Cheri Beranek: Right. It’s definitely a pause in the smaller carrier. So in community broadband. As some of our peers who we work very closely with have outlined in their calls in the last few weeks. The expansion and the continuation of ACAM is a fantastic thing for our marketplace in that it provides another almost $20 billion into our market or 50% more than what was originally thought was going to come from the government. But in most situations, it is an either or decision. And as a result, companies need to very carefully make a decision as to what they’re going to do to assure that they don’t get cut off by making a mistake. And I think there’s enough time in the BEAD programs and in the BEAD calendar to allow these service providers to do that.
Back to the normalized cadence, from the time that you see an engineering design come into play until the time that you see first shovel can be as short as three to four months, but it’s more often closer to a year. And in our world, we work really closely with those engineering design companies. They’re still extremely bullish about what BEAD is going to do for us. And so I would watch the activity of those engineering companies next year to really show how strong the second half of 2024 and into 2025 is going to be for fiber construction.
Scott Searle: Great. Thank you.
Operator: Next question Ryan Koontz with Needham and Company. Please go ahead.
Ryan Koontz: Thanks for the question. You made a comment about the rural market, with the longer loops being a higher TAM market for you, I think of that as being having a bigger impact on the actual fiber cable itself on homes past as opposed to connectivity. Maybe you can expand on why the connectivity TAM is larger. Is that just because the density per unit is lower and you need to spend more on a fewer number of homes?
Cheri Beranek: No, it actually goes back to the fiber, as you indicated, in that most of the association with connecting a home, the largest percentage of the cost is the actual fiber cable itself. And so if your home is 500 miles, yes – 500 feet from your terminal box versus a mile from the terminal box, it heavily influences what the cost of your drop cable is going to be. And so the further out those individual houses are, the more opportunity there is for both drop cable and terminal devices. Again, you might see multiple terminals being strung and feeding off of each other in order to get to that end, which is another reason why the total available market is larger. In general, we’re working to – I think that’s one of the things that sometimes gets overlooked, is Clearfield is investing strongly to increase our total available market during this low, in that we came out into the marketplace last year with a range of pedestals.
It’s pretty common knowledge we’re going to come out with a vault, which is going to be able to be used with every cabinet that we’re going to – that we’ll be deploying. And Clearfield has historically been a company associated with passing homes, not as much connecting homes. And so we have a very strong initiative about using our market presence to get more of the homes connected to be using Clearfield equipment. And you saw sea change being announced last spring, which is undergoing field trials over the course of this first year, which we believe will represent additional revenue opportunities and additional TAM for us next year and beyond.
Ryan Koontz: Got it. That’s helpful, Cheri. Thank you. And just a quick follow-up on the cable market, any difference there between – that’s obviously the numbers have been a little depressed there. Is that similar inventory issues? Are you seeing any changes in architecture pauses in programs? Maybe you can kind of make any broad comments about cable.
Cheri Beranek: I think the cable market is for those individuals, those individual companies who are committed to fiber to the home. There’s been no change in that commitment, and they continue to build and being committed to the new architectures. For those companies, the larger companies who have retained their commitment to the doctor’s position, I haven’t seen a change. But what we have been involved with is a higher number of hub collapses and other types of areas in which they’re taking fiber deeper into their networks. And as a result, have a need for both passive and active cabinets to serve into that space.
Ryan Koontz: All right. Thanks, Cheri.
Operator: Next question Greg Mesniaeff with WestPark. Please go ahead.
Greg Mesniaeff: Yes, thank you. And you mentioned earlier in your prepared remarks that lead times have shrunk to less than four weeks and that the majority of the business going forward will be book and ship business. How has that impacted, and how do you expect it will impact pricing?
Cheri Beranek: Clearfield’s business before the pandemic was always book and ship, and we had some of the best lead times in the industry and, in fact, have really worked very closely with our customers to assure that we could align the equipment that they needed at the time that we could ship it. I think from a pricing standpoint, in regard to customer pricing, there’s always, in a time of oversupply, there is a price pressure on the manufacturer in that the service providers are commanding. They’re the buyers, they’re in the strongest position. But in general, we are working toward what we call price discipline in that we will not lose market share to for – on good business. But we also will ensure that should there be inappropriate pricing in the marketplace that is not sustainable that we won’t be tempted to follow.
