Lumen Technologies, Inc. (LUMN) Earnings Call Transcript & Summary

[ Audio Gap] everyone. Thanks for joining us for the final session of our Ninth Annual Medium Communications Summit. I'm Nick Del Deo with MoffettNathanson, and I'm thrilled to be joined by Andrew Dugan, the CTO of Lumen Technologies. Andrew, thanks so much for joining us.

Yes. Thanks for having me.

Listen, your role as CTO, basically encompasses everything involving the network, which, for a company of Lumen size, is pretty expansive. So I thought to open up, maybe you could talk a little bit about some of the priorities that Jeff has you focusing on these days, maybe more so than you might have focused on in the past.

Yes. Yes. Well, our number one priority is revenue. That's not a new focus, certainly, but that is the thing that motivates us and drives us in the things that we're working on. I'd say in terms of new things or changes from previous years, I'd say the first is we're increasing our investments in our mass market space. We've historically built fiber to the home for about 400,000 units per year. We're increasing that this year to 1 million units. But we're planning to really end the year on an accelerated pace for more than 1 million units, 1.5 million or more. So that's really the big change on the mass market side. There's a lot of interesting things we're doing there with the technologies we're using, but it's really a key focus for us to ramp that business. On the enterprise side, it's really about building out our product capabilities to support what we see the enterprises need going forward. And we're seeing strong growth in security, UC&C, we're building out our edge compute capability, so small data centers distributed at the edge of the network for low latency, high-performance services. And we're building out our secure access service edge, or SASE, portfolio, recognizing that for the enterprises. We're evolving from SD-WAN to a more converged set of services that support not just network connectivity, but security as well. So investing quite a bit in those spaces.

Okay. Well, great. And again, a lot of topics that I want to hit on in the course of our time together. So it's a great overview. COVID has, obviously, had a big impact on the business over the last couple of years, also a big impact on what customers are doing. How are you seeing customer network architectures and IT requirements change kind of in a post-pandemic world? And how is Lumen positioned to capital on those changes?

Yes. So the pandemic, and everybody on this call I'm sure felt it. The pandemic created a more hybrid workforce pretty immediately. And that changes the way that enterprises work. It changes where their employees are, it changes their security environment, it changes how they leverage unified communication platforms, and it changes where they run their applications in support of their employees, which is driving, in my view, an acceleration towards the cloud. And so how do we support that enterprise movement? Well, we're doing it through building out that security product that I mentioned earlier, SASE, reinforcing our UC&C capability, hardening our security offer, adding zero trust and building out our edge compute environment so that we can support these applications for the enterprises that are becoming more distributed. And so in terms of positioning, we have the infrastructure, and we always had. And as we build out these security and application support capabilities that support that hybrid environment better, I think we're really well-positioned.

Okay. How far along do you think customers are in their transition towards where they need to be in this new world?

There's a lot left to be done there. So enterprises have been migrating towards the cloud for a while. I don't think that's new. I think the availability of edge compute as an augment to that cloud capability will create more opportunity for us. So there's a lot of opportunity, I think, for us in that edge compute space to support a set of cloud migration that hasn't yet happened. So there's parts of this that still need to happen. Enterprise has moved quickly through the pandemic with adopting UC&C platforms quickly. We saw that growth on our network early on. But that's become a core part of their capability. So although many are there, our product offers, the ease of use of those product offers that we built in, creates opportunity for us down the road because that's a permanent thing in our perspective. I think enterprises are still rethinking their security strategies. And there's a lot of evolution that has yet to occur there. So lots of opportunity. So it's kind of -- this is one of those things that's a constant evolution. And so how far along are they? Well, the next thing will come along, and we're seeing it with enterprises, SASE, for example. It's not just an SD-WAN conversation anymore. It's bringing in the other components that SASE incorporates that's continuing that evolutionary path. So it's an evolution, I think, that will never end.

Okay. One of the things you mentioned was cloud adoption as a key driver, that's a theme that's come off in a number of the discussions we've had during this conference. I guess relative to other kind of drivers, how important is cloud adoption to your business today?

To our business, it's becoming increasingly important. We've talked in the past about evolving from a telecom company to a technology company. And the way we're doing that is we're shifting our product set to be one that supports a broader set of needs for the enterprise. And cloud is clearly one of those. We've had a private cloud offer that's done well for us. We've had a multi-cloud management capability with our multi-cloud manager that's done well for us. We're adding in the edge compute capability where we have servers and storage at the edge of our network within 5 milliseconds of enterprise demand, that we're expecting and are seeing strong support for. So in terms of cloud being important for us, it's really important. But it's just one part of the overall story because we've sort of changed the narrative with customers. As we become a technology company, we're no longer going to them and saying, "Hey, do you want to buy a wavelength? Do you want to buy Internet service? Do you want to buy a voice service?" We're growing and saying, "What are your application problems?" And having the cloud capability in our network, but also the ability to provide managed services for the centralized cloud, we can now go solve those application problems with a broader product portfolio that includes cloud. And so that may be a little bit of a long answer there, but cloud is an important part of that picture.

One aspect of your cloud offering, which I think has gained some traction in the marketplace, is Cloud Connect. Customers who gravitate towards Cloud Connect, what do they see in that or what attracts them to it compared to customers who decide to, say, buy raw connectivity to a cloud on-ramp as part of their architecture?

I think a couple of things. One is the fact that, in a lot of cases, it's a component of a broader offer that work we're supporting for them. We may be providing, for example, a private network, a VPN network for them, and they're using Cloud Connect to connect that network into the centralized cloud. And so the fact that we can bundle network connectivity to the cloud with a VPN, with our edge compute capability, with a broader network need, I think, is one thing that drives it to us. But I think it's also the agility that we provide, our dynamic networking capabilities that we provide on our network services. We got to think about the fact that the cloud has sort of taught our customers a couple of things. One is that they don't have to run their own infrastructure. But the other thing is that the cloud is very, very adaptable for them. They can turn up and turn down capacity. They can move workloads. And not having a network that fits that same agility model makes it really hard for them to take advantage of the centralized cloud, in a lot of cases. So the fact that our Cloud Connect offers have that level of agility to be able to add connectivity or change capacity or add virtual networks within that connectivity really matches the agility of the cloud. And I think that's necessary and an attractive part of the offer.

Okay. That makes a lot of sense. Kind of think about it holistically and being agile on both sides. One other kind of comment or a theme that's come up a couple of times during this conference is the notion that as customers adopt cloud, they may be more likely to establish a presence in the carrier neutral data center, like an Equinix or a digital realty or whoever it might be. And from that sort of environment, it's sort of like, obviously, a lot of carriers that go in there and that could potentially give them more choices, reduce stickiness, get the better pricing on their connectivity. Is that an issue that you find as customers establish a presence in a carrier-neutral data center? Or do you find that the totality of the relationship kind of mitigates that risk?

I think, certainly, the totality of the relationship is a big advantage for us. The fact that we can provide a broader part of their overall solution needs. We don't necessarily pretend that we're going to be able to serve every need of the enterprise. And yes, they may have space needs for geographic needs that are best fit by a third-party data center. But that's not their only need, right? They still have security needs, they still have voice needs, they still have the need to connect that location to other locations. And in many cases, they need managed services to make it all work together. And our breadth of our portfolio allows us to integrate all of our components or integrate partners, whether that's the centralized cloud providers or third-party data centers, or software providers or wireless providers, we can bring those all into our solution set. So while we would love for them to buy everything from us, that's just not a reality, but the completeness of the portfolio that we offer as an advantage.

Okay. Okay. So we've been talking about cloud from the perspective of enterprises who consume cloud services. But if we flip it around, I think the big cloud service providers and other hyperscalers have been big sources of demand for Lumen over the years. Are there any interesting changes or things that you call out from this customer base? And do you feel like you need to make any changes to better serve them in the coming years?

Yes. I won't say I'm continued to be surprised by the level of demand that they have for capacity but it remains strong. So hyperscalers are a strong and important customer for us. They primarily buy things like wavelengths or dark fiber, but they also buy things like voice services for call centers and collaboration. In terms of change, I would say, over the last few years, their appetite for dark fiber has increased and remains very strong. And what that has done is that has really driven us to invest heavily, even more heavily in our dark fiber network, and particularly, on the inner city. A lot of our fiber provides the backbone and fabric for the cloud data centers. It's been a couple of years since we've been really vocal about what our intercity backbone builds look like. I think it's been a couple of years that we've done a press release on that. But back then, we announced that we were building 4.7 million fiber miles, in support of our dark fiber demand in the inner city, primarily coming from the hyperscalers.

That was some of the ultra-low loss fiber wasn't it?

It was. Yes. That's right. A lot of the inner city network we have is conduit-based. And so it's very cost-effective for us to pull a new cable with new fiber through that conduit. And we've pulled -- sort of the nice thing is that pulls the newest generation of fiber, and we pulled 2 types of fiber in there. One, ultra-low loss, and one low loss. And we continue to do that and the demand remains very strong.

Okay. Okay. So kind of in general, you'd characterize them as being a lot of faster-growing, more consistent source of demand than the average customer.

Yes, I don't necessarily know about -- well, certainly in terms of raw capacity, yes, they're a very big consumer. In terms of overall spend in revenue, we're expecting more growth from our enterprise customers. But having the hyperscalers be a core anchor for us is a -- it's a strategic decision. We want our fiber to be at the center of their networks and our network to be at the center of their networks. It gives us the opportunity to have great performance to the cloud. And that's something that we want to continue to support.

Okay. One aspect of the hyperscalers growing their networks over the last several years has been kind of a resurgence in subsea construction, which I think is pretty interesting. They're doing so with economic models and motivations that are agilely different than kind of the consortiums that tended to build subsea cables in the past. Now Lumen is a big operator of subsea cables, which historically has differentiated you for some of your peers. I guess, how is your position in the subsea market changing in light of the hyperscalers moves? And I guess more generally, I feel like some of the -- a good chunk of the cable as you operate date back from the Global Crossing days, so they're maybe 2 decades old at this point, should we expect the CapEx cycle to refresh those cables or replace them? Or do you think you can navigate another ways to avoid any sort of capital outlay?

Yes. So we do have a significant subsea presence in the Atlantic down to Latin America. And a lot of it is that older infrastructure that you talked about. It's there, it's providing a valuable service, a reliable service highly diverse set of services for our customers. So what's our strategy around subsea going forward in terms of capital investment refresh? We have a very close relationship with a lot of the builders that are out there [indiscernible] hyperscalers before. Middle of last year, we did a press release around us taking a significant capacity position in [ Dunant], which is a subsea cable in the Atlantic. We didn't say it in the press release, but that we basically took a fiber there from that cable. There are other opportunities for us to continue to acquire capacity on subsea cables. And we'll continue to look for those and take advantage of those when we need them. And so I'm not too concerned about our ability to maintain competitive set of services in the Atlantic. We made a very strategic decision several years ago with all the building that was going on, that we'd be able to acquire capacity more cost effectively then build it ourselves. And that's playing out for us. So it's working on nicely.

Okay. Well, to the extent you can, it seems smart to piggyback some of the outlays that the hyperscalers you are making.

Yes. And it's a great partnership for us, because along with, as those cables are built, those cables need backhaul. They need connectivity. And it provides a revenue opportunity for us as well as future capacity opportunity.

Okay. One last topic I want to hit on as it relates to hyperscale is the potential for incremental competition. Some of the hyperscalers, as you know, have massive global networks that rival some telecom companies in their size and their reach, at least from a long-haul perspective. Now a good chunk of what they've used to assemble those networks comes from Lumen, as you noted. I guess the concern that some people have called out as they may use those networks to offer telecom services either for low prices or as a loss leader to drive cloud revenue. I guess, do you see that as a legitimate risk? Or do you see reasons why that wouldn't really be feasible or in their interests?

I'll go back to sort of the strategy that we're building to address the enterprise. And that's providing a complete set of services that helps them run their applications. The backbone is one part of that, absolutely. The centralized cloud is a part of that as well. But there's so much more to what they need than just backbone connectivity. The connectivity to their data centers, the connectivity to third-party data centers, which we build out to with significant amounts of capacity, the ability to support a private cloud on the edge at a customer premise at a factory or a logistics facility, the ability to run edge compute in a highly distributed way at the edge of the network, the ability to support managed services to wrap it all together and help them with their operating that infrastructure. There's a lot of opportunity for everybody in the space. And we view the hyperscalers as partners. We resell their products, they resell our products. So it's more of a beneficial relationship for us at this point in time. And I see it that way for the foreseeable future than a threatening relationship.

Okay. Okay. That's helpful. Kind of maybe moving on to a different topic. Jeff has talked about trying to move away from some of the more CapEx-heavy projects that you've historically undertaken towards more lower capital intensity, higher service layer-type initiatives. I guess, to what degree is this a conscious decision on the part of Lumen versus just a shift in what the market is demanding from you?

I think it's both. We're seeing opportunity up the stack to be able to do a better job building out and selling security services; to do a better job with enterprise managed services, the SASE portfolio; selling more SD-WAN, more managed WiFi. Those are -- have more service component to it than they do capital component. So that's part of the rounding out of our portfolio that we're doing. So when we say we're investing in that, it's really building out that capability stronger than we've historically had so that we can go provide not just the infrastructure services, but also the higher level, less capital-intensive services. And it's not because we don't have the capital, it's because we see a revenue opportunity there.

Okay. And to the extent that you may reallocate capital towards these new purposes and away from physical network expansion, does that potentially open up opportunities for competitors to build that network instead and perhaps make inroads in a given market or make inroads with certain key customers?

It could potentially, but I don't see us backing away from fiber investment. In fact, we're investing more in fiber than we've historically invested. As we build out for our mass markets build, we're building deeper into those markets where we've chosen to invest. I mentioned we're building on our backbone heavily. We've invested edge compute, which is servers, storage, space and power, cooling infrastructure. So while we are increasing our investment in those higher-level services, it doesn't necessarily mean that we're taking away or shying away from the network expansion and hardening our fiber infrastructure because we're still investing quite a bit now.

Okay. Okay. We talked a little bit earlier about how a lot of your routes have spare conduits and it makes it easy to pull parallel fiber cables through them. You talked about some of the ultra-low loss fiber that you pulled a couple of years ago. One thing that we're starting to see, some of the news reports on, and I'll admit that I don't know a heck of a lot about it, is hollow-core fiber. From your perch, do you see hollow-core fiber as something that's going to be of interest to client, to customers in the coming years? Does it have a legitimate use cases? Is it practical from a technical perspective? And if so, is that something that could benefit your business?

Yes. This is one of the fun parts of my job, which is, I think, sort of keep tracking those newer technologies. Yes. So hollow-core fiber, just for everybody, it's a fiber that has a hollow center. It's not glass in the center. It's empty. And the benefit of that is that electromagnetic radiation, including light waves, move faster through open space than they do through a medium like glass. And so it increase -- it lowers the latency of that fiber. And there are real use cases where lower latency can make a ton of sense. I mean, high-frequency trading is one that has received a lot of visibility in the past. But that's the benefit of hollow core, low latency. But along with the hollow core comes some not so great things. And it's very lossy. So you can't go as far in hollow-core fiber, in comparison to a glass core. And so you got to make that trade-off. So hollow core is good today for short distances. There's also trade-offs you have to make in the outside plan. It hasn't been proven, although there's people out there trialing it, both in Europe and North America. But how do you manage it? How do you install it? How do you splice it? That's what those trials are trying to prove. And yes, I hope that those companies can prove that hollow core is manageable in the outside [ plan ] so that we can take advantage of the significant infrastructure we have out there in conduits to put that cable in. I don't see it happening in the inner city anytime soon, maybe ever. But in the metro, for shorter-reach applications, maybe there's opportunity.

Okay. So something to keep our eyes on.

Absolutely.

In years past, you guys used to highlight the pace at which you were bringing new buildings on that. I think one of the interesting things about your network was just the sheer number of office buildings or rather bandwidth aggregation points that were fairly close to fiber that you owned. As of late, I haven't heard you highlight that as much, maybe just because of COVID, I suppose. But I guess, talk a little bit about what you're doing in terms of bringing on net buildings and whether the current vacancy environment in the office space has affected that at all, COVID has affected it, and what we should expect going forward.

Yes. So last year, if you look at our building numbers, they went up by about 10,000 buildings. So we do continue to invest in that. I'll say maybe there's -- I don't want to say 2 ships, but 2 areas where we're focusing. One is we're focusing on making sure that we're driving revenue in the 190,000 on-net buildings that we have today. And that's been an increased focus for us over the last several months because we think there's a lot of revenue opportunity in what we have and how can we maximize that. The second thing is that we are continuing to be aggressive about adding buildings to our network. We're adding them where we have of real opportunities and an opportunity that makes financial sense for us. And so we're absolutely doing that. Maybe we haven't talked about it as much, but penetrating existing buildings and taking advantage of real opportunity in enterprise buildings is still a key part of our focus.

So for a couple of years ago, Jeff had mentioned that you guys were looking into, more specifically, target like smaller and midsized businesses within office buildings that -- like Level 3 had historically targeted for larger opportunities there. You're mentioning penetrating on-net building as being a priority kind of maybe think of that. What -- can you update us on any tools or processes you've developed to make better inroads there?

Yes, it's really about understanding the market opportunity in those buildings and targeting our sales force at those opportunities. And so it's about the data intelligence, it's about our sales force and training them and educating them and making sure that they're spending time selling into those locations. So that's where most of the focus has been in terms of penetrating those buildings because there is a real opportunity there.

Okay. The fiber network that you manage is, it's pretty much unparalleled in terms of its size and its reach. And that probably still holds even after the LatAm deal closes in a few months. To what degree do your customers take advantage of that reach? Do you find that it's critical? From their perspective, do you operate an integrated network across continents? Or do you find that they tend to buy more regionally?

We certainly have a set of customers that care about breadth and reach, large multinational enterprises. Back to the end-to-end conversation, right, they're looking to solve an end-to-end network and application problem. So that when they go to their partners, they're looking for help solving that end-to-end problem. So yes, it is important. As we look at our LatAm divestiture and as we structured that deal, we made sure that we maintained our relationship and partnership so that we could continue to serve those customers in the way that they've historically gotten used to us serving them. The interesting thing about our industry generally is we all rely heavily on each other. And it doesn't matter whether it's global or whether it's, for example, within the U.S. Not all of our networks go everywhere. And so there are partnerships and relationships that we rely on to get to where our customers' locations are. And even in our current global network, our customers need us to go to other places where our network doesn't go [indiscernible]. Asia, we have a network there. But there's countries where we may not have a presence where we rely on partners. So it's part of the way that the industry operates.

Okay. Okay. Another popular theme that's come up over the course of the conference, and it was kind of in the news as a role of DISH's Analyst Day last week, this idea of private wireless networks, typically using CBRS spectrum to enable them. For example, a private network covering a factory floor to help with automation or sensors or what have you. Is this something that's on your roadmap? And to the extent that it doesn't involve licensed spectrum and a broader mobile network, would you not perhaps be better positioned than some to help customers with these private networks?

Yes. I think we are well-positioned there. And so where is it on our road map? We have a CBRS-based private wireless network capability. We've had it up and running in our lab, in our Edge Experience Center for some time. That is an active conversation that we have with customers. We are talking to them about our capabilities to support private wireless networks, for campus-type applications. So yes, we do think that, that's an important part of our overall portfolio in being able to go and sell those services as part of an end-to-end networking capability. But it is just 1 component of the picture because we would also sell potentially managed services that go along with that, potentially private cloud that might sit on-premise to run the application that's being driven through the wireless access, provide the fiber connectivity to that logistics location or factory floor and a global backbone to maybe get to the centralized cloud. So absolutely something that's on our radar and something that we see as a part of portfolio of products that our customers are going to be looking for.

Okay. Okay. Great. An initiative that you've been pushing for a number of years on the business side of the house is that of digitization. The idea that customers can engage in more self-service options, you can install or change services remotely, things like that. Basically, save costs while simultaneously making your customers happy and potentially even getting some extra revenue out of them. Where does the rollout of that vision currently stand? Kind of what's been enabled to date? What are customers able to add, change on their own and so on?

Yes. Yes. And this is a really important thing for us. We talk about that evolution from telecom to technology. And a big part of that is creating the digital experience around the types of products that our customers want to buy going forward. So very key for us. So where are we? A few weeks ago, we launched the Lumen Marketplace. And the Lumen Marketplace is -- it's a site that customers can go to learn about our products and to buy them very simply in a digital way. And so we've got the infrastructure to be able to support that digital experience from a learn-and-buy perspective. Some of the products that are in there, I'll give an example, one of them is Hyper DDoS, the [indiscernible] service protection capability. Today, customers can go there and very simply, buy through an all-digital experience our DDoS product, and have it activated and turned up and protecting their networks within minutes. Other products and services that have been built with that digital experience from the ground up is our entire edge compute set of products is the [indiscernible] for digital consumption. We've had our cloud product, our multi-cloud management capability built for digital consumption. Our dynamic connections capability, we talked about Cloud Connect earlier, and that's part of that. Cloud Connect capability, the ability for customers to manage capacity, manage connections and manage VLANs through a digital experience is all part of that, too. So we're well down the path. We have a lot of products and services that we want to do better with the digital experience, but it's something we're squarely focused on.

Yes, I'm going to pull forward a question I had later in my question, Andrew, because you brought up the Marketplace. I guess what's the earlier customer reaction been like? And I guess, more generally, is it your plan to offer, say, services from 1 or 2 preferred vendors that you're partnering with? Or do you see it as more of a supermarket where anyone can offer their wares in your marketplace presumably so long as they meet certain specs and it's interoperable in your network and whatnot?

Yes. So today, it's Lumen products that you would go to the Marketplace to buy. The experience so far with customers is -- the Marketplace has really only been launched for a few weeks, but we've done testing with our customers around that experience and get very good results from it. And it resonates with them in terms of the experience that they want with an easy buy, with the ability to talk to somebody sort of click out of that experience into a person experience if they need to. And so in terms of experience, that's -- we do think that that's resonating, but it is early. For other companies, products and services to go into it, we do expect that down the road, and I don't know how far down the road, that we could incorporate the products of partners into that. And in many cases, for example, our edge compute, which is a digital experience, you can consume products from partners. We've got partners like VMware, SaaS providers and we've got close partnerships with UC&C companies. So that partnership model is something we're building into our product set and would expect it to show up in the Marketplace more directly at some point.

Okay. If we think out, call it, 3 years or 5 years or whatever you think the appropriate time frame is, what share of Lumen's -- whether it's transactions or bookings, service changes, whatever is appropriate. What share of those activities do you think could be handled digitally versus where it stands today?

A significant part because a lot of the transactions that we deal with, with customers are moves, ads and changes to existing service. When it comes to things like Hyper DDoS you can activate it yourself. But in a lot of our other services like VPN, for example, a lot of our activity in human activity is a customer calling up and wanting to make a change to a site or change the way their network operates. By exposing that digital experience to them and allowing them not only to activate service but manage service, you could take a lot of the workload and improve speed, customer satisfaction and reduce cost for us because we don't have to have people answering the phone or processing customer requests. It's fully automatic.

Okay. Okay. Now I want to make sure that we have plenty of time to talk about your initiatives on the mass market side of the business with your fiber expansion because that's important to the story over the coming years. I guess what factors ultimately convinced you and the rest of the management team that now is the right time to ramp up investment in fiber? What made you believe that it's economically viable and technically feasible to roll it out to your targeted number of homes?

So we've been testing our models for a couple of years. So in the last couple of years, we've built fiber-to-the-home for about 400,000 living units per year. We've tested our ability to penetrate those markets. We've tested our product set. We've built out an all-digital experience with our Quantum Fiber service. So we know based on that experience, what we can expect for penetration, the strength of our ARPUs that we expect from our customers. And we're really building on that past experience and extrapolating that to now go to 1 million units per year and beyond that. So it's really the past experience that's given us that confidence.

Okay. Okay. What -- a lot of your peers are starting to offer multi-gigabit service on the fiber that they've deployed. I guess, what is your fiber engineered for? And what are you capable of delivering? And what's your roadmap for offering faster speeds in the coming years?

We'll be announcing multi-gig offers in the second half of this year. So -- our -- the fiber itself is capable of 10 gig, 100 gig and beyond. It's a matter of what electronics you put on it. We've started to put XGS-PON electronics on our network. XGS-PON is a 10-gigabit PON capability so we can deliver high-speed services to our customers over that XGS-PON network. And that is our go-forward way of constructing our fiber networks. And we take a look at the opportunity we have, we've said we think we have an opportunity of 12 million fiber connected living units. We've built to a couple of million of that. So we have a lot of build-out left to do. And as we build that out, we will be building it out with that multi-gig future-proof capability.

Okay. Andrew, what do you see as the use case or use cases from a residential perspective or an SMB perspective, that's most likely to drive a customer towards those multi-gig plans?

So in the consumer space, a lot of it is about marketing and giving customers confidence that you're providing a high-quality service, being able to guarantee higher rate of service is an important part of that marketing capability. So promising them something that greatly exceeds their expectation is something that I think takes to win in that market. And I do think that we already have an incredibly high-quality service with our Quantum Fiber product. So we get NPS scores of more than 50 on that product, which is an excellent score. We believe that we have a higher quality product than most others today and be able to market that in a way that keeps pace with their expectations is an important part of it.

Okay. Okay. Now to what degree does your ability to leverage fiber that's currently in the ground and used for the business segment, help your fiber-to-the-home deployment from a cost perspective? And vice versa, do you find that deploying fiber-to-the-home in new areas enables you to leverage that fiber for new business opportunities?

It's greatly synergistic in my view. We've built or acquired a lot of fiber networks that provide us great foundation for building out to the consumer, but also to enterprises. We have metro markets that -- and real estate that we can leverage for that build. So it's not just about the fiber. It's the fact that we have the building footprint to leverage that fiber as well. And as we build out the businesses, we get closer to homes, as we build out the homes we get closer to businesses. So it's very helpful.

Okay. And can you talk a bit about your degree of confidence in being able to achieve your deployment goals in the coming years? And to the extent that there's anything that you are most focused on that you think might be a wildcard from that perspective, what would you say it is?

Yes. I'd say confidence is high to get to the 1 million units this year. But 1 thing you should recognize is that it's going to be a ramp to that. If you think about the construction process as a pipeline, we've got to do our market research to figure out where we want to build. We have to do our engineering work to validate that it fits our economic model. We have to get permits. We have to mobilize construction pools. You have to complete the construction. We have to certify it. So that's a pipeline of work that I can see filling and filling nicely to meet our expected volumes. But the market doesn't see it until it comes out the other side. So your expectations for the first half of the year, don't be too surprised if the volumes don't look like the run rate that we're trying to get to for next year because things work -- the work is working its way through that pipeline. Things that we're watching up for is certainly supply. It hasn't gotten in the way of meeting our needs this year. It's something that we're managing very actively and something that we think we can get through.

Do you see the supplier community responding to the increase in demand for these deployments? And do you think that's going to help in the coming years?

Yes, I do think it's going to help in the coming years. I think the parts of the market that we rely on are fiber itself, electronics and construction. Certain parts of that supply chain are more elastic than others. Construction can scale with people and construction equipment. The electronics scales with chip supply, although that's a pretty small percent of our overall need, electronics piece. We don't need a lot of chassis, it's a small percentage of our overall capital spend. But we're managing our suppliers there effectively. And then fiber itself. Fiber is probably the least elastic because you build a factory to make it. I know that fiber suppliers are ramping up their capacity. And we've had an incredibly long and incredibly strong relationship with those suppliers. That gives us confidence that we can get what we need as long as we forecast and order at the right intervals and we are doing that.

Okay. How do you feel from a construction efficiency perspective? Do you think there are steps you can take from here to kind of get even better from a cost perspective? Or do you think you've largely kind of tapped out what you can do and you're sort of operating at the efficient frontier?

There's more. We've seen efficiencies in the last year, and we continue to work on those. We work with our partners on the fiber side about how we can reduce the amount of labor required for the installation of fiber. We look at our network architectures. In fact, XGS-PON, which is what we're deploying now, is a lower cost solution for us per home than our GPON. We look at the outside plant and how we build that with a splitters. We've taken costs out there in the last year. So there's opportunity still.

Okay. Now again, another hot topic these days is the idea of fixed wireless and what that might mean for wireline providers. I'd imagine that where you deploy fiber, fixed wireless is probably not a terribly relevant competitor. You still have a very good size, copper, FTTN footprint. What are you seeing from a fixed wireless perspective? Where do you see it impacting your business? To what degree?

Yes. Wireless has an important role in our industry. And it's for things like mobility. The rural deployments that you're mentioning here, they're still materially served by copper infrastructure. But even beyond that, it's great for wireless backup even for the enterprise or for fast deployments. So yes, it clearly has a role, and it will win in certain parts of that space, mobile applications and rural deployments being areas where they're very strong. So we do expect that we will continue to see competition from wireless providers in those spaces. But you mentioned fiber wins, my belief is that if there's fiber to a location, a fiber service will be the most future-proof and deliver the best service, and that's where we're investing.

Okay. In the few minutes we have left, I want to turn back to a couple of topics related to the business segment. One being the edge, you've brought that up a couple of times during our discussion. Can you talk about your kind of early experiences with that platform? What customers are using it? What they're using it for? And what that tells us about the future trajectory?

Yes. Yes, it's a really exciting conversation with our customers, because our customers are excited about having storage and compute that sits right on top of one of the larger backbones in the world. The types of customers that we're turning up on it today is -- so we have cryptocurrency customers running distributed blockchain applications. We've got content and media distribution customers that are using it because of its very strong network connectivity and we're in proof of concept with a number of other industries, including anybody who needs high-intensity distributed storage. We've got AI machine learning use cases that we're working with. So it's a pretty broad set of applications, but it's going to tend to be those ones that need low latency, high level of network connectivity or high-performance, high compute integrated into that network. So it's -- yes, it's -- we're excited about the growth opportunity.

Okay. Another thing that you brought up a couple of times was SD-WAN and SASE. I think, if we think back a couple of years, I think a lot of folks, both in the investor community as well as in the tech community, probably thought that SD-WAN would kind of spell the end of MPLS. And it seems like what's happened instead is customers are constructing more hybrid networks, or maybe they use SD-WAN or SASE that add nodes to an MPLS network. I guess, one, is that a fair characterization? And what do you think is pushing customers towards that sort of model? And in the coming years, do you see that sustaining? Or do you see it shifting more towards an SD-WAN or SASE-only type architecture?

Yes, I do think it's a fair characterization. I think a lot of people sort of forecasted the depth of MPLS or private networking with SD-WAN. In my view, that's a bit of an extreme view. I don't think that MPLS is dead. I think that it has a role, but I also think that broadband connectivity has a role. And what's driving enterprises there is the hybridization of their environment, both in terms of employees and applications. And so there's a recognition that there are a number of applications that can run and do run over the public Internet. But there's also a set of security needs that's driving things like SASE to emerge. There's security needs that would keep MPLS alive. There are performance needs for applications and employees that will keep MPLS alive. So we're clearly seeing the demand for both. I don't think MPLS is dead. And in terms of SD-WAN versus SASE, SASE includes SD-WAN. So I think SASE is additive. And it's a great opportunity for us. It's the evolution of services that I talked about earlier. With it comes the ability to approach the enterprise and go deeper into their locations and provide more managed CPE, more managed services on-premise and to help them support things that they might have otherwise done with an internal IT workforce. So it's a revenue opportunity for us as we continue to push these services to the enterprise.

Okay. Okay. We don't -- Andrew, we're just about out of time. I thought as a closing question, I would try to ask one that kind of wraps everything up and it actually ties into something that you said in response to my first question. You said that Jeff is focused today and what he's asking you to help achieve is revenue growth. If I think about our conversation, there were a lot of exciting technologies, things that should really have benefited Lumen, but obviously, the company struggled a bit to generate positive revenue growth. So I guess, what do you think has been the source of that disconnect over the last several years? And what gives you confidence that in the coming years, that relationship between these topics we discussed and your revenue growth are going to more closely correlate to one another?

Yes. Yes. Well, so what I'm excited about in this space is the fact that we are taking a different approach to the market, and we're building out those product sets that let us go have a different conversation with the customer. And so that, for me, is a big difference, and that's a part of the whole evolution from just selling telecom services as a telecom company versus a technology company that brings a much broader portfolio of capabilities to the enterprise. The opportunity to expand our market, expand our market share in those services is big. And we do have to execute, right? That is where we have to execute to really drive that revenue growth that those very first thing that, yes, that's the most important thing for us, and that's what we're focused on. And we're going to do it by that product expansion, market expansion and higher market share with solving a broader set of problems for the enterprise.

Okay. Well, listen, that's a great note I wish to close. Andrew, thank you so much for taking the time to speak with us. It was a tremendous conversation.

Yes. Thank you. I appreciate it. I enjoyed it.

Thank you. Take care.

Bye.