As a former analyst, I know that the webcasts which the Street pays the most attention to are the ones where the CFO or CEOs are speaking. While these are of course very interesting, I often think it may be the ‘under the radar’ executives that may say the most. Sometimes it are these executives who offer the most commentary about the emerging green shoots of an new revenue streams. I thought that this week as I listened to the Cowen TMT conference when Lumen’s CMO – Shaun Andrews – was interviewed.
While the transcript is most definitely worth a read, the smoking gun comment to me was in reply to the question:
“When do you really start to see real bookings in edge computing that really start to make a difference?”
The answer: “Now.”
Here is the green shoot…
Mr. Andrews then went on to add: “We’re going faster with edge computing than anything I can remember in history going with”. While the cynic may say that Lumen (former CenturyLink) never really went “fast” with anything, so bar is low. Mr. Andrews himself has over 25 years of experience and was with growth companies of the past, including Level3 and WilTel. So this statement should not be ignored.
Unlike many of these interviews, Mr. Andrews actually put meat on the bone with specific examples as to edge business models for Lumen. The most interesting one to me was his commentary about the opportunity with T-Mobile. He offered tangible models as to how IoT and Fixed Wireless access could represent two significant opportunities of growth for the two companies to work together. How this relationship grows will be something to watch.
I know I sound like a broken record here – but wireless does most definitely need wires. If we know one thing about 5G infrastructure, it is that fiber is the connective tissue of this emerging ecosystem. While T-Mobile has a plethora of spectrum (the full wedding cake of it in low, mid and high-band), it does not have the “wires” (aka fiber and transport) to make this spectrum work most effectively. Lumen does. And they have more than anyone, maybe second only to AT&T. They say a picture is worth 1000 words. Click here to see the reach of this network: https://www.lumen.com/en-us/resources/network-maps.html THIS HIGHLIGHTED PART CAN YOU HYPERLINK IT
These blue lines on this image are significant to T-Mobile and it is hard to find them from anyone else T-Mo does not compete with (ZAYO would be an important exception). In many ways those lines represent the tracks on which the T-Mo spectrum rich train can ride most effectively. While virtualization and Open RAN are the ways of the wireless future, a large part of the spend to enable this is IN the network itself. Here is where Lumen comes in.
For Lumen, edge has to be more than just a talking point. When I was an analyst following Lumen, one of the biggest push backs I got on the name was the higher margin legacy business was declining at a faster rate than the lower margin “growthier” businesses were growing. Another knock on it was that the company was continuing to cannibalize its own businesses. The beauty of edge for Lumen is that there is no cannibalization – it does not come at the cost of any other revenue line. Edge represents a greenfield opportunity set. And there are not many of those in telecom land as anyone who has followed the space knows. The moat around the business is very much there – go back to the image with those blue lines if you need a reminder!