Dave Schaeffer: Yeah, I mean, we did a fair amount of customer outreach during the period between signing and closing, and since closing, we’re actually taking orders, and the backlog I’ve mentioned is a good indication of that. The demand set seems robust. The list of data centers that people want connectivity to is long. It is fortunate that we’re already in those facilities but are not yet wave-enabled in those facilities. So there’s kind of two steps. One, can we even sell a wave in the facility? And then two, can we provision it in a much more expeditious way? We are working on both fronts. In terms of the demand set, we’re seeing it from some of our larger content companies, hyper-scale type customers. We’re seeing it from a broader set of content players, and a number of regional and international access network operators.
And we are seeing a small, but growing set of AI-centric businesses that had traditionally not been wavelength buyers approaching us to buy wavelengths in some of these data centers. So we’re seeing four discrete buckets to three net-centric buckets I’ve just spoken about, and then finally some enterprise customers, who historically had bought waves from Sprint and other enterprise customers who are constructing private networks that are independent of the Internet. A wavelength is more expensive than transit on a per-bit utilized basis. However, it has the three positive attributes of being able to support large file transfers, having predefined latency, and complete diversity from the Internet for greater security. Those are the reasons why companies will pay a premium per bit mile for a wavelength.
Timothy Horan: I can do.
Operator: Our next question comes from Nick Del Deo from MoffettNathanson. Your line is now open.
Nick Del Deo: Hi, good morning, guys. I didn’t catch all the Tad’s comments regarding the TSA change, or at least how that’s recorded. It looks like the balance sheet value in terms of what you owe T-Mobile went down quite a bit. Just to review, is that just a function of getting off their platforms faster? And I think you noted the drop their billing system effective now. What’s left to do on that front?
Thaddeus Weed: Yeah, the TSA is entirely associated with paying vendors. So initially they were paying 100% of the vendors we assumed with the Wireline Business on our behalf, and that has been winding down. In the second quarter, we were billed for May and June, however, those payments were not due yet. So we made no payments in the second quarter. That resulted in those charges being cash flow from operating activities of about $118 million. In this quarter, we have made three monthly payments, similar to the IP Transit, but on the cost side instead of the revenue side. So that’s why you see the large swing in that line item if you look at the cash flow statement. At the end of the corner, we still owed $69 million under the TSA agreement, which is essentially 2 months of activity.
As we sit here now, we have migrated most of the vendors to our accounts payable systems, and we anticipate having all of the vendors migrated by the end of the year. The long pole and that 10 [ph] has no one would be surprised are some of the circuit vendors, which just take longer based upon their nature to get those migrated.
Dave Schaeffer: Right. And then complex to that T-Mobile had consolidated its circuit spends for its wireless business in many instances with the Wireline Business. So not only do we have to migrate that vendor, we have to segregate, the portion of the bill that’s attributable to the business we acquired. And T-Mobile’s been very cooperative in helping us do that, but it is an arduous task with hundreds of vendors. I mean, there are a couple of dozen that really matter in terms of scale. But, I’m actually very pleased that we’re as far along in transitioning our accounts payable into our own systems and being able to pretty confidently say, we’ll have virtually all of them within Cogent systems by year end, and equally impressive, I think, is the fact that we have migrated the billing platform to our platform and will be billing with Cogent bills going forward, actually shutting down the acquired platform that Sprint is used.
Just as a point of reference, we still actually get off-net circuit bills from Verizon that say MCI on them. And it’s been probably over 15 years since Verizon acquired MCI. The bill does not say Verizon. It says MCI.
Nick Del Deo: That’s fine. But, again, good work. I’m going to get your system grew over that quickly. Sort of separate question, on the data center front, you converted a few more facilities this quarter, because are you finding that the broader supply pinch in certain data center markets is increasing interest in your data center facilities, whether it’s old Cogent ones or the ones that you’re converting from Sprint? Or is there size and locations and other attributes, power densities, et cetera., I mean they might not necessarily be benefiting from that new supply dynamic?
Dave Schaeffer: Yeah, so I’m going to segregate the two groups of data centers, because they are substantially different. The Cogent data centers are all in leased facilities and tend to be smaller both in size and power. Today, we have in the Cogent footprint, including the facilities that we’ve converted, 109 megawatts of power available in those facilities. We still have 41 facilities to convert and we anticipate about another 100 megawatts coming from those facilities. So we concentrated on the facilities that had the biggest footprint of rack space and power. The second challenge we’ve had is that these facilities were occupied by unused telecom equipment. As I had mentioned on our previous call, there were over 22,500 bays of equipment that are not in service, but physically sitting on the floor.
We’re removing those right now at the pace of about 400 a week across the footprint. I mean, that’s going to take a year. We’re trying to accelerate that. We have a footprint today that will support a little over 40,000 bays of equipment. So the challenge has been not the interest in our data centers, but really not disappointing customers in making promises that we can’t keep in terms of when these facilities will have vacant space and power that customers can use. The demand set has been strong. There is, at least for now, a short-term crunch in power availability. I think the locations of our facilities are of interest to companies, who are trying to have a more decentralized component to their data center model. So for the largest consumers of data centers space, they currently have kind of a two-tier hierarchy.
