Towerstream's CEO Presents at Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference (Transcript)

| About: Towerstream Corporation (TWER)

Towerstream Corporation (NASDAQ:TWER)

Deutsche Bank's DbAccess 21st Annual Media and Telecom Conference

March 05, 2013 3:25 pm ET

Executives

Jeffrey M. Thompson - Co-Founder, Chief Executive Officer, President and Director

Unknown Analyst

All right. We're going to go ahead and get started with our next session here in our afternoon of infrastructure. For those of you who have been keeping track, what we basically did was we started off with the macrocell guys, early in the afternoon with the traditional tower operators. And now what we're doing is moving into some of the guys who are being innovative around helping carriers think about solving their small cell solutions. So with this, we have Jeff Thompson, the CEO of Towerstream Corporation. Very happy that you could join us at the conference here, Jeff.

Jeffrey M. Thompson

Well, thanks for having us.

Question-and-Answer Session

Unknown Analyst

I think that maybe the best way to get started is -- I do see some new faces in the room, is to give us an overview of the company. You sort of have a legacy business and then a really interesting business around small cells. Just kind of break down for us sort of what you're doing here strategically, you've raised some capital, help us understand where you want to invest that capital.

Jeffrey M. Thompson

Sure. And thanks again for having us. Well, I think the term legacy is actually kind of maybe the wrong word for the core business, as we just heard in the last session how backhaul is such an important part going forward for small cell deployment. But Towerstream has been in the fixed wireless enterprise business for over 10 years now. We're in 13 major markets -- dense urban markets is where we deploy. And basically, we go into every dense urban market and we build a network that's basically a fiber network above the city, which has been a great advantage in New York City recently after some of these storms, and built a last-mile solution, very similar to the fiber providers. We sell basically, big pipes, high quality at a low cost.

Unknown Analyst

SO you're a Internet service provider over a broadband wireless connection?

Jeffrey M. Thompson

Exactly.

Unknown Analyst

Almost like Cogent, but wireless, in a simplified sense.

Jeffrey M. Thompson

And very -- it's a good way to put it. Correct, yes. So we've been doing that very successfully for over 10 years now, but with the founders having a tower background, we've been watching the real estate aspect of our business model and about 1.5 years ago to 2 years ago, we started to explore Wi-Fi offload as a way to alleviate some of the stress that physics are putting on the cellular networks and started building, basically, a test network of Wi-Fi offload. It was just purely Wi-Fi offload at that point. And then the markets came to us, and small cell is really, in the last 6 to 9 months, has been critical to everyone. All the 3 majors have already announced small cell deployment and that was not on the original business model, as we were just going to be a pure Wi-Fi offload play, leveraging our existing broadband network. We have since launched a subsidiary called HetNets Tower Corporation and raised some capital about a month ago. And that's basically to address now what we're seeing as a full platform on a rooftop. We're basically looking at this as rooftop economics, where we have a rooftop that's very low to the ground, small cell and Wi-Fi need to be close to the users because of the distance -- the goal is to get to a really small cell, hence the term small cell. So we're basically going into an environment where the carriers are taking a traditional macrocell in a dense urban environment and replacing it with 20 to 30 smaller cell sites to meet the capacity need.

So it's a very simple business model, but there's a lot of infrastructure involved and what has now become very important for us and for the carriers and our customers, is that we also have a backhaul element. Most of the small cell...

Unknown Analyst

Which is what I referred to as your legacy business.

Jeffrey M. Thompson

Yes. I'm glad we turned it back around here. As I've heard in the last few sessions here, is that all of the small cell deployments are requiring co-lo for their small cell antenna. Some of them have Wi-Fi parts in their RFPs and RFIs, and then you also have power and backhaul. And backhaul is really the Achilles heel for small cell deployment. You got to have lots of backhaul and it's got to be inexpensive for the economics to work for small cell. So we feel we're uniquely positioned, with all the rooftops that we have in these urban markets, to help the carriers get to their small cell goals.

Unknown Analyst

Let's break this down in a little detail. Let's start off with you have rooftops. Can you explain what it means to say that you have rooftops?

Jeffrey M. Thompson

Yes. What we do is we identify locations and we've actually learned how to do this through our Wi-Fi offload program early, maybe a little bit too early, but has really helped us now. Small cell needs to go where there's congestion in the networks, Wi-Fi needs to go where there's congestion in the networks. So what we do is, we do traditional site acquisition, which is a dirty job, and it's brute force, you go around and knock on doors and try to find locations that are basically what they call street level, about 2 stories above, you don't really want them much higher. And you find locations that match the needs of the carriers and where the congestion issues are. You go and sign a lease -- you get a lease that you can...

Unknown Analyst

You're signing a lease for the roof space, basically?

Jeffrey M. Thompson

Yes.

Unknown Analyst

So you're securing exclusive right to, I guess, wireless communications off the roof. Is this similar to what Mark [indiscernible] he was talking about?

Jeffrey M. Thompson

Yes. We typically get about a 20-year lease. We don't always get pure exclusivity, specifically in the markets that we're in, in Manhattan and places like that. But what's unique is we always get Wi-Fi exclusivity, because it's an unlicensed technology. It wouldn't work if we didn't get that. So a carrier, especially if they're already there, they could run their cellular off of that, they wouldn't have to necessarily work with you. But on Wi-Fi, you are securing, essentially 20 years of exclusive rights to put Wi-Fi infrastructure on that roof.

Unknown Analyst

Exactly.

Jeffrey M. Thompson

But that also helps us. I don't know if you've noticed, but everyone that's talking about deploying small cell is now talking about -- or AT&T was very adamant about saying they're going to put Wi-Fi in every small cell deployment. So if you try to come onto our rooftop with a device that has Wi-Fi in it, they got to work with us. So it's actually been a great way for us to get exclusivity without paying for it.

Unknown Analyst

And the lease that you're signing with the landlord, is there like any -- it's a fixed lease that has an escalator, do you have to revenue share?

Jeffrey M. Thompson

When Towerstream was formed to do just pure last-mile access wirelessly, there was 2 famous flameouts before us, Winstar and Teligent. So we learned a lot about what they did and what they did wrong and why their business model didn't work and the aspects, and I'm sure that could be a whole session in itself. But in the rooftop business, you look at the traditional tower companies and they typically do, do revenue shares, they do all these different things that made it not so it was important to them, because they don't make as much tower cash flow from those locations. For us, we want everything to go through us. And we don't do revenue share. We just pay a standard amount to be on that rooftop.

Unknown Analyst

Got it. And explain to us what the Wi-Fi business is, and then we can get into sort of how that's expanded around small cell. You were building, with your own capital, Wi-Fi networks on those rooftops where you have exclusive rights to put Wi-Fi systems, correct?

Jeffrey M. Thompson

Correct.

Unknown Analyst

Okay. Then what's the revenue model on that? How do you monetize Wi-Fi? We're thinking Wi-Fi as being free.

Jeffrey M. Thompson

Yes. Well, Wi-Fi is never free. Somebody's always paying for it. Whether it's the cable companies, they look at it as the quickest way to grow their revenue is to lower their churn by using things like Wi-Fi. But for us, Wi-Fi, some of our early contracts that we've worked on, or if we're typically looking at usage-based contracts.

Unknown Analyst

With carriers?

Jeffrey M. Thompson

With carriers. We've migrated the -- when we launched HetNets Tower Corporation, a little over a month ago, anything that goes through HetNets is rent-based, so the -- even for Wi-Fi. What's great about the Wi-Fi technology, if you look at it compared to DAS, it is made to do true carrier-neutral hosting, where you can make it look like somebody else's network, you can hand it off to them into their core. We can actually, with a gateway, now make that Wi-Fi traffic look like 3GPP traffic, so it looks no different for their billing engines or OSS. It's a really elegant solution for them. But what we're doing is we're taking a single antenna and renting it to multiple people because you can, it's made to do that...

Unknown Analyst

Because everyone's Wi-Fi device has the same Wi-Fi chipset.

Jeffrey M. Thompson

Everyone has the same chipset and now we're seeing the launch of Passpoint, which is really going to be a huge revolution for the carriers. As Wi-Fi becomes part of the RAN and part of the RAP, they're going to be actually -- they can manage it, measure it, and actually charge if they want to for that technology. And considering that small cells are coming down to about the same size as the Wi-Fi cell, you're now going to have a small cell which might only have the capability of doing 32 or 64 simultaneous units on a traditional LTE small cell. We've got, in a small 20 megahertz channel, where you've got Wi-Fi sitting next to it, the carriers going to be able to utilize that huge amount of spectrum when someone's that close. Maybe 100 megabit channel, 100 megahertz channel, 40 megahertz channel, but significant downloads. And if you look at the top 2 carriers that do usage-based, they always say, usage means revenue. So if you're in a small area and you can put your users onto a Wi-Fi access point instead of your LTE limited channel, you can generate -- you can download a Netflix movie in a few minutes. So with Passpoint technology, all it's doing is making it so you don't log onto a Wi-Fi network ever again. It just seamlessly logs on like your cellular network and uses your credentials.

Unknown Analyst

Correct me if I'm wrong, but the way it works now, for example, I have an AT&T BlackBerry, it automatically identifying Wi-Fi sites that AT&T has aggregated into its networks. In many cases, they operate it. So there's firmware in my device that AT&T has developed to make that happen, correct? Passpoint gets around that?

Jeffrey M. Thompson

First of all, what's a BlackBerry?

Unknown Analyst

Well, that's a different story. But where does Passpoint get entered into the technology whereby it becomes more seamless? That's the point, that you don't have to necessarily customize the application on the phone to find a Wi-Fi system that the carrier has associated with themselves yet, right?

Jeffrey M. Thompson

Correct.

Unknown Analyst

It's more like open source.

Jeffrey M. Thompson

Well, it's a standard now. So that all of the chip makers and all of the manufacturers can do it the same way. Because everyone was doing exactly what you're talking about and everyone had a different play -- we actually went through a very long, grueling part of some of our first contracts with getting certain clients to work on almost every different phone and everything was different. Now with Passpoint technology, everyone's going to do it the same way on every different handset. So Passpoint will make it seamless and make it so that everyone's going to have equipment that can actually talk to a Passpoint device and do the same things, to just standardize it, like any other technology should be.

Unknown Analyst

The point is, you can sign up as many carriers. As you want as long as their customers are out there with Passpoint devices, it's relatively easy to start bringing in new traffic into your network. Is that the idea?

Jeffrey M. Thompson

Yes. Actually you get -- as a carrier, you get a specific number from the IEEE that identifies your network to other Passpoint devices. So for instance, if you have -- AT&T or Verizon has a Passpoint-enabled Wi-Fi handset, which a lot of the handsets for the second half of this year are all going to be, they can actually have a seamless log on to any Passpoint-capable network. Our network that we built so far is Passpoint-ready. So we're pretty excited for you all to upgrade, to be able -- to be ready for Passpoint devices. But this is going to be a huge thing for the carriers because -- and it offers them the chance to finally use Wi-Fi or charge for it.

Unknown Analyst

So we've talked about with the models like, what have you actually accomplished so far? Because this is a new venture for you. How many rooftops have you secured, rights due to your leases? How many Wi-Fi nodes have you deployed? Are you generating revenue off of them? I know you signed a few carrier deals, where are we in the development of those relationships?

Jeffrey M. Thompson

There's a lot of questions there, I'll try to get through them all. Well, first of all, we've got about 1,500 rooftops where we can put multiple antennas on those rooftops, over 3,000 Wi-Fi nodes built that can start generating revenue in major markets. We're building in now 5 markets, Philadelphia's the last market that we started to build into. And all of -- and we have about 10,000-plus antenna capabilities to offer the carriers for their traditional small cells that they are now all putting out there. With that, we also have the backhaul capabilities on all those rooftops that we've built so far. So we're pretty excited that we're that far along with the build-out and a little bit ahead of the game there.

We think that small cell is probably going to, from what we're hearing, is going to be required in at least the top 20 markets. And the goal of our last raise was to raise some money. Because Towerstream is basically pretty close to cash flow breakeven. Towerstream doesn't need money, but the new subsidiary, HetNets Tower Corporation, is where we're going to be spending the capital.

Unknown Analyst

So you're paying leases already on those roofs ahead of the revenue?

Jeffrey M. Thompson

Correct. In our -- over the last few months, we've actually now moved into a model where we're talking to the big 3 about their small cell deployments, trying to get anchor tenants, trying to get -- as Mark was just talking about, get master lease agreements and not deploy until we get that anchor tenant and make that capital go much further. In the meantime, we're securing the rooftops without paying. So that's -- we don't want to slow down, because this is a land grab. No matter which conference you go to, everyone's talking about small cell, which we saw today. But it's a quantity play. They're going to be putting a lot of these up, so our goal is to try to get the leadership position in the small cell side of the tower industry.

Unknown Analyst

Okay. But where are you in terms of signing deals with carriers to actually handle their Wi-Fi offload?

Jeffrey M. Thompson

Well, we have 2 Wi-Fi contracts already, and we're just starting to load revenue just now. And in the second half of Q1...

Unknown Analyst

Have you disclosed who the carriers are yet?

Jeffrey M. Thompson

We haven't talked about them. There's other people that do talk about them, so I'd just rather not. But it's -- we expect to be working with at least 3 out of the 4 major carriers for small cell, as they're all -- as we heard earlier today, they're all starting to launch plans and have requests out there to do it.

Unknown Analyst

And is it Wi-Fi and small cell for these deals?

Jeffrey M. Thompson

We're trying to pull that back in now. Because we've got Wi-Fi -- there was no small cell -- there was no velocity IP small cell launched when we launched our Wi-Fi programs then.

Unknown Analyst

Because Wi-Fi was the original agreement that you signed with...

Jeffrey M. Thompson

Yes. We're now trying to -- as we look at any major agreements that we're doing with them is to pull Wi-Fi offload as just another rentable antenna on our rooftop.

Unknown Analyst

Are all of these carriers' customers, if they have a Wi-Fi-enabled device, will they be able to take advantage of your sites? You talked about how Passpoint is coming, but it's not in the devices that are out there now. So just something has to happen whether those devices can talk to your Wi-Fi network.

Jeffrey M. Thompson

Most of the carriers have worked in some way to come up with a proprietary way to log on automatically to our network.

Unknown Analyst

And it's just automatically downloaded onto devices? I mean, will all these customers be eligible to do this or is there some sort of period of time where they're going to have to ramp this?

Jeffrey M. Thompson

No. In most of them, I mean, we can just use their SSIDs and things of that nature. So there's ways to do it very quickly. The word quick doesn't seemed to be mentioned along with carriers. But the -- and the Wi-Fi platform could be done today without waiting for Passpoint. Some of that is starting to happen with us. But we think that the firehose is going to be when Passpoint gets turned on.

Unknown Analyst

I guess that's what I'm trying to figure out. At what point -- because if you have the rooftops and you built a certain number of Wi-Fi nodes and you have the carrier agreements in place, what is going -- what are we waiting for in terms of seeing the revenue? And you think it's going to have to be maybe a change out of handsets, is that correct or...?

Jeffrey M. Thompson

I think for the firehose, yes. I think you're going to start seeing us build our Wi-Fi revenue. You're going to start seeing us get -- go much quicker with small cell. It's more traditional for these folks and everyone has pretty quick build schedules for their small cell deployment. So I think 2013 is going to be a pivotal year for HetNets Tower Corp. We've got -- already got a couple of contracts in Wi-Fi, we're also dealing with some of the cable companies, and hopefully we can bring them along too. But the good news is that all the carriers have now decided that Wi-Fi is not a 3- to 4-year band aid. They've now said, we're going to bring in Passpoint, we're going to embed it into our RAN, it's going to be part of our long-term strategy. So we've really positioned the company to be a big part of the carriers' long-term strategy, which I think will be great for our shareholders.

Unknown Analyst

So you talk about securing these rights to the rooftop and you're paying for that and you're going to build a Wi-Fi and small -- and you're going to make that available to carriers. Isn't there a roof across the street? How do you get comfortable that the cash burn you're committing to on the lease is going to get you the revenue on the other side?

Jeffrey M. Thompson

That's a great question. And fortunately, we were early enough in the Wi-Fi offload with the carriers to find out where's the problem areas. And if you looked at one, we basically go and build hot zones. And if you went -- and we can give you a tour in New York anytime you want. If you look at -- if you went into one of our rooftops, you would look across the street and you'd probably see a bunch of our antennas. And you'd look to the other corner, and you'd see a bunch of our antennas. So when we decide that we're going to cover a zone where there's congestion. And you know if there's congestion for one carrier, there's probably congestion for all of them. We really build it so that we're going to have all the best locations. And these are street level, they're hard to get, and it doesn't happen quickly. So we think in the zones that we're covering, it's going to be very difficult to replicate, and specifically with the exclusivity that we get.

Unknown Analyst

Okay. The small cell side of it, how does that work? The carriers are bringing their own electronics in, whereas in the Wi-Fi, you essentially, you own the pipeline [ph]. You're putting the Wi-Fi up. What is the revenue model associated with the small cell component of it?

Jeffrey M. Thompson

It's just a traditional rooftop business. They have co-lo that they can -- they've got to rent a spot from us, their power requirement that we can rent to them, and there's also your backhaul and cabinet space. It's just anything you'd see in a traditional tower business model.

Unknown Analyst

And when you do the backhaul, that's your fixed wireless business that's providing the backhaul?

Jeffrey M. Thompson

Correct. But what HetNets will do is we'll rent ports to people and then use the Towerstream backhaul. So we'll still -- it's just like the co-lo companies, they rent ports now. So we won't sell service, we'll actually rent ports for backhaul.

Unknown Analyst

Got it. If anybody has any question, this is obviously very informal, feel free to raise your hand. They'll bring over a microphone, and go right, fire away, okay. We've got a shy crowd. So we'll stick with this a little longer.

Can you talk a little bit about the original Towerstream business? What the objectives are there? You've talked about that you were running that more for cash as opposed to growth. So just trying to understand the financial objectives of that business.

Jeffrey M. Thompson

We closed a merger in Houston this morning. We bought a company down there which is our fifth acquisition. It's -- Houston is one of the fourth largest markets in the U.S. And we're -- we found out in the last 1.5 years that we can actually buy companies in the states for less capital than it is to build our own markets right now. So it's about half. So we're still going to be doing acquisitions in that space. In the organic side, our organic sales have gone great. November was our best organic month ever in the history of the company. Basically, I don't want to say taking advantage of, but Hurricane Sandy showed everyone what happens when all your telecom is in your basement and not on your roof. So we had an incredible month in Manhattan, and that's really just demonstrated kind of a renaissance in our traditional business, that having fixed wireless on your rooftop is a pretty important thing.

Unknown Analyst

Are people buying it as the primary connection or as a redundant connection or is it a mix?

Jeffrey M. Thompson

It's -- well, people that are buying links as big as ours are typically putting them in a router and doing some routing configuration that doesn't say one's A, one's B. It's like, best routes, or BGP or whatever they want to do to make sure that they're getting the best routing performance. But what's also interesting is people are starting to realize that fixed wireless is the -- many times, is much -- lots of the times, is faster than fiber. And you've seen a lot of this with the high-frequency traders building networks between Chicago and New York. And just to kind of simplify it, if you took a piece of fiber and put it from the Empire State Building and put it -- connect it to the MetLife Building and put a fixed wireless connection right alongside of it, that was a gigabit wireless, they would run exactly the same, because they're both at the speed of light. But if you actually have a fiber route in the city, you'd probably go longer and probably hit electronics. And so your fiber connection will be slower. So that's also been helping to push our fixed wireless business as people are starting to realize that fixed wireless is no longer the second choice for last-mile services. So you'll see us continue to do acquisitions. Our CFO, Joe Hernon, has a great pipeline of a little bit bigger acquisitions than we've done than the last couple. So you'll see us do maybe 1 or 2 more this year. We'll continue to do probably 2 to 3 deals a year in the fixed wireless business and we'll continue along the same lines that we've done over the last few years with that business.

Unknown Analyst

And since your whole business is wireless, can you help us understand the extent to which you take advantage of unlicensed versus licensed spectrum?

Jeffrey M. Thompson

Yes. It's getting to a point where if you look at small cell and you look at unlicensed versus licensed. And if you look at Wi-Fi, it uses a technology OFDM. And if you look at LTE, it uses the underlying technology as OFDM. So you really get to a point where everyone's getting the same bits per hertz. And then you get to the point where how much channel size can I have. And since they both use the same security protocols, if you back up a little bit and you realize that spectrum doesn't realize whether it's licensed or not. The FCC determines that. So they perform the same way. It's just physics. So in certain places, once you get down to a small enough circle or if you get to an indoor location, it's better to utilize the unlicensed spectrum, because you can actually give a better user experience than it would be to basically waste the 20 megahertz license channel if you have access to an unlicensed channel. So our rooftops, I think you're going to see a lot of that play out as small cells develop. If you have -- in the devices that are coming out, the handsets and QUALCOMM's looking at all these different things that they can put in, basically doing a lot of the work and giving you the best connection based on what's available. Or if you've got a small cell that only has 32 users, and that's only capable of doing 32 users, and that gets locked up, you want to push it off to Wi-Fi if you can. Or if it's a low-margin bid, why not use Wi-Fi, because it's a lot less expensive than it is to use an LTE.

Unknown Analyst

But you don't license spectrum, I think that was my point. Your business takes advantage of the unlicensed spectrum bands that are out there, whether it's your fixed wireless business or your Wi-Fi business.

Jeffrey M. Thompson

Well, our backhaul network is licensed.

Unknown Analyst

Is the whole thing licensed or is it mixed?

Jeffrey M. Thompson

Most of it, except for our multi-point technology, but that is -- that's the low end of our business. Anything that's 5 megabits, we call it the T-1 replacement market. That's 5 megabits and below. But most of our links now are licensed links.

Unknown Analyst

What are your thoughts on the pipeline of unlicensed spectrum that the FCC is looking at? Are you seeing that there could be more coming to market that an operator like you could take advantage of?

Jeffrey M. Thompson

Well, they did just release additional spectrum in the 5-gig band. And that just makes the 5 band very large and very capable and enables Wi-Fi devices to find channels very easily, and you'll continue to see that. The White Space is -- I was at the White Space conference a month ago. And that's also, when added to Wi-Fi, will enable some different coverage model. You can see Google and Microsoft very active in this space. And if you combine the White Space capabilities with Wi-Fi capabilities, you now get to a place where you can actually have complete coverage with Wi-Fi signal which is unlicensed. And if you have smart intelligent devices, they can make the choice whether to use it or not, or revert back to a cellular network, maybe even more like a Republic Wireless model.

Unknown Analyst

You mentioned 5 gigahertz. Well, most of us are trained to think that high frequencies are no good. How -- why would you be excited about such a high frequency for your business?

Jeffrey M. Thompson

Well, if you look at the size of cell sites, they are getting smaller and smaller. And 5 gig can go a certain distance, but it's not going to go long distances. So with it's -- but, if you're in a building like this, 5 gig would be fantastic with all the congestion that you're going to have in situations like that. So as the users are getting closer and closer to the actual cell sites, then the spectrum can be actually higher. And you start seeing small cell, it's probably better deployed in the 2.5 band, than it is in the lower band. We're all seeing that everyone thought the 700 megahertz was beachfront property for LTE, and now we're seeing it as actually having some issues as a technology for those deployments and gets a little -- has interference problems and bounces around all over the place and can degrade very quickly. So the higher frequencies that some of the companies have out there are actually better for small cell.

Unknown Analyst

Cable operators have shown a lot of interest in Wi-Fi. Are they friend or foe in terms of what you're trying to accomplish?

Jeffrey M. Thompson

Currently, friend. They have an elegant way to mount their Wi-Fi devices on their cable strand. So they avoid one of the big issues, which is site acquisition and the other issue, which is backhaul, because that cable will give them backhaul. So they have a very elegant way to go into a neighborhood and deploy a lot of devices really inexpensively and without any troubles. When you go into the cities, that advantage disappears and they you have to go to more of a traditional site act model and have -- go to the challenges of backhaul. So they have the same challenges as any carrier would have in a urban environment, where there's no telephone poles and no strands sitting out in front of the buildings. So for us, we can offer them a shared wireless infrastructure solution that's less expensive than them doing it themselves. And everyone -- it wouldn't exist if you couldn't do it that way, right? So everyone looks at the build via rent. And if we can offer it to them cheaper than they can do it, and they can deploy it very quickly with all the locations that we have in the major urban environments, then we hope that they'll be friend.

Unknown Analyst

They could do their own backhaul, though. I mean, is there one of the things where maybe you'll get them as a customer of the Wi-Fi signal, but they won't necessarily become a customer of the backhaul?

Jeffrey M. Thompson

Yes. Well, we were looking at -- the same thing's probably going to happen to us in small cell. If they have backhaul, they don't have fiber in every building they want to have it. And a lot of the places where you're putting small cell or Wi-Fi is in very congested urban parts of the cities, whether it's indoor or outdoor. So they might have backhaul, they might not. So if they don't, they would probably use us. The same with the carriers. As backhaul is part of the process for all these small cells, you're not always going to get this, the backhaul. In maybe Manhattan, you are not going to get Verizon, but you might get them in Los Angeles. And you're not always going to -- T-Mobile, you might get them almost everywhere, who knows. But it's based on where their ILAC infrastructure is, and sometimes we're finding out there's no business model to have fiber in that building, because it's a small building, which is perfect sometimes for a small cell. Then no one's going to put the fiber in there in the first place, and then they will take our backhaul.

Unknown Analyst

Is there any -- actually, are there any questions out there? I want to make sure. Is there any geographic limitations? Other words, could you do this in any market? Or do you need to get any type of license, local license, a CLAC [ph] license or anything along those lines to pursue this business model?

Jeffrey M. Thompson

Well, we're not a CLAC [ph], we just do data. So for us, we'd like to follow our fixed wireless network. It was important for us to get the Houston network. So now we have that strategic advantage of being able to beam backhaul into almost any rooftop or any location that we need to, which is strategic for us, plus it really lowers the cost for us also. So for us, we're going to kind of -- it can be done in almost any market. I think eventually, you're going to start -- you will see in at the least the top 40, but the urgent is the first top 20. But it's going to be in any dense environment.

Unknown Analyst

Going back, I mentioned earlier, and you talked about it as well, you raised some capital, you sold some stock. I think you raised about $28 million of equity capital. What's your current cash position and then what's the cash burn inside the new HetNets business? In other words, I mean, do you feel like you're fully [Audio Gap] significant capital or really a recurring cash commitment you're making as you secure these roofs?

Jeffrey M. Thompson

Yes. We're very comfortable with our position right now. Like I said, Towerstream doesn't need money. The raise was mostly for HetNets. And what we'll do is, as we just mentioned, is we're -- we've got plenty of capital to get up and running, so that we start generating the revenue that we need to generate. We also have many different ways to secure and keep this landgrab mentality without the cash drain by pushing off when we actually start paying to when we start launching and when we bring on anchor tenants.

Unknown Analyst

What's the concession you make to get the exclusivity without the payment?

Jeffrey M. Thompson

Well, it's -- we had a little bit of discussion today. There's -- well, lots of times, we can just get time without any concession. And you're always going to pay for something, but you don't want it to be the full boat, I'll say.

Unknown Analyst

I'm sorry to interrupt you, but in terms of your financing scenario, do you feel fully funded at this point? Or you inevitably are going to have to continue to raise capital as you secure more exclusivities on roofs?

Jeffrey M. Thompson

No. The way we're doing it is more traditional-like, as the tower company. It's because small cell, everyone's making commitments in the carrier level, the top 3 out of the 4, at least, you're seeing huge commitments on small cell. So for us, before we start deploying the capital that we just raised, is to really basically align it. Everyone is going pretty fast at this point, get your anchor tenant and then start deploying the capital. And at that point, as you're starting to deploy with an anchor tenant, then we're really -- we've got enough capital so we can actually start looking at debt more.

Unknown Analyst

Have you talked about the targeted returns on capital you're hoping to get out of the rooftop business?

Jeffrey M. Thompson

Well, if you look at the return on capital for Wi-Fi nodes or even just straight co-lo, that'll be very similar to a tower business. But Wi-Fi return -- believe it or not, Wi-Fi has a much higher chance of generating more per antenna because of the many different customers that can be on there. It can be a cable company, it can be a carrier, it can an advertising company, it can be one of the platform players like Google or Facebook. Anyone that has Wi-Fi devices can utilize that Wi-Fi antenna. So we think a mature Wi-Fi antenna is going to have an incredible rate of return compared to a DAS node, which is obviously, we all know, is very expensive. But the rest of the returns will be just treated like -- more like a traditional rooftop or tower.

Unknown Analyst

Got it. Well, we're almost out of time. We have time for one more question if anyone has one. All right. Well, Jeff, with that, I'll thank you.

Jeffrey M. Thompson

Thanks, Bret [ph].

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