HITT – Zayo and Crown Castle Merger Update and Reclaiming Strategic Network Conversations

I am excited to introduce Graeme Scott, VP advanced networking and mobility. Graeme, thank you for being here. I’m gonna go ahead and hand it over to you.

Thanks, Cass, and, appreciate the intro. Welcome, everyone. As Cass said, it’s the week of Graeme. So if you like Graeme content, you can get your fill this week because not only are you joining me here for the hit, tomorrow, I am hosting the AI power hour, and that is at, one o’clock eastern.

So I don’t know, Chandler, if we can drop the link in the in the chat for that one, but that should be a good time. We’re talking about the AI Roadie. And if you guys were on the last AI power power with me, you know I’m gonna add a little fun. We did a name that tune.

It was pretty cool. And then, of course, on Thursday, we’re doing a beyond the solution, virtual version, mobility and IoT. And guess what? It’s my birthday.

So I’d love for you guys to come join me. We’ll hang out. We’ll have a good time. So it’s the week of Graeme.

So if you if you love my content, love to see you guys on some of these events. So, I’m gonna get right to it. As Cass said, we have a full schedule here today. You may have seen the news about a year or so ago.

A big announcement from one of our our favorite suppliers, Zayo and Crown Castle were coming together. Zayo was gonna purchase Crown Castle, and we love both those guys. We’ve had a lot of success with both of them. So a lot of questions from you guys, our advisers about what that was gonna look like, how things were gonna work.

So joining us on the call here today to talk through what’s happened, what’s going on is our man, John Matherly with Zayo. John, welcome to the call. John, you there?

Where’s John? We’re look we’re waiting on John.

Do we have John? Okay. Alright. So, what happened basically, folks, is that merger was completed, and, hopefully, John can jump on here and and give us a little bit of insight about what happened and what’s going on. But what we’re gonna do, Chandler, let’s see if we can, if John, can join us here in the next couple minutes, we’ll go to him. Otherwise, let’s just jump right into the hit, and then we can maybe kinda come back to John if he’s able to join us. So, alright.

Hopefully, John can jump on there. Maybe he had some technical issues there, but, we’ll get to John just shortly. John’s gonna run through what happened with the Zayo and Crown Castle merger and tell us about what that means for us as advisers. So good stuff coming there. But let’s go ahead and jump into the hit.

Let oh, there we go. There’s John. How are you, buddy?

You there?

Hey. Good morning. How are you?

Hey, John. So it’s obviously a little technical issue there. Thanks for joining us. So I kinda teed it up here for you, talked about what happened last year. Why don’t you give us an update on where we are with things with the Zayo Crown Castle merger as of today?

Yeah. Thank you.

Yeah. A lot it it feels like we were going through the the acquisition process for about three years.

Just Did you lose John or is that just me?

Can we hear John?

Lost John. Okay.

Alright. We’re having some thanks for all the birthday wishes here, guys. It looks looks like we’re having some technical problems with John. So, Chandler, let’s just go ahead and kick it on over to the hit.

We’re gonna go ahead and jump in there. Hopefully, we can if we can sort it out with John here after the fact, we’ll we’ll do that. We’ll come back to him, but let’s let’s just dive into the hit here. So alright.

Couple weeks ago, last time I hosted the hit, I did a big session on network as a service, and it was a popular session. We had a lot of advisers that joined us for us, but also one that stirred up a ton of conversation.

I had a lot of feedback from you guys in the chat and via email, after the call, and I really love that, right, when we get a high level of engagement. And this is a topic that I think is fairly significant for all of us in the adviser community. So what I wanna do today is really kind of continue that conversation, the call we had on the last hit. And if you of course, if you didn’t tune in for that hit, we can always get you the recording.

So go ahead and check the hub or or check with your SPDM. They can get you in touch with that. But it was a really good conversation where we talked about network as a service, what it is, why it’s emerging, and how changing customer behavior is really what’s driving a lot of these technological change. We kinda laid out what happened with the tech to enable us to get to this point, and then we talked through how customers buying decisions and how they make those buying decisions is changing and how we as advisers need to adapt to that.

So today, I wanna take the next step. Right? Because understanding that the market is changing or the way people are buying in the market is changing, but knowing how to sell in that market is something that’s a little bit different. So what I’d argue is that for many of us, me, at the beginning of my career, we had network conversations in a certain way, and that way made perfect sense at the time.

The challenge is as we’ve moved to this evolution of the market, the market’s changed, and thus our conversations need to change and evolve as well.

So today is not really about NAS. It’s about reclaiming the strategic value of the network conversation. So let’s go ahead and move to the next slide there, Chandler.

So, picking up where we left off. Right? That’s what we’re calling this one. The best advisers in this industry have always done one thing exceptionally well.

You adapt. You adapted when MPLS became mainstream. You adapted when cloud changed application delivery. You adapted when mobility became business critical.

Although some of you, not all the way, I gotta say, but a lot of you guys are getting there. And now we’re seeing another one of these transitions. So whether you left that last session excited about NAS or skeptical about it, and trust me, there were plenty on both sides with the communications I had, this conversation applies to both groups. Because this session isn’t really diving into the NAS or the specific technology.

It’s about how value moves in technology markets and how you as the advisers move with it. So let’s go to the next slide.

Step one here, to understand where we are going, we need to understand where we have been. So let’s go back a few years to the early days of network. So those of you guys in the chat, drop a one point five four four in the chat if you sold t ones back in the day. I know there’s a lot of you on the call, so let’s drop a one point five four four in the chat if you’re one of those guys.

In the early days of networking, bandwidth was genuinely scarce. Right? One point five five, five four four sounds like such a ridiculously low amount right now. And by today’s standards, it is, but that is what everybody sold.

Right? In the early days, networking bandwidth was scarce. As I said, provisioning was difficult. Carrier footprints were very limited.

MPLS, t ones, o c threes, all of these things we sold were super expensive. Lead times were measured in things like weeks and months, and customers genuinely needed help to figure out what they were gonna do with their bandwidth. The adviser wasn’t simply selling connectivity. The advisers was helping customers navigate complexity.

You know, questions like, can I get service to this building? What carrier should I use? How do I architect a resilient WAN? How do I connect dozens of locations together?

How do I support future group growth? The adviser was often acting as an architect, strategist, translator, and guide. The value that the adviser provided came from expertise. You have a scarce resource in bandwidth, a resource that costs a lot of money.

The need to optimize and utilize that effectively and efficiently was critical to businesses, and advisers played a key role in that conversation. You were helping customers build businesses on top of a scarce resource, connectivity. When bandwidth was scarce, you created value by helping them navigate that landscape. Then something happened.

So let’s go to the next slide here, Chandler.

It really started with cable and grew from there, but essentially bandwidth became abundant. Right? Fiber expanded, broadband improved, Cloud adoption accelerated. And transport became very, very easy to acquire.

Abundance replaced scarcity. And as such, the market began treating connectivity like a commodity. An adviser told me the other day they sold a ten gig circuit recently for fifteen hundred bucks. Like, think about that.

When we’re talking about one point five four four, and that was, what, eight, nine hundred dollars, Now you can get ten gigs for fifteen hundred. It’s crazy. So think about how many network conversations you have today. Begin with how much, how fast, and how soon.

Right? And then maybe if you get to the next level, we talk about, well, who’s the carrier? What’s the term? And that’s not because we lost the ability to have strategic conversations.

It just wasn’t necessary. Bandwidth was essentially free. It was limitless. It was so cheap relative to where we came.

All we wanted to do was just throw bandwidth at a lot of the problems, and the carriers sort of walked right into that as well. Right? They facilitated that. Bandwidth became cheap.

Every advertisement was about how fast. And even if customers didn’t need that kind of speed, they wanted to get it. Right? So we didn’t lose the ability to have that strategic conversation again.

It just wasn’t necessary.

As bandwidth became abundant, many advisers found themselves competing on the only lever customers really cared about, and that was price. K? Network became a line item. Margins compressed, and customers stopped seeing the network as strategic.

And as such, the conversation moved downstream really fast. This is where we had a lot of folks jump into the business and call we call circuit slingers. Right? They came in there.

They were just selling cheap bandwidth as quickly as they can, and that circuit slinger was created by this commoditized network. Right? And we love circuit slingers. Right?

There’s a lot of people out there that are selling it, but the world is changing again, and, we have to adapt to that. So let’s go ahead to the next slide there, Chandler.

Next slide, Chandler.

There we go. Alright. So here we are today, and it’s time for us to reclaim the strategic conversation around network. Because at the at at the same time that bandwidth was becoming abundant, the importance of the network exploded.

Okay? Today, the network underpins cloud applications, hybrid work, the customer experience. We, of course, implement cybersecurity to protect it, IoT deployments, AI workloads, business continuity, application performance. All of these things are absolutely critical to our customers and the way they operate, and the network underpins all of it.

The network has never been more important. In fact, I’d argue the network is more strategic today than at any point in history, and that goes back to, you know, the early days when we talk I just talked about. Technologies like SD WAN, SASE, NAS, automation, and all of these AI driven operations are helping reconnect the network conversation to the business outcomes it has quietly powered all along. The infrastructure is now intelligent enough to deliver measurable business value, not just connectivity.

And one of my favorite ways to describe this is that while bandwidth became abundant, complexity did not. And complexity is where the value lives. Right? Today, we have an opportunity to move back upstream, sort of cast off that mantra of circuit slingers and go back to being strategic advisers.

Advisers who can connect technology decisions to business outcomes are the ones that are gonna win. That’s where the value is returning. So let’s go ahead to the next slide.

This slide, I think, is really one that kind of wraps it all together. Right? Because it highlights the difference between selling technology and selling outcomes. Outcomes.

The traditional conversation starts with products, bandwidth, carrier, price, features. The outcome conversation starts with curiosity. Right? You’ve heard Adam say a lot, be curious.

Right? Our our our best advisers are curious.

What is the customer trying to accomplish? What’s creating friction? What’s slowing them down? What’s costing them money? What’s preventing them from making money? What’s preventing growth? Customers rarely wake up wanting a circuit.

They wake up wanting productive employees, reliable applications, happy customers, efficient operations. The network is simply the platform that enables those outcomes. The network never stopped being strategic. The conversation stopped reflecting its strategic value. And I think it’s on us now to reclaim that conversation and go back to where we were. So let’s go to the next slide.

Three questions here that, you know, these I always love to leave you guys with some stuff to to take home with you, take on the road. So three questions that we wanna ask our customers here. Question one, what are they trying to accomplish? We’re not asking what technology they want.

We’re really trying to drive at, you know, what they’re trying to do. What business outcome are they pursuing? Are they pursuing growth? Are they pursuing expansion?

Are they pursuing efficiency, customer experience? These are the kinds of things we wanna drive at. Question two, what’s getting in the way? Because, again, customers don’t usually buy technology.

They buy relief. They buy relief from friction. They buy relief from complexity, relief from risks. They’re trying to mitigate whatever pain they’ve got.

Right? So what is getting in the way of you accomplishing those goals? And then question three, what does success look like? And you can ask this, of course, a number of ways.

You know, there’s a lot of great ways to do this. But what does success look like? When everything is working perfectly, what changes? Right?

What’s easier? What’s faster? What’s less painful? What’s less predictable? If you can answer those questions before talking product, you’re already having a different conversation than most of the market.

So before you lead in with price, that how fast, how much, how soon, try having a few of those conversations. Hey. You know, you want some more bandwidth for what? What are you using it for?

What’s going on? What’s changed? What’s happened within the business that, you know, creates the need for that new circuit or that incremental band bandwidth? So those are the kind of questions that I I encourage you to lead with in your conversations.

And I know some of you guys are already doing that, and that’s good stuff. But, like, we’ve we’ve this conversation is really the one that we wanna have. Next slide, Chandler.

So here’s a bunch of other questions that you guys can take with you. I don’t expect you guys to memorize that. The goal isn’t to turn everyone, you know, to using these exact exact questions, but the again, the goal here is to build a habit, to create a cadence that allows you to sort of take another step into the conversation and be strategic with our conversations around network.

Just, you know, get into the habit of asking one more question before you present a solution, one more question before you recommend a supplier, one more question before you generate a quote. Really drive at the why.

What’s the outcome we’re trying to achieve? Because the better you understand the outcome, the easier it becomes to connect that technology to true value, and then we get out of the game of competing on price. Right? So let’s go to the last slide here.

I’ll leave you guys with this one. For years, advisers created value by helping customers get connected, and that was important work. Right? There was a lot that was going on there. Today, customers are more connected than they’ve ever been, but they’re also more complex than they’ve ever been. The future belongs to advisers who can help customers navigate that complexity.

The future belongs to advisers that understand what the connectivity you sell truly enables and truly creates, and the value belongs to advisers who can translate technical capabilities, meaning the things we can do with what we sell into true business outcomes. So I would argue that the network never stopped being strategic. The conversation simply stopped reflecting the strategic value of the network. And, again, when bandwidth the bandwidth all of sudden became almost free, almost limitless, there is no scenario today that you can’t throw more bandwidth at.

But I think what most of us are finding is that doesn’t always solve the problem, and that’s what we wanna do. We really wanna dive in here and talk through outcomes. So create more trust, differentiate yourself from your competitors, and ask position these questions at the beginning at the middle of your conversations and help implement the next wave of network transformation. So gonna go ahead and open things up here now.

Did we get John back? Do we wanna bring John? Is John here? Okay. There he is. John, how you doing, man?

Doing better now.

Good. Alright. Okay. So, John, we’ve got the map up there. Quickly break down what happened with the Zayo Crown Castle merger. Walk us through where we are today.

Yeah. Thank you. I’m John Matherly. Thank you all for joining here today.

May one, May first, Crown Castle sold their fiber division to Zayo. That means everyone who worked for for the in the fiber division at Crown Castle started working at Zayo May one. That included everyone in the channel. Okay?

So all customer contracts, partner contracts were transferred to Zayo, along with the fiber assets and our colocation facilities that we had. So that is what changed on May one. The one thing that has not changed as of yet, the same channel manager teams that support you as partners continue to part, support you now. So you may many of you probably do have two channel manager teams that you’re working with.

Just keep doing that.

It’s gonna be another few weeks before we normalize that.

But as of now, it’s I hate to use this term, still business as usual.

Okay. Yeah. So that’s important. Right? So if you’re working with somebody that you love, like, you know, our guy, Kip, or or anybody else across the country, that is still your point of contact. Right? We’re still working with that individual.

Correct. We we think that will change on August one.

Okay. Okay. Good. So, John, if I’m an adviser on this call this is great. Right? Happy that you guys are kinda through that through the wilderness.

Why should I care as an adviser on this call?

Good question.

The good thing is I’ve been through a lot of these. I know everybody on this call has been too. Zayo really wants to take the best of breed of both companies.

Just a few examples that although the partner rules of engagement have not been finalized, they will be much more partner friendly than what Crown Castle had in place. Okay? Zayo took the stance of fiber builds that Crown Castle had so that we now have one point five million buildings that are currently in our newly created near net program. K?

Renewals will be analyzed by a centralized team.

Previously, at Zayo, that was done by channel managers.

Legacy Crown Castle inside quoting team will support the whole channel, the entire channel.

Zayo did not have that organization.

Probably the best thing that they did is best of breed is they put all the channel team back together. We all work and report to Chris Nine.

Chris had been the channel chief at Zayo for for the last few years.

Good. Good. So that near net lit building list, that’s a huge increase from where it was before. Right? What what how how much is that increased by?

That increased by about a million buildings.

Wow. I mean, that’s that that that’s pretty significant. So there’s a lot of opportunity there. So, you know, sometimes I think generally in the channel, we tend to look with some skepticism when we see mergers and acquisitions.

But in this case, it sounds like, you know, it’s, hey. This is this is the best outcome right here. So tell us what does this mean for advisers going forward? What kind of opportunity do we anticipate this will create as the organization moves to its next phase?

Yeah.

Well, like, if you think about what the cop companies were known for, Zayo was typically known for their long haul network all over the United States.

Crown Castle was known for our metro networks and multiple, you know, all the NFL cities. So those two combined, it really creates a lot more addressable market for partners.

The combination now, we have a hundred and fifty thousand on net buildings in addition to the one point five million I talked about a few minutes ago as far as part of the near net building program.

So just what you it was a great lead than what you’d you’d talked about previously, Graeme, was, you know, additional fiber assets drive all these products that customers are interested in it now, AI infrastructure, etcetera.

Some of our key products is, remain and expand, in particular, security as a service, managed services, SD WAN, and Dynamic Link. That is Zayo’s network as a service product offering. You can turn up, customer can turn up, connectivity, change bandwidth, and connect to, cloud providers, through a portal. They could do that on their own. So all this means partners have more to sell, more different places to sell those services. We’re gonna continue to be competitive in the medium sized business that frankly Crown Castle was really good at.

Combine that with the the large WAN deployments that, that Zayo has traditionally sold are just a lot more products and a lot more places to sell it.

Love it. Which means opportunity for our advisers and a great story. So, John, I think Angie will kill us if we don’t mention this. Right?

If you go into the hub, you still will see Crown Castle, right, in the hub as a supplier. However, it is now all Zayo. Right? I think that’s the important point.

So there is no Crown Castle. Even though you may see it in the hub still, it’s it’s now just Zayo. So everything’s going to Zayo. Correct.

Yeah. Okay. John, awesome man. Appreciate you being on here. Sorry we had a little technical difficulties there, but glad you were able to join us.

Folks, John’s gonna stick around in the chat there for a couple of minutes. If you have questions for John, please go ahead and ask him. He he will be there to answer, but we’re we at Telarus are very excited about the opportunity. We think that, you know, oftentimes, you know, when you see mergers and stuff, you kinda like I said, you approach it with a little skepticism.

But I think that truly this does create some incremental opportunity for our advisers and and and is a is an overall good thing for for all of us. So thanks again, John. Thank you for joining us. Appreciate it.

Graham.

Cool. Alright. Hey, Cass. I don’t know. Do you wanna do should I take some questions here from the crowd, or you think we should just go ahead and bounce right to Graphene? What are you thinking, Cass?

There we go. Oh, I’m thinking I should turn my microphone on.

That’s what I’m doing, Graeme.

I’m gonna ask for any questions that are in the chat.

Eduardo did ask, just curious, what was the connectivity issue? I’m assuming that it was something that you guys kind of talked about in there.

The guy I don’t know if was he referring to the connectivity issue that John had or what?

Maybe it was for John. Another random question was, who’s built oh, this is a great question actually for John.

There was a question for about Zayo that was in the chat that you may wanna go ahead and answer for everyone that was there.

Yeah.

If if whose bill are you on?

Everything gonna be on Zayo paper?

Every everything as of now should be on Zayo paper.

Obviously, we haven’t had time to combine the billing platforms, but the new, the the billing will be have the Zayo logo.

Got it.

Perfect. Wonderful.