, guys.

Thanks, George. Thank you. Your next question is coming from Mike Crawford from B Reilly Securities. Your line is live.

Thank you. At Distributech, 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 that uses 700 megahertz spectrum for LTE. So is Is first energy one that fell out of your pipeline, or is that one that's additionally considering 900 megahertz?

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 offerings. We have not lost anybody in our pipeline to date since we've had availability of our spectrum to that alternative at this time. And I'm glad you mentioned our presence on that panel. At Distributech, we had numerous executives really being able to talk about various topics, 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, 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, you know, the growing list of challenges from cybersecurity, as we just talked about, resiliency, and importantly, the decarbonization or connecting of all the distributed energy sources.

Yeah, 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, you know, a big part of that legacy portfolio are what we've described as narrowband. And, you know, narrowband, you know, leveraging 700 megahertz is one example. The mesh networks, you know, or the dedicated SCADA networks are other examples. But they all fit into that category. And, you know, I absolutely, I see them as actually opportunity creating, you know, 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, you know, definitely, you know, continue to see kind of how broadband then becomes a compliment and or, you know, a lifecycle replacement to those technologies as we start looking to, you know, higher end, more broadband, you know, more broadband intensive or lower latency demanding applications, you know, starts really driving the conversation towards where broadband LT comes into play.

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

Yeah. So Mike, I know we've talked about this before. You should assume that we actively follow, you know, all other spectrum opportunities and are always seeking opportunities for expansion of our business model. You know, specifically, you know, our understanding is there's some, you know, some, some, technical and encumbrance challenges that that band can't really be used for the same sort of unencumbered private broadband systems on LTE, 4G, 5G. But I know we've had a conversation about that before and happy to take any more of that offline if you'd like.

Yeah, Rob, I'll just, I mean, I'll jump in. It's Chris. And as we look at spectrum opportunities, and that's the core of who we are. If we see opportunities to enhance our spectrum position, we look at it, we investigate it. You know, Mike, the one you're referencing, it's not in our band. It wouldn't roll up to five by five. You know, so we appreciate the team at NextNav, but that's not an opportunity that we see gives us additional value. But we do look at, we're open-minded, and we look at all sorts of potential opportunities to expand our spectrum portfolio.

All right, thank you.

Thank you. Once again, everyone, if you have any questions or comments, please press star, then 1 on your phone at this time. Your next question is coming from Walter Pysik from LightShed. Your line is live.

Thanks. 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 those of your existing customers, if that's not already happening?

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

And my sympathies on your conference call. Maybe you guys should switch to Zoom. Is this like some form of Microsoft Teams? I think so.

But just to 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. Am I understanding your question correctly?

Yeah, that's perfect. So then you have this opportunity to show these other utility companies that 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 part of the issue of why they're not moving forward with whatever next step you need to move forward on?

Yeah, I think, look, the complexity of decision-making is a lot more than just piloting. But piloting is... is a unique aspect of the utility journey. 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, we've met with numerous utilities this past week at Distributech, And they are all hosting and inviting in their brother and their fellow utilities to come see their deployments and talk about it. We happen to be in San Diego where San Diego Gas and Electric is, and they've already deployed private LT 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 connectivity. So in San Diego's case, they're showing that they're deploying wildfire systems mitigating sensors to be able to depower lines before they hit the ground. They're showing that they're connecting up battery storage facilities that they're rapidly deploying, and they can provision private LT 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. 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 often that have to do the same and functional areas. And this is because, as I said earlier, 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 anything from reclosers to AMI systems to cybersecurity capabilities that are embedded into the rate cases along with our spectrum purchase decisions.

I think it was SDGEP, 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 anything Any visibility on that?

Yeah, a couple thoughts. One is, you know, without getting into any specifics of kind of how they're deploying, you know, I've compared it before, but, you know, 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. CBRS has a specific great broadband capability, but, as you know, very limited range of 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, as they said, you know, the underlying spectrum has to be low band, as you know from your past, the need to be able to cover vast areas of territories where 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, can't give you the breadth of coverage that you get out of private broadband, wireless.

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, you know, to obviously supplement phones. We saw what Apple has done initially with GlobalStar. We see what Iridium does. and their discussions with Qualcomm, I understand that's not something that you necessarily want your spectrum to be used for, because if you're focused 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 entered into that dialogue over the past year, six months.

Yeah, I wouldn't say we've seen it. I know 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, of LTE is where it's capable. I think it's a compliment. When we talk about our new product of Catalix 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 an 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. We'll see how well integrated and where the costs end up,

but I think generally, you know, I don't think I asked the question properly. Let me, let me try again. Um, I think I worded it poorly as usual, but, um, it was not about like 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 a dollar a pop, a dollar 53 dollars, like anything supply and demand of a limited asset, um, 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 of the interest to implementing some of these spectrum bits into LEO constellations, theoretically, that should drive up the valuation discussion, you know, as you kind of proceed forward. Is that not happening?

I think, you know, 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, um, for, for, for private systems, whether it's terrestrial or satellite. So I think, you know, um, the, the, the rising tide of demand and obviously the scarcity of low band specifically, um, absolutely continues to support valuation conversations and, and, and yes, you're spot on in that regard.

And then just one final one, um, for, for Chris, um, You know, Biden, I think, talked a bit about infrastructure, I guess. I perceived some of that in his words. And then I think Stanky has talked about, in terms of the fixed broadband world fiber, you know, the government funding of a lot of stuff. Can you just refresh us on if things seem to be moving forward with a lot of these large funding programs?

stuff that may start to have an impact that did not have an impact in in 2022. yeah yeah hey well 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 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 in there and then came out in the form of the Department of Energy RFPs and NTIA broadband RFPs, all of that macro messaging about the importance of communications to a modern grid. You know, we like to say a modern grid needs modern communication. So all of that macro messaging from policymakers, and I spent the entire day yesterday at NAERUC, and there are discussions happening there. So at the state regulatory level. So all of that macro messaging is fantastic. At the micro level, you know, we did, I think it's fair to say, we did participate in the production and submission of a number of concept papers with regard to the IIJA BIL 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 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's had from macro messaging to micro 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.

Do these organizations have those resources to recognize that, or is that you and your team kind of basically... going to these people and educate them and saying, look, 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 let's stay away from that rather than, you know, involve that stuff and just work it into the cost basis, which they're able to do.

Yeah, no, it's a great, again, 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 have a 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 who can help them put together products and these concept papers and submissions. And then what we like to say is we sort of set the table 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 sort of a combination of all of the above.

Got it. Go birds. Thank you.

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

Thanks, Operator, and thank you very much 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. We're happy to take any follow on questions and looking forward to conversations in the weeks that follow. So thanks again. Have a good day.

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