This is Bloomberg Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio.
Let's talk utility, is Matt. When I think of utilities, or when I think most people, they think of water, you know, electricity that you know, the bills you pay every month. I wan't go throw a broadband in there. I mean, when you put it on the to do list of utilities, you got to pay every month. Broadbands right up there. Yeah, when the power goes out, what's the biggest concern you have, I can't charge my phone exactly so, and if people are all huddled in the
Starbucks and things like that. But a lot of the country, some of the country is still not served by really good broadband. There's a company out there that's trying to fix that. US Cellular, and we have the president's CEO of laurent uh their re All, who goes by the nickname of LT. We're gonna go that makes things out like that, Yeah, that makes it. He's here in New York Giants country here we like the LT. He's a president CEO of US Cellular. It joins us on Zoom from Chicago.
And a Bob Mold fan apparently really, I'm a huge fan of Bob Mould. I mean, I loved Who's Kerdo when I was a kid. But when I lived in Berlin a couple of years ago, I was so happy to learn that he lived there too, and I got to drop in on a couple of very small shows. I'm talking like forty fifty people.
You got to tell me who was Bob Holt?
He was the lead singer of whosker Do and now he has a great solo career.
No no idea, Okay, no idea?
What eltea?
We're going to move on from that. LT, so talk to us about kind of where we are in the deployment of decent quality broadband across this country. Where are we today and where do you guys need to take it?
Maybe so you reference to the concept of a utility, and one of the things that the pandemic in particularly really laid bare was just how critical broadband and broadband connectivity is.
The numbers can be debated, but generally you.
Can think of over ten million Americans as not having access to high speed, high quality broadband. That definition is you can think of it as there's two definitions. The government uses unserved and underserved Americans. Underserved is below under getting access to one hundred megabet connection unserved as you've got less than twenty five megabits. The key number is you've got at least ten million Americans who don't have access.
And I have twin daughters. We went through the pandemic.
With them doing school from home, and I can't imagine how difficult it would have been for them to thrive and survive without high quality broadband.
And so it's a national issue. It's also a very personal issue for our business.
So our business, we're a wireless company, we focus primarily on rural America. We're the fourth largest wireless business in the United States, four billion dollar revenue, five million subscribers. We connect our customers throughout the US, but our focus is somewhat more on rural America. The largest city is that our network covers, or cities like Milwaukee or Tulsa, and so mostly we focus on covering people who sometimes don't have access to the atts and the verieton.
So what's the technology, lt what's the tech technology? When I got to rule America, I'm talking rural America, and you know, the phone companies or the cable companies aren't going to string wires up, they're not going to dig up the ground. What's the technology? Can you explain to technology that gets broadband to those parts of the country.
So generally you would have access through one of three things. Currently you would have access if you have a phone company DSL, which obviously is a very low quality kind of signal. Maybe you could have access to satellite, which has a lot of challenges in and of itself. We've been rolling out of technology called fixed wireless Access. We're
very excited about it. It uses the existing mobile infrastructure, so think things like mobile towers, and what we use is the radios on those towers that currently serve mobile phones in the area. We dedicate a portion of that radio capacity to serving homes and to serving businesses, and so we're connecting people that without us would not be connected. We've seen a ton of uptake of the technology, so we've doubled our subscriber base on this over eighteen months.
We're about to cross one hundred thousand subscribers. It's a great way to connect rural America. It's not isolated to rural Some of our competitors are also pushing it in urban markets. It's a really interesting way to connect homes and businesses that maybe in the past wouldn't have had accidents.
Yeah, I was actually last week I was talking with John Scully about this, and he's the CEO of AT and T, and I think for a while they weren't to end of the technology. Now they're fully behind it. So what's your competition, like, I mean, do they go out to those places as well or is it sort of two small potatoes to them to try and connect these people. What's it like fighting against a giant like telephone.
Well, you know, it's interesting that you mentioned it right now. Our competition isn't there we're worried about with this technology, with the fixed wireless technology is connecting people that without it aren't connected. And so we actually don't compete too much against the Atts and the rises and the T mobiles in the space. We're all trying to figure out how to bring these types of connections to the home
into the business in a way that's economical. The challenge that I face and John Stankey from AT and T faces it, as does Verizon, as does T Mobile. What we face is the challenge of how to connect people economically, we want.
To connect these folks. These are not people that either.
We, the wireless carriers or our wireline competitors want to leave behind the challenges. It's really difficult, it's really expensive to connect these folks. And in DC there's a program Bad the Bad Program and portion of the Infrastructure Investment in Jobs Act. It's taking forty six billion dollars and it's putting it towards connecting unconnected Americans, which is fantastic. The challenge is that there's also a vision in DC of let's connect everyone with fiber. And that sounds great
when you're sitting in an office building in DC. When you spend time in rural America the way I do, and you pass through farmhouses in Iowa or ranches in Wyoming, it's very difficult to connect.
Those homes those businesses with fiber.
And that's where our technology comes in, and we think we have a way to combine fiber and fixed wireless and the forty six billion dollars that's coming from the government and to truly connect every single American.
That's not been something that's been.
Possible in the past, and now it can be a reality because of the combination of the technology that we're bringing to the table as well as the funding with the government's offer.
But that's not cheap lt. I'm looking at the FA function the Bloomberg terminal, which has financial analysis, and I see capex of you know, six hundred and fifty seven hundred million dollars a year. You've got you know, four billion dollars of kind of net debt on the balance sheet, you know, less than a billion dollars of ebitita. So how do you finance this going forty I don't have you free cash flow positive here. I'm not sure, but
you're right about it. So how are you going to finance a continued growth here?
So that's really where the government infrastructure comes in. It costs between six hundred and fifty thousand to a million dollars to put a cell tower in rural America. In order to break even on that cell tower, I have to have between two to three hundred fixed wireless customers within seven kilometers of that tower.
That math doesn't work right now.
If you've got two hundred and fifty to three hundred customers in a fairly dense area, we'll have them connected. The challenge is people who are more sparse, and so we're working with states to take these infrastructure dollars and help us bring the cost that we have to bear of that tower from between six hundred and fifty two a million. If I can bring that cost down to two hundred down to one hundred, all of a sudden, I can connect a lot more Americans, and I can with simply the dollars on.
Our balance sheet.
The other benefit that comes along with it, by the way, is that when we put that tower in rural America and I send my engineers up to connect homes and businesses with fixed wireless, we don't just do it with fixed wireless. We're also putting our five G mobile spectrum and mobile radios up on top of that tower. So now we're connecting that whole area with mobile five G. People want to be connected on their mobile phones the same way we want to be connected in their homes and their businesses.
And we can do both.
What's the next what's the next thing LT after five G? I mean, I assume it's going to be called six G. But is there something that's going to be more connective and more easy and easy, easier to deal with the.
Path for our industry has always been you put more capacity out there for people to use, more capabilities out there for people to use, and they will find a way to use it. And so both we and our competitors and other folks in the industry, we're starting to think about sixty. The more important thing, I think is the capabilities that we're going to provide higher speeds, the ability to connect millions and billions of devices to our network, so truly allowing this network of sensors to take and
finally bringing latency them. And so if you think about things like drones right now, running a drone outside of line of sight is very difficult.
Connectivity.
We can do that, all right, LT, thank you so much for joining us.
LT.
Theravoll, President, CEO of US, leader joining us on Zoom from Chicago,