MasTec, Inc. (MTZ) Earnings Call Transcript & Summary

Hi. Good morning, everybody. Welcome to the Future of Tech series, and welcome to the 5G panel titled State of the Union and Key Controversies. I am joined virtually by one of my colleagues, Brandon Nispel, who covers the telecommunications space. Before we get started with the introductions of the panelists, I did want to let everybody know that if you have any sort of questions during the panel, feel free to submit them at the bottom of your web page. And with that, let me quickly introduce our panelists. We're pleased to have Rick Suarez, who's the Group President of the telecom group at MasTec. We also have Ed Knapp, who is the CTO of American Tower. And we also have Dan Leibholz, who's the CTO of Analog Devices. Well, welcome, everybody, and thank you all for joining us this morning.

First topic that we wanted to cover, I think, what is very topical on everybody's minds right now is, what sort of impact is the COVID-19 pandemic having on kind of the rollout of 5G? So wanted to talk about what are the impacts near term tactically in terms of what you guys are seeing in terms of any sort of changes in terms of the pace of the rollout? And then maybe also just longer term, are there any sort of longer-term implications that are emerging as a result of this pandemic? So maybe -- why don't we start with you, Rick?

Good morning. So I'll say in terms of the rollout of 5G and how COVID has impacted, what I would say is from a production -- and our business is the installation services, right, so it's building up a network itself, and we do that nationwide and in Mexico. And what I would tell you is the pace of the work really hasn't slowed down for us. So we've actually had 2 really strong quarters of builds. But I do think you have seen pockets here and there where -- whether it's OEM equipment, material supplies, things that come from other countries where factories may have been impacted, we've seen some pockets here and there where there have been a few challenges that, I think, we've overcome. Obviously, labor is always something paramount in trying to understand what are the impacts of COVID, keeping the people safe so that production keeps flowing. Again, I think industry-wide, most of us have adapted to this remote worker approach to keeping folks safer while keeping the crews as productive as possible. So I think in terms of factory production, we've seen that flow very well. In terms of the customers and their -- the impacts of COVID for them, what I would say is the -- what we've seen, right, is in terms of traffic in the network itself, the dynamics of that traffic has shifted, right? So where it was very urban-focused before, as folks have moved out, depending on who you believe 50%, 60% of the workforce being remote, what we've seen is that RF traffic has certainly shifted, right? And now it's more suburban and rural, where we're seeing more traffic changes there that may drive the customer to sort of look at the patterns and see from a relief and exhaust standpoint, make some adjustments that in the past may have been more focused based on the historical trends that were pre-COVID.

Got it. Rick, want to follow-up to that is one of your peers had made a comment recently that because of the COVID-19 shutdown, that there's less street traffic, like, people are driving less that, that has made installs actually a little bit easier. Can you comment on that?

Yes. Certainly, I can just selfishly speak for myself, right? My commute to the office is normally an hour, and I'm getting to the office in 20 minutes, right? So that's certainly -- we've seen that benefit for the workforce and having access quicker to get to locations. I mean everything from safety has improved down. So certainly, that has been a benefit that I think we've -- all that had crews out in the field have benefited from.

Got it. How about you, Ed? What are your thoughts?

I think very similar to Rick, I think we're not seeing a slowdown in the deployment. People are still making applications. I think we've seen low-band rollout over the last year with AT&T and T-Mobile. And now we're seeing the mid-band, the beginning of that post-merger or acquisition with Sprint. So that part of the network mid-band at 2.5, that will start to pick up here in the second half. And the high band still -- has continued. I think some of the city and urban issues as far as construction, I would assume that -- and I'm not close to that part of it, but getting those sites in place, if you're Verizon, and building out those cities might be a little bit easier without the congestion. So you have to look at it across the 3 different types. On the macro tower, we see that investments will continue. And the shift in load, I think, is pretty obvious. If you had a mobile business, and people are now at home, just as we are right now, you're going to start using different types of networks. We see it different globally, too. A lot of the pandemic has traffic differently, depending on the breadth and depth of broadband capabilities around the world. On 5G, though, we see in Europe the fact that some of the auctions and some of the spectrum has been deferred. So there's a little bit of a slowdown there due to the pandemic. But overall, I think people in the wireless industry are powering through because this is a fundamental component to being able to do the things we need to do remotely in a digital economy.

Great. And you, Dan?

I would just add on around Asia -- since Ed and my colleagues covered North America and Europe, in Asia, we certainly see, in China, just a real acceleration, if anything, of 5G deployments. And that certainly is born of both -- whether it's the just inexorable demand for data and really catching up and playing through where 4G was really not strong enough for them in terms of the available spectrum and the -- there's just the incredible amount of use of mobile technology in China. We did see -- have seen some slowdowns and some pauses in Japan and Korea, but we expect that that's going to pick up again in the next year or 2. I think that's just sort of financially driven. But the government encouragement and investment in China has been incredibly strong. And so kind of when we look at it on a global average, we've seen -- this has been quite a strong year overall for 5G deployments, and then we see things accelerating next year with North America with the new C-band auctions and the clearing of that spectrum. So we think that things are actually going to accelerate into the coming years with North America.

Dan, has anything emerged just in terms of longer-term implications? There's been a lot of buzz that factory automations, the importance of that has started to emerge maybe with this work-from-home environment. Does that kind of raise the stature of fixed wireless? Have you seen that kind of flow through with customer conversations and your interactions with the ecosystem?

Well, certainly, there's a lot of interest in utilizing mobile technology -- 5G technology for applications beyond mobile broadband. And we see mobile broadband as a real driver for 5G, but there are a lot of use cases that are industrial, that are infrastructure-based, whether it's smart city; vehicle-to-vehicle, vehicle-to-X, as they call it; and industrial, such as IoT types of applications, remote monitoring, drones, nonline-of-sight control of drones; a lot of technology applications that require not only good bandwidth, but very, very low latency and a high degree of reliability. So what we see is a lot of interest in trialing and prototyping born of what's happening with COVID. For example, a lot of factories are dealing with socially distancing the workers or dealing with worker absenteeism. They want to keep the lines going, and so they're filling in with robots for picking and packing or moving goods around the warehouse. And while today, most of those applications would be using WiFi or other kinds of narrowband technologies, we believe 5G -- the technology protocols built into 5G will be a real enabler of these types of applications. And so we're seeing a lot of trialing and prototyping with -- for those types of applications.

Okay. It looks like we have Brandon back online. Brandon, do you have a follow-up?

Yes. Great. Technical errors there. Yes. Maybe, Dan, to follow up on that, how would you compare the pacing of the 5G rollout compared to LTE? And you mentioned periods of inflection. If you had to pick a period where in the next 5 years, you think activity levels for 5G will be the greatest, what would you pick?

Yes. I'd say from a deployment perspective, I think we've seen the inflection from 4G to 5G really starting around mid-2019. In our business, we see really strong growth in technologies that are for 5G base stations, 5G infrastructure. So 5G is growing very rapidly, and 4G technologies have rolled off. So in terms of our business, we're already past that inflection point, and the growth is really going to continue very strongly over the next few years. Now I think in terms of end-user demand and what's driving 5G, I think it is a little bit different than 4G. I believe 4G was really dominated by -- it was really device-driven. With the iPhone, with the compelling use cases of streaming of mobile apps compared to the capacity of the 3G network, there was just a rush to build out the 4G network, the LTE, and get folks online and really solve an incredibly frustrating experience for consumers. I think with 5G, I think consumers will see really an improved -- much improved mobile experience, but the devices, I think, are going to be somewhat -- in terms of the experience will be incremental at first in terms of what you can do with your device. So I think it will be more about an improved experience rather than one that is an enabling one to start. And then over time, we'll see devices really taking on a lot of different kinds of characteristics, really taking advantage of the bandwidth of the network, such things as -- you have to use your imaginations, whether it's mobile gaming or AR and VR or training in factory settings, a lot -- education. So a lot of different types of applications that we can imagine versus a compelling need today to get that network turned over. And so I think we'll see -- so I think -- and then as I mentioned before, there are a lot of these industrial use cases, which will grow gradually and incrementally as these capabilities are proven to be reliable and proving to return something to the factory managers in terms of ROI. So I think we're at an inflection now in terms of investment in infrastructure. But infrastructure-led investments tend to, I think, go a bit slower than ones that are really end customer-driven -- end customer demand-driven. But certainly appreciate my colleagues weighing in on this one.

And, Rick, what about your thoughts on that?

Yes. I mean I agree with what Dan is saying. I mean, personally, I think also just in the U.S., this C-band auction happening at the end of this year, and now, I think yesterday, we heard about another mid-band grouping that will probably be available at the end of next year that's being freed up, I think that's really going to be the 5G catalyst in the U.S. I think with that mid-band, what we're going to see is accelerated deployments from the big carriers, certainly, to try to get their capacity covered in these next couple of years. So I do expect growth in -- certainly in 2021 and more so in 2022. And the type of work we do already on the macro side and certainly on the small cell side is the result of those bands becoming available. I think this whole COVID has really surfaced a bunch of new use cases that I think will also drive incremental growth in the business, like WiFi, as an example today, right? We're all learning now that doing video at home via WiFi doesn't work, right? I think Brandon, you just sort of suffered some of that yourself. So I do think we're going to see a renewed effort certainly on the fiber side to reinforce at the suburban, rural, but also in this fixed wireless world, which is going to be a quicker way to sort of get capacity out to consumers at their homes that's going to drive, I think, more opportunities in terms of work and the workforce. And I see the same thing international. I mean you think about just call centers, whether it's in India, Philippines, all -- we've all suffered through this COVID when they shut down and people went home and they couldn't work, right? So I think this has opened the eyes of certainly the carrier business, both cable and wireless, where they're seeing this opportunity for new land and grab again to try to get access quicker to consumers at their homes.

And Ed, I wanted to get your perspective on this. You might have a slightly different view than these other panelists.

Well, no, I think it's consistent, but I'll add a couple of thoughts from my experience. So one of the things that I'd say in 5G is look at the device side. I think, typically, in every G I've experienced from the beginning of 1G and analog, devices were the lagging factor. You didn't have the device but you had networks being built. So infrastructure always led by a while to be able to cover what we needed to have a service. Because of the way 4G and 5G kind of interplay, you kind of also had a lot of 5G devices in the marketplace early on without maybe the network -- requisite network coverage. So we look at the 5G infrastructure, so that was one difference that I think was clear here. And remember, in some of the 2G and even 3G cases, devices lagged by a while relative to infrastructure. Most infrastructure, too, was built with macro first, right? That was always the case, and we believe it's fundamental to delivering the coverage. We have an early adoption plan in the U.S. where we leveraged the millimeter wave. So it was kind of doing more of a limited build in terms of coverage with millimeter wave. So the way I looked at the build-out and the infrastructure, think of it as 3 ways. So we talked about inflection points and some of the things that we'll see over the next few years. The first phase, we did have some high-band deployments, right? So we had folks going in, trying millimeter wave, and that led some of the early fixed wireless use cases and things like that. The second part was trying to take a low band, 600, 700 megahertz and adding what now is considered dynamic spectrum sharing. So now you're trying to blow out coverage for as many users as you can. First, we were talking about really high-performance gigabit rates, then we're talking about wide area of coverage. So that was the second wave. And the third wave is really this mid-band. All the spectrum that's coming online now, that's -- we are in the middle of the sort of the CBRS option for PAL as we speak. And then we see the C-band coming out later this year, and then more recently, they sold the 100 megahertz that came in. So you'll see several different waves, which is a little more complicated than in the past with what we have today in 5G. And I also just think the infrastructure is lagging a little bit behind where the device capabilities are because they're so intimately tied to where we were with 4G. Also, the nonstand-alone/stand-alone issue really enables a lot of these use cases. We saw -- I mean the iPhone didn't come out initially. So that was one of the device gaps potentially in the U.S. that maybe held back folks from buying the phone, even though they existed. So we're going to see all that stuff come together later this year. And I think you'll see '21, it starts to really draw because you'll have the coverage, you'll have DSS and low band, and the mid-band we'll be building out would be hundreds of megabits of capable bit rate on the networks. So I think that's a great sort of evolution that we have ahead of us between these different bands and their applications.

And that's a good segue, too, into really our next topic on spectrum, and there's multiple new spectrum bands coming online, as you all mentioned, whether it's C-band, CBRS, millimeter wave or the new band that was identified really this last week. Is there one band in particular that you're excited about in terms of the impact on your business? Maybe, Dan, why don't you start?

Yes. So understanding that the deployments globally are in lots of different bands and there's a lot of -- I'll talk about my remarks around sub-6 gigahertz first, and then talk about millimeter wave. Within that sub-6 gigahertz, we've for some time evolved to a very flexible architecture for the kinds of technologies that we develop. And so we have this software-defined capability and can be very agile in terms of responding to it, given deployment in different customers' products where they can use our product and then marry it up to the band-specific technologies, such as power amps and the antennas, of course, that are not part of our company's offerings. So from our perspective, we're somewhat agnostic and have a flexible architecture. Now that said, the millimeter wave is a very, very different type of technology. The architectures are very different and the types of components that we offer, and we supply for a millimeter wave, are quite different and augmented to what we do in the low bands -- sorry, in the sub-6 gigahertz. And so the best way to think about it is you have to take all that data and you have to shift it up into microwave frequencies. And these millimeter wave radios for infrastructure have hundreds and hundreds of very, very tiny antennas that work cooperatively to steer a beam of information to an end user. And so there's this electronic steering and coordination of all these channels that require a lot of technology that we provide and we embed in our circuits, in our chips. So that's a really new and challenging type of problem for us. And another kind of contrast is that the lower bands you might have at the traditional macro that would sit on a tower, you might have sort of tens of watts of power coming out of each antenna, there might be 1 or 2 or 4 antennas per sector, in millimeter wave, you might have a 1/4 watt or 1/10 of a watt coming out of each one of these antennas. So it's a very different type of powering, and that allows us to embed that type of technology in our circuitry as well. And so we're very excited by -- the technology requirements are growing very quickly. We're very excited by the -- what we can offer in that space. And I think with respect to how customers would experience millimeter wave, my best analogy would be if you have really great WiFi in your home, the sub-6 gigahertz will give you that experience on the road, walking down the street, in a building with 5G. But if you -- with millimeter wave, you have the experience as though you're directly plugged into your -- the fiber that -- wired into the fiber in your home. So the use cases, the types of things that you can do when you're plugged in but you're -- as though you were plugged in, but you're really on the street, in a stadium, that's a really tremendous amount of bandwidth and a tremendous amount of capability. And so I think this is where we'll see incredible advances in what the devices can do for our customers. And that will -- true, we'll get the 5G radios in devices in the next couple of years, but I think the devices themselves will change very substantially to take advantage of that type of technology.

And Ed, how would you answer that question? I think American Towers called out CBS -- CBRS in terms of an opportunity, but also like in the mid-band, but what are your thoughts?

Yes. So I think all spectrum is good spectrum. You find ways, if you have the component technologies from ADI and others to turn them into product and seems like MasTec to help build it. From my perspective, mid-band is really the sweet spot, right? When we look at the sort of low band, we're really kind of incrementing 4G, and low band being, like, say, sub-2 gigahertz. We're taking in our band FCC channels, and we're just trying to change the waveform from 4G to 5G. You're going to get wide area coverage, maybe you get some IoT. When you switch to Release 16, you can get low agency, depending on the architecture. But that's kind of what most of cellular was for the last, let's say, 3, 4 decades, right? We get to mid-band, the game shifted, and we start to look at -- with CBRS in building, neutral host. We have new entrants into the marketplace potentially that can use that spectrum. And instead of doing it with unlicensed technology, they're doing it with standard cellular technology and put together a plan to be able to coordinate that through the SaaS and some of these other techniques that the FCC and the various standard bodies have enabled. So we're really excited about that. But then more importantly, macro towers in the fundamental architecture of coverage and capacity, the Goldilocks spectrum is mid-band, right? So if you start looking at the 100 megahertz from 3, 4, all the way up to potentially the 3, let's say, 3.9 or 4 gig, we think the C-band satellite feed, that would free up 28 megahertz over a couple of years of tranches. We have obviously, Sprint T-Mobile taking advantage of wider band channels in [ TDB ] at $2.5. We have potentially the PAL auctions ending in the next few weeks or months, and that's turning into potentially rural applications in other models that will drive the deployment of essentially macro tower deployments of massive MIMO, right, which will provide the balance between all the antennas that Dan talked about in millimeter wave and the balance between doing those at mid-band to get either beam forming gain or to get capacity at, let's call it, MU-MIMO, a multiuser MIMO, with a massive MIMO antenna. So those are -- that's a fundamental transformation that we think will really enable wide area coverage, high performance, hundreds of megabits of capable 5G throughout the country.

Rick, what are your thoughts? I haven't heard a lot about maybe small cells in millimeter wave, but what are your thoughts more broadly?

Yes. I mean certainly in line with what Ed is saying, on the mid-band side, we're extremely excited because every one of those bands is going to take a new radio and possibly a new antenna, right? So you're talking about climbs at every one of the sites, which is new attachments for the tower companies. But certainly for us, it's a great deal of activity to try to bring that together. On the millimeter side, I think we all sort of agree, the strategy involves all 3, right? Narrow band, the mid-band and the high band. And that's still going to be an important component of -- tool in the toolbox for the carrier to bring it into the high-density areas, to bring together the experiences that Dan is speaking to that are going to be necessary for these services that are going to be here in the next couple of years. That one continues to be the same in the sense that it still has the permitting challenges, the application challenges. So it's that -- what we see is that pipeline is growing. It's taken a while to develop because we all started seeing challenges of trying to get those [ MTBs ]. But what we see is those are starting to come together, right? And that work will start to grow more and more in the next year and the year -- it's almost doubling year over year over year as the access points are becoming available to go construct, right? So it's still going to be very focused on the millimeter wave side, but the momentum is -- we see the momentum there, and it's actually driving incremental fiber growth as well. So it's triggering other work streams that are necessary. So I think that millimeter wave is good in terms of growth. I think this -- these mid-bands are going to drive, and I'm sure Ed can speak to that is even more macro sites that are going to be necessary to get to these rural areas and be able to apply that in the way that it will in these years to come. So it's all positive.

Great. I had a follow-up. But before I do, there is a question from the audience. The question is what time line do you see for C-band line spectrum at 3.7 to 3.98 gigahertz to become available for 5G? Assuming the auction goes off as planned in December, don't the incumbents have until the end of 2024 to vacate the spectrum? Anyone want to take that?

I could take a try at it. My best understanding is that the first 100 megahertz should be cleared or it's a -- there's a good understanding that it should be cleared by the end of 2021. And the subsequent 180, the balance there would be cleared by the end of 2023. And so in terms of deployments, best case, carriers would be -- that purchase part of that spectrum would be building out and deploying infrastructure in anticipation of that spectrum being cleared and being available in those 2 tranches. Whether they actually go ahead and do that, that's -- obviously, that's their -- those are their -- that's their decision. But I agree with my colleagues that the C-band is going to be the workhorse -- this mid-band is the workhorse for 5G in North America. It solves a huge number of problems, and it's going to be -- there's a lot of incentive to really upgrade the networks for all the reasons that we've talked about. And I think in terms of the millimeter wave, I think that's going to be -- it's sort of still in trialing. I think if you go and look at Verizon, they can show you the coverage maps of what's out there today in millimeter wave. It's really some trials in different cities. I think they've shown some really positive results. But as you know, not as many folks in the cities these days as there were a year ago, but hopefully, there will be next year. So I think sort of proving that out and really demonstrating the value that's going to probably be, in my opinion, maybe take a bit more time, and there'll be more focus on getting this mid-band to C-band deployed in that time frame that I mentioned.

Great. Thanks, Dan. Just to follow up on that. I mean as you guys all know, millimeter wave is a controversial topic within the industry. There's obviously a lot of skepticism just given the technical issues that people have been having with it. What I'm hearing today is that potentially with the C-band auction coming, does that kind of make millimeter wave more of a niche case scenario? Are the operators potentially just using this as a potential stop-gap measure? Or is there real, significant longer-term opportunities for millimeter wave? Why don't we start with Ed on that?

Yes. So first of all, the short answer is yes, there's long-term opportunities. Millimeter wave spectrum has a role to play. And I think that the operators will and the community of innovation will drive use cases that will take advantage of that. So if you get large parts of cities covered at the street level, you can offload certain parts of the traffic, you can increase the demand on the street. Obviously, in-building is a different challenge for millimeter wave. So you have to look at the capital of getting that signal in doors. But outdoors and also with IAB, which is another technology that folks are looking at, integrated access and backhaul, it will help relieve some of the fiber constraints and costs that come with small cells. Having deployed, you can deploy some mesh technologies associated with it. So I think there's -- and there's repeaters that people have been working on that help seed the signal in fixed wireless application to work around foliage and other challenges. I think we've also seen in stadiums and in doors and arenas where a millimeter wave can provide significant capacity for fan use. Obviously, we're not in that situation today with the pandemic. But I think, obviously, we believe all of that will come back. And I think there's tremendous opportunities in AR, VR and some of those use cases in those open arenas that will take place. And I think Verizon has led that effort, for sure. So I think there's a long-term view that millimeter wave will play an important part of 5G experience for sure. In the case of sort of mid-band, we still see that, that's the fundamental sort of workhorse or Goldilocks spectrum to take wideband TV channels and make that available everywhere. And then you have technologies like dual connectivity, right? So you can now connect -- you don't have to have carrier aggregation where you're all coming from the same tower if you're just aggregating spectrum. You can aggregate at the radio on the device different locations. Think of it as like Spider-Man who can basically grab RF and the beams that are being formed in millimeter wave or maybe an MU-MIMO channel, and I can combine those into a traffic capability that different use cases might be served by different access points. So I kind of feel like the complexity of the network and how device interacts with the network will also take advantage of millimeter wave when it's available and when it's near you and you can turbocharge your experience.

Okay. How about you, Rick? Are you kind of indifferent between millimeter wave versus sub-6 on your end? Or does this impact you?

No. I mean, first of all, I think all spectrum is necessary, right? So I think it's all going to get utilized. Like I said before, I think this millimeter wave, it's just another tool in the toolbox. But ultimately, the use cases for the services to come will need millimeter wave, right? So whether you're talking about the smart grids or the vehicle -- smart vehicles. So if anything, it may be early, and I think Dan spoke to now it's being tested and piloted and certain use cases are being adopted. What Ed said about equipment is paramount, right? I think these repeaters, some of the technology, the antennas that are going to come with it are still early on. So I think those will catch up, and then it'll get consumed because it'll be something that in the next 5 years will be necessary to achieve the speeds that are -- that the consumer is going to demand.

Again, it sounds like you feel millimeter wave, post the CBN auction, is maybe going to be confined to more niche applications. Or is there still the potential for killer applications to be developed with millimeter wave?

Yes. I'm a believer in faster computers, better devices and more spectrum. I think that the opportunities that -- we use our imagination around what could be possible if your device was 100x faster, if the network were 100x faster, 10x more reliable. We're actually seeing -- and I was a bit surprised, but apparently the -- some of the performance metrics or measures on millimeter wave 5G, so you -- show actually some really good results around battery life and around the energy required to receive bits of information. So I think there's -- I'm optimistic about the imagination of technology world to find really interesting applications to build really compelling devices. I think we're all in agreement that the millimeter wave is very, very short distance and so you need a lot of infrastructure. It needs to be very dense. If you look at those maps on Verizon, you can see you need a bunch of access points or radios mounted on lamps or on -- street lamps or on tops of buildings just for a very, very confined area of -- of a couple of city blocks. And so we're talking about thousands and thousands and thousands to cover New York, Boston, DC. And then if you think about the challenge of extending that outside of a metro core or stadiums into -- or very, very small areas, into the suburbs and beyond, I think it's a real stretch of the imagination to see that millimeter wave will be ubiquitous and everywhere. I don't -- I really would challenge that assertion. So I think we'll see it as -- in urban cores, in areas of concentration, in public squares, public spaces. But I think for the -- for coverage at high performance and reasonably high capacity, that will be the domain of sub-6 gigahertz of these workhorse technologies that we've discussed.

Okay. Great. So just to close things out, we're going to move into the quick fire section of our panel. We've got 3 questions that I'm going to go in kind of rapid fire order, basically, looking forward just kind of a quick response and kind of what your just quick thoughts are. The first question is 5 years from now, what do you guys see as being the top use case for 5G? So with that, why don't we start with you, Ed?

Yes. So I would say that as we build out the network, get the latencies down, the consumer side should drive some things. Obviously, there's a lot of enterprise opportunities, but enterprises will take some time, except maybe on the factory. So I think AR/VR and gaming, that would be probably the main driver that most people will see the value in 5G.

Okay. Dan?

I would agree with that. I think in 5 years, that will be dominant. I think we'll start to see some of these applications that can really benefit from the low latency and the reliability, whether it's logistics and drones and some of the IoT types of applications really starting to emerge over that -- once the technology is deployed and proven out.

Rick, top use case for you for 5G?

Yes. I think just to add, I would just say I would add telemedicine to that, right? So the virtual doctor at home will be, yes, I think, one of the real beneficial use cases from it in the next 5 years.

Okay. You guys are basically just telling me, we all have no clue what's going to be the top use case. So basically... Okay. Next question. Winners and losers. Within your subsector or looking at the ecosystem more broadly, the one rule is you cannot name your own company. Who do you think will be the biggest beneficiary associated with the rollout of 5G? And then conversely, who could be seeing more headwinds or be a little bit more challenged? So looking for one winner and one loser. Why don't we start with you, Dan?

Sure. I would say the technologies that we see being required for 5G are ones where we integrate at the system level. We're building more capability into our chips because we've got to drive the power out and the number of channels that are supported up, whether it's for massive MIMO and sub-6 or millimeter wave. And so I think the technology companies that integrate a lot of functionality and do so in a very flexible way, we've talked about the range of spectrum, the range of applications, it requires a lot of flexibility in the devices and really what I call -- we call software-defined devices. So I think companies that lead with that will be the winners. And I think, obviously, we see that inflection point, and so companies that have focused on sort of macro tower-based 4G, those will probably roll off somewhat and be replaced by the massive MIMO tower base as well as the -- in the future of the millimeter wave.

Okay. How about you, Rick? One winner, one loser?

I would say on the service side companies, that can really bring end-to-end services and turnkey on these builds will certainly be winners because the complexity of the build in the future will just require that integrated view and support to bring the economies of scale that are needed for price points. In terms of -- I'm not sure that I see losers because I just see this as such a hot industry in the next 5 years that I think those that stay progressive will do well.

Okay. Ed?

I kind of feel like some of the folks that will continue to benefit are the folks that we see today as the cloud folks. As we start to have networks become more software-oriented, we see virtualization, telco cloud occurring and we see the mobile edge compute moving the functionality that may start at consumer, but enterprise becoming more distributed, those folks are going to have a big role to play in the future. So I kind of feel that the rich get richer in that sense. But there are going to be opportunities, right? So a lot of innovation will break up some parts of the network. And what used to be monolithic end-to-end designs, there'll be pressure on some of the traditional OEMs, as we look at ORAM. I think that some of the things we're seeing in the marketplace today is will the -- will parts of the network be unbundled and disaggregated in ways that could create opportunity for smaller companies to innovate and will -- some of those other folks that currently do that, how do they defend their franchise?

Okay. The last question. Bold predictions. What could happen over the next 3 years that could be most surprising? Any bold predictions you think could occur within your subsector or kind of the overall 5G industry over the next 3 to 5 years? Disruptions? Consolidations? Feel free to think outside the box here. Rick, why don't we kick things out with you?

I certainly think CBRS can bring about some real innovation and new entrants into the business that are not the traditional carriers. But I think there's an opportunity there for a rising star to innovate and sort of capture a lot of, whether you want to call it, private networks. And so I think that's the only one. And I also like the ORAM approach to the future. I didn't see it with SONET back in the fiber days. There was a lot of talk and it never materialized. We'll see now with ORAM. I think that could certainly, again, bring about a whole new opportunity for those that are not the traditional OEM types, right? So I think those 2 areas are going to be interesting to watch.

Great. Ed?

I'll get really bold here and say, I'll push you out a few more years, not 3 but, say, in 2025, the smartphone is no longer the platform of choice, right? So that particular device is going to break up. You're going to have probably no display, you'll have a modem, maybe you'll have a camera, that's your core puck, if you will. And then you're going to have a series of wearable capabilities that are going to use natural language processing to enter your data to visualize things through glass and other means where you can project what's happening on a broader display or any environment that you're operating in. So we kind of see that smartphone peak is kind of where we are, and then eventually, it's going to take all that functionality that's getting harder and harder to squeeze in that form factor, it's going to break out. We've already seen a watch. And I think there'll be a lot of innovation in the device side, particularly with some of the IoT and sensors that we can build as a little, let's say, a, or personal area network, around that core modem, which would be, let's say, a combination of millimeter wave, as we discussed, but most likely, it's going to be driven by the wide area coverage of mid-band and 5G. So that's my view.

I like that. I look forward to connecting with you in [ vail ] in 5 years to see if that comes through. Okay. And then Dan, you get to close things out here.

Yes. I think I mentioned some of these applications. I think I look at us on a Zoom and a teleconference as sort of the -- kind of the video equivalent of text messaging. And see where we've gone with social networking from text to -- up to live streaming. I think the ways that we'll interact with each other through new devices, through augmented reality, through -- and being able to do that from anywhere, that's going to require the network uptime, the reliability, the bandwidth of infrastructure, but it will require devices and software and management layers as well. But I think that one of these big disruptions has been just the rapid adoption and acceptance of visiting customers virtually, engaging in these kinds of discussions virtually, visiting with our friends, socially, virtually, those experiences are going to really transform. I was on a partner meeting with a technology company, and they couldn't do it live this year so they sent everyone VR goggles and we all wore our VR glasses for the keynotes, and it actually worked. It was actually a much more immersive experience. I got to tell you I paid more attention to the speaker because I couldn't be on my device, checking my e-mails at the same time. So even just the experience today with technology that's really in its early days, it is a different level of experience. So I think we'll see these improved networks, improved devices, give us a whole new set of ways to interact, and they'll become much more commonplace.

Great. Okay. It looks like we're over time. I wanted to thank all our analysts for a great conversation this morning. Thank you for joining us, everybody.

All right.

Thank you.

Thanks, everybody.