Lumen Technologies, Inc. (LUMN) Earnings Call Transcript

[Presentation]

Welcome, everyone. My leadership team and I are excited to have you with us today to talk about the technology shifts occurring in the market and the opportunities they represent for Lumen. We've worked very hard over the past 3 years to transform our company financially and operationally. And we have fully embraced our platform strategy for driving future growth. Today, I hope you'll see why we are so excited about the future. 2021 is our fourth year since the acquisition of Level 3. In previous years, I've talked about integration -- digital transformation and operationalizing our capabilities. These earlier phases have laid the foundation for Lumen and the Lumen platform. Our 2021 focus is on the platform growth. We will continue to expand our footprint, enhance our capabilities and drive profitable revenue as we meet the needs of the 4th Industrial Revolution. You've heard us talk about the 4th IR. AI, VR, machine learning, work-from-anywhere, IoT and many other data-intensive applications are driving a fundamental market shift in how enterprises securely acquire, analyze and act on their data. Some of the trends resulting from this shift are massive amounts of data to be processed and explosion in the number of endpoints that generate or consume that data widely distributed computing, where applications are hosted in environments specifically tuned to meet requirements like security, resilience and very low latency; the virtualization of network resources and escalating in more destructive cyberthreat landscape; and the need for a high-bandwidth, flexible and secure networking fabric between all of the sources and uses of data of an enterprise. The Lumen platform and our own digital transformation have been focused on meeting the needs of the 4th IR and the growth opportunities it presents. Starting with our physical infrastructure, the fiber and facilities of Level 3 and CenturyLink have been integrated and operate as a single network for Lumen with over 180,000 on-net buildings, fiber deployed to more than 2,200 data centers globally, extraordinary connectivity to the major cloud service providers and deep and robust interconnection and peering to the world's eyeball networks, data networking services like waves, high-speed IP, SD-WAN and MPLS right on that infrastructure and are fully integrated into our adaptive networking philosophy. With services like Dynamic Connections, network as a service is now a reality. Customers through the portal or their applications via APIs can control our network to augment capacity or redirect bandwidth on demand. Our fiber network delivers direct access to an array of global cloud environments where apps and data live. From the largest cloud service providers to colo facilities, to on-premise solutions, operating some of the world's largest IT and transport networks, we have unique insights and capabilities to secure our customers. Our Black Lotus Labs team uses our network insights and works with other threat intelligence efforts around the world to understand and proactively counter these threats. We embed their capabilities into our security services like DDoS mitigation, web application firewalls and botnet protection, blocking threats on the network before they can make their way to our customers. Our edge investments combined the broad distribution of our gateways and other facilities, the extensive fiber network and our exceptional data networking capabilities to provide a low-latency, resilient and secure distributed computing environment to our customers. We see edge computing as the next big growth area for our business and believe it presents a transformational opportunity for the technology industry, helping existing public cloud vendors get closer to their customers while giving birth to a new edge cloud where network, compute, data and application services can be delivered with the ultra-low latency necessary for the 4th IR use cases. Judging from the interest from some of the world's largest tech companies partnering with Lumen, I'd say we're not alone in seeing the promise that the edge brings. Our recent announcement with IBM is a great example of how Lumen is helping to extend their cloud to the very edge and closer to their customers. IBM and Lumen have tested, integrated and will begin supporting IBM's Cloud Satellite offering virtualized on the Lumen platform, giving their customers and ours access to the IBM Cloud with very low latency. Our SAP partnership is another excellent example of the Lumen Edge Cloud. We've built a totally new cloud, a Lumen cloud that lives and is native at the edge, so SaaS providers like SAP or UCaaS providers like Zoom can deploy their applications on the Lumen platform and realize the benefits of capacity, latency, security and resilience for their end users. Most recently, we announced an alliance between Lumen and T-Mobile that will leverage T-Mobile's 5G mobile network and our world-class fiber infrastructure to help enterprises build, manage and scale applications on the Lumen platform and deliver them across public and private spaces for opportunities like IoT. Our bare metal and edge computing capabilities are another aspect of the Lumen Edge Cloud and directly support enterprise customer applications. We provide the hardware via bare metal or can host the application via edge computing, giving enterprises the ability to leverage the advantages of the Lumen platform. As you can tell by the great partners I've mentioned, we are not doing this alone. Our platform strategy is based on partnering with other industry-leading companies. As one example, I'll point to VMware, a strategic partner with exceptional capabilities in virtualization and SD-WAN. In a few minutes, you'll hear more from Shaun about our partnerships and initiatives. Our platform creates a digital marketplace for customers where applications and services are easily consumed, digitally delivered and efficiently activated. Combined with our customer success model, which you'll hear more about in a few minutes, all of these efforts make a difference. Don't just take my word for it, though. We are delighted to be named as a leader in Gartner's 2021 Magic Quadrant for Global Network Services. And Frost & Sullivan recently awarded us a Best Practices Innovation award for our security solutions. These are just 2 among many other industries analyst awards we've received. The bottom line is we are investing in a unique platform of capabilities and solutions. We are attracting new customers and growing our base. The industry is recognizing this, and our shift to delivering application technology is only going to accelerate. On the mass market side of our business, we're excited about Quantum Fiber and our fiber-based services to consumers and small businesses. We believe our fiber-to-the-premises technology is superior to any wireless or HFC-based offerings of our competitors now or in the future. The symmetrical nature of our fiber-to-the-premises solutions deliver differentiated performance for work from anywhere, remote education and similar use cases. As you know, we continue expanding our Quantum Fiber footprint and increasing our penetration. Our blended penetration of new and previous builds is almost 30%. To me, the existing penetration rate validates our Quantum Fiber strategy and represents an opportunity as we continue to drive penetration higher. Our investments to move to digital interactions are really paying off by reducing our costs and driving significant improvements in customer satisfaction. Our year-to-date NPS score for Quantum consumer customers is a positive 76. As I noted on our fourth quarter earnings call in February, our priorities for 2021 are clear. We intend to drive growth over the Lumen platform, improve the penetration of existing services, continue to transform the business and continue our balanced approach to capital allocation, investing in the business for growth, returning capital to our shareholders with our dividend and paying down debt. Clearly, I'm enthusiastic about our company. Today, you'll also hear more details from some of our leadership team. First, we'll hear from Andrew Dugan, our Chief Technology Officer, about the role that our network plays in delivering a differentiated platform experience And how the network sets our platform apart. Then we'll hear from Shaun Andrews, our Chief Marketing Officer, with more about the Lumen platform and the new products and services we are delivering on it alongside an ecosystem of alliance partners to meet growing the market needs. Ed Morche, President, North America Enterprise and Public Sector, will talk about our sales approach and his efforts to bring more customers on to our platform and taking advantage of our robust capabilities and assets. Then we'll hear from Laurinda Pang, our President of Customer Success, about her team's role in enabling our customers to achieve their business goals by partnering with Lumen. After Laurinda, we'll turn it over to Maxine Moreau, President of Mass Markets, to hear about Quantum Fiber for residential and small business customers. And finally, Neel Dev, our CFO, will share with you how we are managing our business to drive growth in places where we invest and expect to grow. Thank you again for listening in today. [Presentation]

Hello. I'm Andrew Dugan, Chief Technology Officer. As Jeff mentioned, we're continuing to invest in our physical infrastructure. Over the last few years, we have continued to leverage our multiple conduits to overbuild our core intercity network. We have a set of completed construction and we have a number of additional projects in flight that in total will add roughly 6.2 million fiber miles to our intercity network. Looking back to when many intercity networks were last built in the late '90s and early 2000s, they were commonly built with 96 or 144 count fiber cables. Because we're investing to meet the high-capacity needs of our network as well as web scale companies, we're now installing a minimum of 288 fiber count cables and, on some routes, we have up to 866 fiber count cables. This allows us to upgrade our own backbones with higher capacity and lower unit costs, but equally important through Dark Fibre sales. It positions our fiber at the center of the cloud infrastructure. This will become important as we continue to talk about the low latency needs of enterprise applications. In addition to building a very high-capacity fiber backbone, we're also investing in increasing the capillarity of our network. This is an important part of increasing the overall value of our assets. We continue to add enterprise buildings to our network and invest in building out to our customers to deliver the high-capacity and high-performance services they expect. We're also building out fiber to meet the needs of 5G builders, and we'll continue to do that where our fiber assets can add value. We continue with our micro-targeting strategy That allows us to build to meet the combined demand of our enterprise, consumer and 5G customers. Collectively, this investment continues to extend the reach of our fiber footprint. In addition to building fiber assets, we're also investing in the development of our edge platform that integrates application and cloud control with network control and integrated security. This is an area that I'm very excited about, because it brings together many of our capabilities in a way that others can't match. The edge compute conversation has been around for a number of years. Although Lumen didn't create the conversation, we're in a great position to deliver on the need. We should ask ourselves, why does the edge compute conversation exist? It exists, because the performance needs of all applications are not being met by the current cloud compute and data center models. If the centralized cloud or data center model met the need, there wouldn't be an edge compute conversation. There are 2 aspects of performance that enterprises care about. The first is latency in their applications, and the second is bandwidth. The primary latency that enterprises are trying to control with edge compute is the latency caused by the distance that information is carried. We own and operate a lot of real estate, and that allows us to deploy edge compute into networks. To solve the enterprise application latency problem, it isn't enough just to have edge data centers. That's only half the problem. You also need to be able to ensure low-latency network connectivity with a highly connected network. That is where we believe Lumen is positioned to deliver unique solutions. By combining the enterprise reach of our network, the data center reach of our network and the fact that our intercity Dark Fibre builds are supporting the infrastructure of web scalers, we're in a great position to deliver high-capacity and low-latency edge compute and the associated network services to customers. This advantage isn't just limited to private network connectivity. We're also a great choice for Internet-based applications. We operate one of the largest Internet networks in the world, but we also operate the most interconnected Internet network in the world. When you're working to lower latency, what matters is that in our connectivity of networks, because of our connectedness, we're also a great choice for those types of Internet-based applications. We're creating a platform that allows customers to manage their applications across multiple compute locations, including on-premise, at the edge and in the centralized cloud using a multi-cloud management capability. In addition to solving that edge compute problem, we're also solving the other half of the problem, the latency of the network. With that same platform, customers can control the underlying network connectivity using our adaptive networking products. This combination of network assets integrated with cloud control will deliver the performance and application management experiences to meet the needs of the 4th Industrial Revolution in a way that only Lumen can deliver. [Presentation]

Hi. I'm Shaun Andrews, the Executive Vice President of Product and Chief Marketing Officer at Lumen. My team and I are responsible for developing the Lumen platform and leading our go-to-market strategy to drive revenue growth. You heard Jeff and Andrew talk about 4th IR and the need for low latency delivered by edge solutions. Not only do we see these apps and use cases growing in the market, but we also see it in our own customer research. We strive to be data-driven. So we surveyed a global set of target customers on their expectations from edge solutions. One of the insights that we gained is that it's not just about the compute layer. 91% said they need integrations with underlying network. They're looking for security, and they don't feel equipped today to deliver apps that have performance requirements related to low latency. This led us to the platform vision you have been hearing us talk about. Now as proud as I am of our vision, the proof is in the pudding. So I want to start with a real-world example of how we recently delivered a use case for 4th IR on the Lumen platform. Last year, we worked with one of the world's largest video services to enable a new architecture for the delivery of football games to millions of end users. Live footage from the game traveled on our network optimized for content all the way to our edge cloud nodes where Lumen Edge Bare Metal was used to distribute the video to end customers. This is the modern way to deliver apps, data and content to viewers using a distributed cloud model, and our platform worked flawlessly. Our distributed compute footprint with deep peering to broadband networks and high-capacity peering to the wireless network providers enabled Lumen to scale to 1.2 terabits per second of streaming. The flexibility of the Lumen Edge Bare Metal offer enabled our customer to manage all of the elements of the software stack that they optimized for streaming live video events. In the instance shown here, in late December, the customer hit their all-time streaming peak during the game with remarkable performance across all Lumen products, CDN, bare metal as a Service, VVCs and transport. I share this, because it's a remarkable validation of our platform strategy. The combined power of all of our network and edge cloud assets coming together in an easy-to-consume platform and a clear proof point of how we plan to grow revenue with this strategy. Speaking of revenue, I want to spend a few minutes talking about how the platform will enable growth for Lumen. Andrew talked about our increasingly robust fiber network infrastructure and how we believe our investments will continue to set us apart by delivering better performance for customer applications. And you heard Jeff talk about the platform we've built over this network foundation, a platform that delivers software-defined networking capabilities, the connect to hybrid cloud environments ranging from on-prem to edge, to the major cloud service providers and how they can help deliver additional security services and provide unified orchestration of the applications and the underlying infrastructure. I want to cover how we translate this vision into revenue growth with solutions built on our platform and delivered with a differentiated digital customer experience. Today, I'm going to highlight 4 key solution areas that are part of our overall portfolio: edge computing, adaptive networking, connected security and unified communications and collaboration. Over the last 2 years since the inception of Lumen and our platform vision, we have launched nearly a dozen new and improved solutions on our platform. I'll begin with edge computing. In Q4 2020, we launched Lumen Edge Bare Metal. And as you heard me mention earlier, it's already a part of our customer use cases relying on infrastructure services at the edge. Lumen Network Storage is another example that complements compute with object and live storage delivered with low latency and potentially even better economics than cloud-based storage, because we deliver this capability without egress costs for our Internet customers. Our edge computing portfolio will continue to expand as we add our private cloud solution based on VMware Cloud Foundation and Lumen Edge VM, our multi-tenant on the edge, both scheduled to launch in Q2 of this year. Our edge computing capabilities are a key investment for us this year. Today, we are able to deliver sub-5 milliseconds latency to 85% of U.S. enterprises. You may recall during the February earnings call, the number was roughly 60%, and we intend to raise this to more than 95% of U.S. enterprises by the end of the year, an incredible testament to the great work of our teams. Our edge compute is further differentiated, because it's tied to our adaptive networking portfolio. This portfolio delivers network as a service abstracted over our hybrid fiber-based networking infrastructure that enables greater flexibility in adapting the network to our customers' needs. For instance, we recently launched Hyper WAN, the industry's first digital self-service enterprise networking solution that packages a public and a private port for one price with built-in security. The benefit to our customer is faster turnup of service and the ability to reconfigure their network as their needs change, all by themselves. We're seeing thousands of customers digitally interact with our Hyper WAN experience online. And in one instance, we were able to turn up service in 9 days, which wouldn't have been possible with our traditional process flows. And it's not just innovative new products like Hyper WAN, existing products and services like Fiber Plus, our business Internet offering, are also moving to digitally delivered models to help our customers get connected faster and get the experience they want. On the other hand, more complex network deals continue to be a major source of revenue. I just learned the other day about how our pro services team helped a multinational manufacturing company get better access to their cloud-based apps and network redundancy by deploying SD-WAN to all of their domestic sites along with Internet service. Another retailer had 100-plus sites connected using a complex solution of SD-WAN, hosted VoIP, broadband, wireless backup and professional services. So we continue to expect significant success in both traditional as well as digital adaptive networking sales. Certainly, security is essential to each and every one of our customers. And the Lumen platform helps integrate security services more easily and deliver those services faster. For example, DDoS Hyper, our industry-leading DDoS mitigation solution, helps customers immediately protect their businesses right away when they need it. You'll hear Laurinda talk about this specific example in a few minutes. The platform also helps us marry our network and threat intelligence to our security solutions, allowing us to use our visibility into the global Internet to provide better network-based security offerings like our web application firewall and botnet protection. Last but not least, our UC&C solutions are a great example of how our high-performance application platform delivers an excellent customer experience. For the collaboration solution, businesses rely on every single day. We are partnering with industry leaders like Zoom, Microsoft Teams and Cisco to meet customers' collaboration needs using our platform. These are business-critical and massive undertakings. 15,000 Zoom seats at one of New York's largest hospitals. 24,000 Microsoft Teams users deployed at one of California's largest utility providers, who transitioned from legacy voice services, and we helped them manage the transition. I can see the Lumen's value proposition for UC&C. The best network combined with the best applications continues to resonate with customers. Now building solutions and services is essential, but we are increasingly hearing from customers who want to consume these services digitally. We are focusing on creating these digital experiences for our solutions across their journey from learning about our products, to purchasing them, to making changes and getting support. Today, you can get DDoS services with us instantly or order the Hyper WAN solution to get Internet and IP VPN services faster than ever before, with some locations getting serviced 80% faster. Customers also increasingly want to consume services through APIs or want utility APIs for billing and account management. So we recently launched our API Marketplace to help customers consume our services via API. Our ultimate goal is to meet customers' needs however they prefer from completely digital self-service to fully supported managed services. Now as much as I love our platform solutions and the great experiences we've invested in, the truth is that any platform strategy can only succeed if it's built as an open ecosystem that works well with others. As you heard Jeff say earlier, the Lumen platform has been specifically designed to deliver amazing outcomes when our alliance partners plug into it. In a short period of time, we have built out a strong ecosystem of alliance partners. Whether it's SD-WAN services delivered on the edge, the world's largest cloud service providers, security and UC&C vendors, orchestration or SaaS providers, they are all using Lumen to better deliver their products and services to customers via our platform. One such partnership that we've announced recently is with VMware, where we are not only co-engineering solutions across network, edge and security to be delivered on the Lumen platform, but we are also working on joint go-to-market initiatives across marketing and sales to help bring our customers incremental value and growth opportunities for both companies. But don't take my word for it. Here's my friend and CMO of VMware, Carol Carpenter, with a few remarks on our great partnership.

I'm happy to be here to talk about the relationship between Lumen and VMware. Our partnership is the result of 2 like-minded companies working to help customers realize the incredible opportunity presented by moving business applications to the edge, where digital real-time interactions occur. Think about it, manufacturing, branch offices, retail and more, where the computing insights need to be more decentralized. I'm also excited about the joint innovation lab initiative. We established the lab to fast-track the design and delivery of offerings built with VMware products and running on the Lumen platform. Based upon customer needs, this year, we expect to deliver exciting new solutions for VMware Tanzu Kubernetes. This drives developer velocity and helps get applications into production faster. Another solution is the secure work-from-anywhere capabilities based on Lumen Black Lotus Labs threat intelligence and VMware Carbon Black. We're excited to work together to drive these solutions' success in the market. Thank you.

I am really proud of our progress so far and excited about the potential of the Lumen platform to deliver more amazing use cases across a multitude of industries. And I'm even more excited for the new solutions we plan to bring to market with our ecosystem partners around the world. Our platform and platform solutions present a tremendous growth opportunity for us. When we look at industry analyst report, the market size is nearly $200 billion with a 5-year growth rate of 14%. And as you'll hear from Ed and Laurinda, with a revamped sales and customer success engine, we have never been more ready to capitalize on this opportunity.

Hello. My name is Howard Boville, Head of IBM's Hybrid Cloud Platform. We recently launched IBM Cloud Satellite, a significant milestone in the expansion of our hybrid cloud capabilities. It helps clients deploy cloud services securely in any environment, public cloud or private cloud, on-premise or at the edge. When we started to look for partners to bring the promise of next-generation applications to life, we were really impressed with Lumen's edge strategy network, reach and pace of execution. We started working with Lumen late last year once we had a comprehensive understanding of their vision for the edge. IBM immediately saw the compatibility with our approach and agreed with Lumen's philosophy of building an open easy-to-use platform based upon industry-leading tool sets. We quickly certified IBM's Cloud Satellite on Lumen's edge compute services to reach more than 95% of the U.S. enterprises within a 5-millisecond latency. We believe we have chosen a great edge partner with Lumen upon where to make the edge and natural complement to any application together.

Hi. I'm Ed Morche, Sales Leader for Lumen's Enterprise and Public Sector business in North America. Shaun just provided an overview of the capabilities of the Lumen platform. Now let me tell you why this so critical to our enterprise customers. In today's environment, enterprises need 3 things for successful multi-cloud outsourcing strategy: application performance for their customers and their employees; focused support, helping them with evolving complex problem sets as well as ongoing nurturing of their existing business; and in-market advisers to help them navigate through rapidly evolving trends. Whether they are internally developed or sourced from a third party, all enterprises rely on applications to run their business. The CIO is under pressure to do more with less. Maintaining a large data center footprint and IT staff is quickly becoming an outmoded and expensive way to run a business. Put simply, Lumen's edge compute platform makes customers' applications perform even better while allowing our customers to greatly reduce their overhead. Our platform reduces the physical distance between the producer and the consumer of data, thus reducing the performance lag or latency of an application. Our competitors have primarily designed their edge compute solutions to be in the 50- to 100-millisecond range, because that's the point at which human beings begin to perceive lag for performance issues. At Lumen, we have designed a platform to not exceed 5 milliseconds of latency. That clearly meets the needs of human beings to operate applications effectively. But that low-latency threshold also allows for highly effective machine-to-machine interaction, enabling complex algorithmic computing and artificial intelligence learning. We spent time talking to CIOs, and we asked them why they haven't moved more workloads out of their own offices and into available public clouds. The answer was always speed and end-user impact. CIOs just couldn't find solutions that would meet their low-latency requirements. Now with applications being within 5 milliseconds or less, the game changes. Workload development and maintenance can be outsourced, and CIOs no longer have to worry about maintaining large technical stats to build and maintain server farms, and they no longer need to own or rent real estate to house those servers. Now that their speed problem is solved, enterprise customers can focus on running their companies and let Lumen be their platform, ensuring our customers' success comes from superior application performance, driven by the Lumen edge platform, but it also requires a superior support model. Gone are the days of the sales professional trying to be a universal expert in charge of billing inquiries and operational questions while still trying to bring in new revenue. We have transformed our enterprise team by allowing people to focus on where their natural strengths lie. Inherently, sellers tend to be oriented around new acquisition sales, or they prefer to nurture their accounts, customer success. Both are incredibly important to our customers' life cycle and both are needed in order to grow our top line revenue. Maintaining the base revenue while we acquire new business by creating a presales team focused on the acquisition of new business and a post-sales team focused on the existing base revenue, we give our account teams great role clarity while improving the customer experience through all aspects of their journey with them. This enterprise transformation allows the sales organization to exclusively spend time working with current and prospective customers in the [indiscernible] days of their relationship. The pace of change at Lumen has been high, and it needed to be. We built a customer-first culture, enabled rapid product development in areas like edge compute and aligned around the digital-first orientation while providing opportunities for employee development. The customer discussions begin with our technology, but ultimately, we win with our people. In less than 3 years, we have upgraded and retrained large workforce, both sales and customer success and pivoted to platform-based solutions. And we did all of this while we integrated Level 3 and drove cost synergies well ahead of plan. Complex problems require a highly trained workforce to deliver simplified solutions during technology shifts like those we are experiencing now. As we continue to evolve from a telecommunications company into a technology company, the way we categorize our revenue growth changes in line with our evolving platform and solutions portfolio. These categories better reflect our go-to-market strategy and where we are investing for growth, compute and application services. This is where you see our edge cloud services, data center services, CDN and security services revenue, IP and data services. This category includes adaptive networking, hybrid networking, VPN, SDN-based services and Dynamic Connections and fiber infrastructure services. This category includes Dark Fibre and optical services. In the midst of the game-changing shift in the IT environment and pandemic, we are pivoting from primarily being an infrastructure company to being an infrastructure and platform solutions company. We have taken what was once a 3-year rollout plan for edge and turned it into a 3-quarter introduction to the marketplace. Our platform provides the foundation for business transformation, creating new ways to manage applications, collaborate and exchange critical information. We start with our technology, but ultimately, we win with our people, experts dedicated to advancing business. Our technical support teams, including our sales engineers and solution architects, guide customers through their business transformation with unmatched expertise. At Lumen, our go-to-market strategy revolves around 2 principles: first, segment the sales team to align with our growth opportunities; secondly, allow customers to interact and purchase from us digitally when they want to and provide them local end market resources when they are needed for complex solutioning. That last point is a real departure from how we understand our competitors are acting. We share all the time that other providers are pulling resources away from their customers and pushing customers to call centers or resources in remote markets. At Lumen, we are focused on growth and support our customers to enable that. To ensure unity of approach, we have aligned all aspects of government and education within our public sector organization. This organization includes the civilian, DOD and intelligence community teams of our federal business, state and local government, K-12 schools, public safety and higher education. We support our enterprise customers based on how they choose to interact with Lumen and by the level of complexity in their business. When well-informed customers want to self-serve, they engage us via lumen.com and use our digital commerce platform to purchase the products and solutions they need. Increasingly, our enterprise customers align themselves with channel partners to support them in decision-making. Our indirect business allows us to work with master agents, sub-agents and VARs to extend Lumen's business reach with medium-sized customers and is increasingly growing in importance for us in larger, more strategic engagements. One of our biggest differentiators at Lumen is the leadership of our enterprise sales team under field-based general managers. These GMs, along with their sales and support teams, are aligned locally with our customers to ensure we provide them with the support they need on their technology journeys. All of these routes to market are complemented with technology specialists, engineers and architects who are highly skilled resources, which help our customers drive their digital transformation. Our enterprise general managers are Lumen's senior leaders in the field. Core to our beliefs is investing in local infrastructure and local resources to support our customers at the point of decision-making. Whether you're working from home or working from work, all geographies and verticals have their unique nuances. And by having senior leaders who live and work in those markets, we make highly informed investment decisions around local infrastructure and solutions needs that better enable our customers to carry out their missions. Arguably, the most critical role our GMs have to play is the responsibility to optimize their market assets to benefit all channels of the business, thinking and planning for their own local customers while ensuring that their markets are ready to support all others. Imagine this local investment model replicated across the country. This is what gives such power to our GM structure and why it is core to how we operate, extending our infrastructure and platform to enterprises one local market at a time. This has certainly been an interesting year for our business. More recently, we are seeing positive developments emerge. Of all our segments, public sector was the most resilient over the last year. And we continue to see steady performance across our state, local, education and federal segments. While sales to our mid-market customers have been challenging throughout the pandemic, we expect it to slowly turn around as the economy begins to reopen and offices and retail begin a long march back to a new normal. What was most apparent during the height of COVID-19 was the pause in decision-making in our large enterprise business. Many of our national and global customers lost decision-making authority as cash became king in a concern to maintain financial dry powder. However, several projects that were put on hold indefinitely last year have now returned to active discussions. We are optimistic about our enterprise and public sector business, but we also know that it will take time before we are in a more predictable operating environment. Thank you.

Good afternoon, everyone. Great to be with you today. I'm Laurinda Pang, President of Global Customer Success at Lumen. My team and I are responsible for protecting, nurturing and growing our enterprise customer relationships. I also oversee Lumen's international and wholesale businesses. So far, you've been learning about our transformation to a technology company and how Lumen's unique platform supports enterprises as they traverse a journey of their own, as they contend with how to increase velocity around innovation, as they determine how they'll improve their customers' experience and, ultimately, how they'll compete and win in this digital era. Now I'd like to share how our approach to our customer success is a game changer. At Lumen, we're putting our customers first. We're thinking about their business outcomes and, most importantly, how they define success. And we started with understanding how they want to interact with us. Our customers go through a 6-stage journey when interacting with Lumen. We call that journey [indiscernible], starting with learning about Lumen and our services, making a decision to buy a solution, getting that solution delivered, using the service, paying for it. And ideally, they renew that solution. We recognize that customers want to interact with us how they want to, not necessarily how we expect or hope for them to interact. So we've established a North Star and simplified to 3 journeys, do-it-yourself, do-it-together and we-do-it-for-you. Do-it-yourself is a digital touch journey, end-to-end automation that is frictionless. We expect customers going through this journey to want to interact without any human involvement. We enable this journey through portals and APIs. Here's an example of a do-it-yourself journey. A regional enterprise is under attack and their defenses aren't working. The customer searches online for DDoS mitigation. Once on lumen.com, the customer immediately sees there is an under attack button for DDoS Hyper. In just a few clicks, the customer has signed a contract and submitted an order. Within minutes, the Lumen's Security Operations Center begins provisioning, and they are up and running within hours. The customer uses portal to view that the attack has subsided and sets thresholds to proactively monitor and send notifications when Lumen senses any further attacks. The customer pulls reports to help facilitate a discussion with their leadership regarding what took place. At the end of the month, the customer receives and pays their bill online. Highly satisfied, this customer looks to Lumen to improve their overall security posture. This is a lower-cost model, and it is safe to assume our mid-market customers would traditionally experience this journey. Additionally, some of our customers in IGAM and large enterprise want the same ease of use, particularly for standard and repeatable buying. Take a hyperscaler customer, who is purchasing wavelengths tens or even hundreds at a time. They want the ability to quickly model their routes, check for diversity and place an order without human intervention. Our digital tools enable them to do this on their own. Do-it-together is what I would call a medium-touch model. This is a mix of human and digital interaction. We're leveraging digital marketing, AI for pricing and network configuration as examples. And the human involvement is intentional. Imagine a national enterprise is actively searching the web multi-site Internet services and SD-WAN. The timing is perfect for our team to reach out. We have the right mix of technology and industry expertise to help the customer cut through the noise and confusion they found in their searches. As they share with us their defined business objectives, our team designs a simple multi-site SD-WAN solution that meets their needs. From here, the customer can take an automated journey to price, configure and provision their services or we can assist. Once installed, the customer can access network monitoring, diagnostics and utilization reporting via the portal or API. Finally, we-do-it-for-you. This is where managed and professional services come into play. Typically, our most complex customers with the most robust requirements necessitate a high-touch model. Not to say we don't leverage digital tools here, but the human interaction, oftentimes dedicated support, is what our customers are procuring and where we can really differentiate and add value to their experience. One example is a global house of brands to whom we delivered a managed SAP solution on the Google Cloud Platform. This multimillion dollar contract required deep technical and SAP expertise as well as significant cross-functional coordination across the entire [indiscernible] journey. That started with consulting to fully understand the customer strategy and requirements, moving to a heavy program management for migration and implementation to what is now the ongoing management of this customer's SAP environment. We know when we deliver an exceptional experience and receive higher NPS scores, ultimately revenue grows. In fact, our NPS scores have shown steady improvement for the past few years. The anchor journeys I just described to find the customer experience at Lumen. Customer success is how we go to market. Ed's sales acquisition team is chartered with growing new logos and increasing share or cross-selling new products into existing customers. My team is focused on ensuring our customer success. The who's who and technology companies have been innovating and applying the practice of customer success for the last decade. And Lumen, we believe, is the first to market in our industry. So what is customer success? It is a philosophy, a discipline and a methodology for protecting, nurturing and growing customer relationships. We're focused on solutions rather than products. We're leveraging our data to make us smarter and faster with our customers. Our success consultants are deeply listening to their customers, learning about their business outcomes that their customers need to deliver and ensuring the solutions Lumen is providing are delivering value to those customers. Our purpose is to create mutual success with our customers. We succeed when our customers want to do business with us. So we hold ourselves accountable to customer health, which we measure across multiple dimensions such as product mix, delivery milestones, service reliability and billing inquiries. We monitor and drive product adoption, so our customers are fully utilizing and deriving the most value from what they have purchased. We know if our customers are realizing their business outcomes, they will value our relationship, stay and grow with us. Let me share our recent of customer success in action with a current customer who is a global leader in business and financial data, news and insights. As part of the account team's normal cadence of communication, a persistent challenge in the delivery of services was highlighted and required an urgent intervention. Our customer success professional, in this case, Michael, dug in deep with our engineering teams to determine the root cause and remedy the situation. A week later, Michael was leading a quarterly review focusing on the customer's success plan. There, the customer shared a view into new applications being hosted at a new location, driving the need for additional services. Michael updated the plan and emphasized our alignment and readiness to help. A few days later, the customer awarded Lumen the opportunity to support this new project. Additionally, they shared further expansion plans, requesting those plans also be included in an updated success plan. This was a good indicator, the customer trusted Michael, appreciates the value in the plan itself and the ensuing discussions that help them deliver their business outcomes. The key to being smarter and faster with our customers is data. Lumen is acquiring, analyzing and acting on our data to improve the experience we deliver. We have partnered with a customer success platform company to help us enable the right actions at the right time. We're analyzing customer data, operational interactions and financial data to determine the health of each of our customers. We combine those inputs with market and technology trends, new product offerings and other insights to direct our customer success professionals to take their next best action with their customer. Algorithms get updated to continually improve our success rate, all with the objective to protect, nurture and grow our relationships. Our culture has been transformed, and our people are becoming our competitive advantage. Stories like Michael's are becoming the norm at Lumen. Although this is an ongoing journey where we will continue to improve our success rates, Lumen's customer-first discipline is changing the game. Customer success should not be thought of simply as a better model for retention. Rather, it should be recognized as an important growth engine for Lumen. When we effectively deliver value and focus on the success of our customers, we know we will enjoy a longer relationship, our customers will grow with us and they will recommend Lumen to others. Mutual success is ultimately achieved. Thank you. [Presentation]

Hi. I'm Maxine Moreau, President of Mass Markets at Lumen. As Jeff mentioned, I'm here today to explain the excitement around Quantum Fiber Mass Markets platform for future growth. This new digital platform is rapidly improving many aspects of our business and is foundational for growing fiber customers, increasing ARPU, improving customer experience and reducing churn. The past year accelerated an ongoing trend. More people are working from anywhere, learning from home, streaming video and using data-intensive applications like online gaming and virtual reality. We have seen a shift in how we consume video and leverage IoT technology for smarter and safer homes. Consumers and small businesses require safe, reliable, high-bandwidth broadband and with fast download and upload speeds. Quantum Fiber can deliver that now and into the future as these trends continue. Quantum Fiber is uniquely positioned to fulfill that demand by delivering fiber-based broadband services to our consumer and small business customers in a unique and distinct way, one that gives customers freedom, control, confidence and security they need to power their personal and professional lives. With cable's asymmetrical speed, upload speeds are often far slower than their download speeds, impacting the quality of file uploading, video conferencing, online gaming and other data-intensive applications. Quantum Fiber broadband can deliver symmetrical speeds, creating a compelling value proposition for a large and growing part of the market, leveraging Lumen's highly secure, reliable and vast fiber network coupled with our fully digital-enabled customer experience. We can differentiate Quantum Fiber against our competitors and the industry, and our customers are starting to tell us that. Quantum Fiber is a reinvented digital approach for customers, a simplified digital experience with a transformed customer success and support model. We review the entire customer life cycle to eliminate pain points and friction, increase the ease of use and simplify the process from first touch to support. A Quantum Fiber customer's bill looks as simple as your monthly Apple subscription notice, 100% prepaid subscription-based pricing with flexible payment options, including Apple Pay and PayPal with more to come. Since we began launching Quantum Fiber, we have eliminated over 50% of human interactions with our new digital platform. It's not enough to have an amazing platform, we must also deliver results. In 2020, we expanded our fiber footprint by 400,000 locations. We've committed to future footprint expansion using our micro-targeted urban densification focus and disciplined approach that benefits multiple Lumen business units and customer segments. With urban densification, we can take advantage of many efficiencies in fiber enablement from planning to market readiness and achieve higher sales through targeted digital and local marketing tactics. In one of our top Tier 1 markets, we are already 40% fiber-enabled and plan to continue our expansion in dense urban clusters. We are also leveraging Lumen's on-net buildings to grow our small business market share and connect MDUs and MTUs that are near net to our national fiber footprint. 100% of our sales are through online ordering, delivering an amazing customer experience, reducing order cancellation rates before install and lowering operating expenses associated with poor traditional service ordering. Fiber is delivering a 20% reduction in run rate-level churn over historical levels, improving revenue and margin trends. Quantum Fiber eliminates complexity and enhances the support model for our customers. Our customers are loving the simplicity, ease of use and service that it provides. As a result, we are seeing significant improvement in the customer experience measured by Net Promoter Score. Our 2021 year-to-date aggregate NPS scores for Quantum Fiber customers is at positive 76, higher than Amazon or Apple. As you know, NPS scores above 50 are considered excellent. We are also seeing a 50% reduction in churn before install from our enhanced communications and delivery processes. With an all-digital platform, superior fiber broadband service and the early successes we are seeing, what should you expect from Quantum Fiber in the future? Future investments will continue to focus on driving urban densification using our micro-targeted approach. With over 23 million living units and small businesses in our footprint, we have a vast footprint to select from to grow our fiber enablement. We have the ability to operate outside our footprint anywhere Lumen's fiber is in proximity to MDU and MTU developments. Next, we are aggressively taking market share in our small business segment, especially with MTUs located in dense markets where we have fiber-lit buildings. In the first quarter, we are seeing a fourfold year-over-year improvement in small business fiber broadband net adds. With approximately 2.4 million locations fiber-enabled and 28% fiber penetration rate at year-end, we have a significant future growth opportunity with the investments we have already made. We expect to complete the launch of Quantum Fiber across all markets during 2021. With that comes our enhanced go-to-market, including local market accountability to drive growth at the neighborhood or building level, micro-targeted sales and marketing efforts and a differentiated world-class customer experience. As we grow fiber penetration, we have a path to continue growing customer ARPU. We are bringing to market products and services such as fully managed WiFi and other advanced services that enable growth in wallet share, pull-through additional fiber sales and enhance the overall experience. Finally, we plan to deliver sustained growth with Quantum Fiber well into the future by growing our market share, footprint, revenue and customer ARPU. Thank you for your time. [Presentation]

Hello, everyone. I'm Neel Dev, Lumen's Chief Financial Officer. Our objective for today's event was to give you more insight into our strategy for improving our revenue trajectory. As you heard from the leadership team, we are focused on emerging and growing addressable markets with new product capabilities by continuing to extend our fiber footprint and through our partnership ecosystem. In 2020, We've made solid progress on our objective to improve revenue trajectory, improving by 150 basis points compared to 2019. For 2021, we enhanced our financial reporting to provide better visibility into areas where we are investing and expect revenue trajectory improvement versus legacy services we manage for cash. On the business side, if you look at the intersection of products and sales channels, we are focused on growing over 70% of the revenue mix. As we mentioned on the fourth quarter earnings call, we continue to see some sales cycle lengthening in the near term, but feel good about conditions improving in the second half of this year as the economy reopens. Within mass markets, the primary driver is Quantum Fiber. We will continue to fiber to homes and small businesses with our micro-targeting strategy focused on increasing penetration and ARPU. For both business and mass markets, we continue to invest in digital transformation initiatives that enable revenue growth and improve the margin profile of these products and services. We have significantly strengthened our balance sheet over the past couple of years, which underpins our ability to invest in our growth strategy. We are comfortable with our dividend payout ratio, and we'll continue to balance between investing for growth and paying down debt. As I mentioned on the fourth quarter earnings call, our 2021 outlook includes investments required to improve our revenue trajectory. The outlook incorporated the investments that were discussed today. And we feel good about all guidance metrics. In summary, the combination of our network assets, core competencies and existing and planned product portfolio position us well in the growing addressable markets we are targeting. Some of the areas we are targeting our new emerging markets with evolving needs, and the rate of customer adoption and market growth are difficult to predict. However, we believe we have all the elements necessary to take share, and it's all about our execution. And we've given you the visibility to monitor our progress. Thank you for your time today. We are now ready to take your questions.

Hi, everyone. My name is Mark Stoutenberg, and I am part of the Investor Relations team here at Lumen. All the speakers you heard from today are available to answer questions. Before we get started, though, I need to direct you to our Investor Relations website, where under the Lumen Analyst Day event, we have posted our safe harbor statement, which notes that today's remarks may include forward-looking statements subject to certain risks and uncertainties. All forward-looking statements should be considered in conjunction with the cautionary statements including -- included in the posting and the risk factors in our SEC filings. With that, we'll take our first question from Simon Flannery of Morgan Stanley. Simon?

Great. My question is on Quantum Fiber. Maxine, I wonder if you could talk a little bit about the right penetration. Do you think you can split the market 50-50 with the cable provider or the other providers? And what are you seeing in some of your best markets? And how long do you think it gets there? And then to Neel and perhaps maybe to Jeff, but we've seen some of your peers become even more aggressive recently in the fiber-to-the-home. I think we've seen, with COVID and so forth, demand for broadband stepping up. What thought have you given to moving beyond this sort of pace of 400,000 locations per year and driving that even more aggressively over time?

Jeff, you may want to unmute.

Sorry, thought I had already done that. Before handing it off to Maxine or Neel, let me talk about our fiber-to-the-home strategy and what we're going to do. Maxine touched on the fact that we want to have an urban densification in our fiber-to-the-home. We think it's a great opportunity. And we continue to invest in that. And we've proven over the last couple of years that where we invest, we can grow, where we invest, we can drive penetration. And so I'll continue to focus Maxine and her team as she is on how do we increase the penetration in the markets where we are, but then also how do we continue to use our micro-targeting efforts to expand our footprint. We think there's tremendous opportunity for us. But we also don't view it just as a fiber solution. If you listened to Maxine, it's the overall digital experience of Quantum Fiber that we bring to our customers, the way they buy our services, the way they consume our services, the way we deliver them, the way we secure them and make them robust for our customers. And so we'll continue to heavily invest in that. We think that we're investing at approximately the right pace. We'll probably pick up speed as we move forward. But we've been making sure that we deliver on the value proposition, we get the return on investments and that we're able to drive the penetration. And what Maxine and her team have done have proven all of that strategy to us. So with that, I'll hand it over to Maxine if you want to make any more comments.

Thank you, Jeff, and thanks for the question, Simon. I would say we don't have a ceiling target. We believe that our fiber product is superior to any wireless solution, wired fiber. Our fiber-first strategy is our focus and will continue to be our focus. And Neel has been very clear. We don't -- we're not capital-constrained. So as we continue to improve our penetration and performance, we'll continue to expand our footprint, and we believe we've got a long runway for growth in -- within Lumen in Quantum Fiber.

Okay. Thanks, Simon. Our next question is going to be from Tim Horan at Oppenheimer. Tim? Okay. Let's see who is next.

Sorry, Mark, I was on mute.

Okay. Go ahead, Tim.

Jeff, I guess, the question is for you. Well, what inning are you in, in the shift to tech platform company? And what else do you need to do? And I guess, secondly, can you talk about maybe how the competitive environment has changed as you make this migration? Are you now competing with a little bit more with the cloud providers? Or are you going to look to partner with them a little bit more. But -- and I guess how unique is this as you compete with Verizon and AT&T?

Sure. And I'll ask Shaun to chime in at the end of this. If you look at what inning, I'm always reluctant to say what inning. We're in the early innings, but we've got a great platform. We're in the -- we've been working on this for several years. We've got a great platform in place. We've got great partnerships that Shaun talked about in our ecosystem. Some of them are cloud providers. Some of them are other types of network providers. Some of them are infrastructure applications providers within the cloud ecosystem. And so we view all of those historically as customers and as opportunities to partner with them, and we can continue to do so. If you look at our IBM Cloud relationship, that is how do we take IBM's Cloud Satellite offering and to offer it over the Lumen platform to create opportunities for both IBM and for Lumen. And so we will continue to look at those relationships and our capabilities as things we have to evolve. So we're still in the early innings, but I believe the platform is largely there. We'll continue to create new applications that sit on top of that platform, and we'll continue to expand our ecosystem. But we're super excited, because it opens up a lot of addressable markets that have not been addressable for Lumen in the past. And those markets are growing markets. So growing markets and more addressable markets are both really positive aspects of what we've been doing with our cloud, our Edge Cloud and with our overall platform. Shaun, do you want to add to that?

Yes. I certainly agree with that. I'd say no matter what inning we're in, this is a kind of game where you never get to the ninth inning. This is going to be a continually evolving race. A little bit of color on where we are, though, for you, Tim. At the last earnings call, Jeff mentioned we had reached about 60% of the United States with 5 milliseconds or less, on our way to get to 95% by the end of the year. We're now at 85%. So we've made really good progress. We've also got expansions underway into EMEA. We just turned up London recently. We've got expansions into APAC and LatAm. And those will all be complete by the end of the year. As your question specific to the cloud service providers, we've always had an enviable relationship with them. We have long-standing partnerships and infrastructure, managed services and CDN. And we are moving forward in the same vein on this edge compute effort. So very much a complementary relationship with the major cloud service providers as we go forward.

Thanks, Tim. Okay. The next question is from Frank Louthan at Raymond James, Frank, if you unmute, go ahead.

So talk about a lot of new products and interesting things that you're involved with. You still are facing a situation where the majority of your revenue is in decline. So at what point can things like MEC and Quantum Fiber get the company to a position of sustained top line growth? And how long can investors expect to see that with the company?

Yes. So I'll ask Neel to give some commentary on here. But let me first correct, the majority of our revenue is not in decline. We have -- 75% of our revenue comes from business customers. About 20%, 25% comes from consumers in mass market. And even within those categories, our Quantum Fiber business is growing even in the mass market business, and we'll continue to invest in those growth areas. If you look at our business enterprise customers, IGAM, enterprise, mid-market customers and in the categories that we want to see growing, computing applications, IP and data services, fiber and infrastructure, those types of categories, it's about 70% of our revenue. And so -- 70% of our business revenue. And so I -- we are investing to make sure that we're growing in those areas, and we see good opportunity to do so. For some more specifics, I'll hand over to Neel.

Thanks, Jeff. So Frank, I think the first thing I had to highlight is that our revenue trajectory is improving. So like I mentioned, our year-over-year performance improved by 150 basis points in 2020. And our focus will be to continue to drive that improvement going forward. If you look at our new reporting, we've addressed some of the questions some of you have had in terms of what are the parts of the revenue that we are investing for growth versus the revenues that we're managing for cash. So like Jeff mentioned, on the business side, whether you look at the channel lens or the product lens, 70-plus percent of the business we're investing for growth. And we [indiscernible] revenue trajectory. And on Quantum Fiber, we're leaning in and investing. In that business, not only are we adding fiber-to-the-home and increasing ARPU, we're also improving the margin profile of the business with our digital interactions.

Thanks for the question, Frank. Okay. Our next question is from Brett Feldman at Goldman Sachs. Brett, go ahead and unmute.

Great. Can you hear me okay?

Yes, we can.

I have 2 questions actually, first on relationship with T-Mobile. I was hoping you could maybe expand a bit in terms of what you are hoping to accomplish through that partnership. And I'm curious, do you believe that through a partnership, you can now match whatever AT&T and Verizon can offer customers in terms of integrated fixed and mobile solutions? Or do you actually believe that there is some form of advantage that, that partnership may have over those incumbents? And then the second question, which is different, you had previously done a strategic review of the consumer business and, ultimately, you decided to maintain the existing corporate structure. I'm wondering, as you continue to pursue your evolving strategies on the business side and on the mass market side, what could be a threshold or a trigger that may cause you to once again reevaluate whether you might be able to better achieve those independent strategies if the company were to think about a different structure than the one it has today?

I'll take the second one first and then go back to T-Mobile. Look, we've said since the close of the Level 3 transaction that we were open to looking at what makes sense for each individual piece of our business. We'll continue to do that. I wouldn't say there's any particular trigger that is going to make us reevaluate, because we constantly evaluate our total business as it is. And so we'll continue to do that. Don't have any types of answers that I want to announce or any of that. But we'll continue to look at what makes sense for our shareholders and how to maximize the return to shareholders for each different piece of our business, whether it's Quantum Fiber, whether it's the traditional twisted pair of copper networks or whether it's the Lumen capabilities and the Lumen platform. So keep an open mind to those things. With respect to T-Mobile, we think that there's great value in adding one of the world's best 5G networks with one of the world's best fiber networks. And while I don't generally talk about how do we match our competitors, so I won't focus on AT&T or Verizon. What I will say is that I absolutely believe we can use this relationship to match our customers' needs, to come together with edge solutions that take advantage of great fiber capacity and take advantage of T-Mobile's 5G capabilities and meet our customers' needs very, very effectively. And so that's the intent of the partnership and the relationship that we have. Shaun, do you want to add to that?

No, nothing to add. Totally agree.

Okay. Thanks for the question. Our next question is going to be from Ana Goshko at Bank of America.

So I've got a couple around capital investing and the capital budgeting process. So one, if you break down your current capital budget, how is it allocated between initially maintenance, but also from the mass markets investment and the areas of the business side as well? And then secondly and importantly, how should we think about the return on investment hurdles and the payback period kind of hurdles that you put in place when deciding to make these investments? What we're seeing from some of your infrastructure peers is continuing high levels of capital intensity, but really kind of elusive revenue growth and free cash flow growth.

Yes. So I'll let Neel give a lot of specifics to this, but we are very committed to a balanced capital allocation strategy. And we have 3 aspects of that investing in growth, returning shareholder value through a dividend and reducing our leverage. So we're very committed to that. If you look at investing for growth, we're investing in products and capabilities over the last several years that are needed by the market today. We're not investing billions of dollars in spectrum. We're not doing some of the other things that other providers are doing. We are focused on how do we leverage the world's greatest fiber infrastructure to meet the needs of the 4th Industrial Revolution and the applications that we see coming. Whether they're work-from-anywhere in their Quantum Fiber business or artificial intelligence on our edge computing platforms, we're continuing to invest in those things that we see as relatively near-term paybacks for our business. Neel, do you want to give some specifics on Ana's questions around allocations?

Sure. So Ana, we don't disclose that level of detail, but I would tell you that we have a very dynamic capital allocation process. So we're very success-based. We look at the outcomes. And we have a dynamic allocation process. Back to some of the questions on fiber-to-the-home. If we see the penetration and ARPU continue to grow in the direction that we expect, then we can allocate more capital. Last year, for instance, even in -- with the global pandemic, we spent $3.7 billion and invested a fair amount in the platform, our fiber footprint and some of the capabilities that we highlighted on this call today. So we'll continue to have a dynamic allocation process. In terms of the ROIs, if you think about our infrastructure, we're leveraging a fairly robust infrastructure globally. So incrementally, our paybacks, like Jeff mentioned, are fairly short.

Thanks, Ana. Okay. Our next question is going to be from Eric Luebchow at Wells Fargo. Go ahead, Eric.

I wonder if you could expand a little bit on the edge opportunity. I think I heard you correctly today, you talked about maybe, like, nearly $200 billion addressable market for edge services. I think, Jeff, in the past, you had talked about maybe a range of $10 billion to $40 billion as the addressable market. So maybe specific to Lumen for the services you're providing, whether that's network connectivity, bare metal, some of the private partnerships you have with like VMware, where do you think -- how would you size up the opportunity for Lumen in the edge market? And when do you think we really see that segment become more material to your financials?

Yes. So let me separate your question into 2 different pieces and then farm out each of the pieces. Shaun, if you would talk a little bit about the opportunity that we see there and what the addressable market for each of the different pieces, because [ Eric said ] we've used $10 billion to $40 billion for what we think is somewhat addressable by Lumen. But if you can give us some more details there. And then, Ed, if you would -- I'd love to have you comment on what you see from a customer perspective in the near term, what you're seeing your customers ask for, how you see us satisfying their needs. Eric, so if I can expand it a little bit, I'll look longer term at what is the market opportunity, and then Ed kind of near term, what are you seeing? So Shaun, would you?