Sometimes bringing on a new client in my line of work can be a tricky business. Because we stand behind our much-ballyhooed commitment to present you unbiased coverage on the companies we write about, whether they pay for our attention or not, we sometimes have to deal with the experience of firms that aren’t quite ready for a harsh light, backing out of deals at the last minute.

Rift Valley Resources (RVR.C) came to us several months ago, committed to a marketing program, and soon became frustrated with us.

Not because we said mean things about them – we haven’t said a word yet.

And not because they were worried we’d kick them around – again, we haven’t, yet.

No, they were annoyed because they wanted to be talked about and, well, we refused. They just weren’t ready for coverage. We could have tossed out some dross and fulfilled expectations, but you wouldn’t have listened to it, much less used the info to make a stock purchase decision, because it just wasn’t time.



The website was under construction, news hadn’t dropped that needed to be out there, and their business model was based on a lot of ‘we’re gonna’s rather than ‘we are’s. The upside was definitely there, the opportunity solid, but we didn’t want to bring them to you until we were convinced, they were doing what they promised.

So, we pushed back from the table, not once, not twice, but three times.

And to Rift Valley’s credit, they hung in. They didn’t quit. They didn’t rage. They did the work.

I’m going to guess that wasn’t an easy thing to do, to keep your ego in check as some d-bag downtown who already had your cash passed judgment on your business. But while some run from such a challenge, others see it as a base to build from, and Rift Valley has done that.



So, let’s get into it.

Everyone in the United States has internet access. Right?

Nope. In fact, a lot of people don’t have any internet access outside of their cellphones. 55 million Americans have either crappy internet, or not internet at all. While us city folk enjoy fibreoptics and lightspeed bandwidth, folks in towns and villages and trailer parks and cabins enjoy no such glory, and the phone companies are in no rush to change that.


Fun fact: Back when telephones were first becoming a thing, rural households had that technology long before urban customers did, because the thousands of miles of barbed wire fences across much of the country served as phone lines before phone companies could actually cover the country properly.

Fast forward a century or so and the pendulum has swung the other way. Now, it’s not just the guys living off the grid in Unabomber cabins, las they build out their zombie bunkers, who aren’t connected to fibre internet. There are relatively large population centres across North America that are still using achy, creaky, Geocities era connectivity that can barely carry three minutes of 1080p porn and a MeUndies subscription at the same time.

The phone companies call them ‘second and third tier markets’. You might call them ‘grandma.’

Grandma needs her porn, dammit.

So how do you reach that 55 million people currently watching their Game of Thrones download at half speed? What’s the ‘barbed wire’ of the new digital age? What reaches them without having to build out any new cable?

The answer is something that, more and more, is starting to look like it has had its final days of usefulness; television.

Plain old vanilla television, broadcast from big towers all over the US into the households of almost everyone, receivable through a coat hanger-cum-antenna, even if you’re holed up in an upturned Airstream in the Arizona desert and catch rainwater for bath time.



These are the locations of TV broadcast antennas used by ARK Mediacom. The largest cable companies in the nation have similar sized audiences of the network ARK is connected to. It’s a legit beast.

More importantly, ARK Mediacom has figured out how to use the white space around the broadcast signal to carry internet bandwidth.

Not all internet bandwidth, mind. Some of the current use of the internet is two way; I send data to a website; the website sends data back. But most of the internet, in fact 80% of it, is Netflix or YouTube sending you gigabytes of video content, one way, with you only having sent a single click to them to make it happen.

And ARK, by caching the most sent content (read: cat videos) and sending it out through TV white space, can offload around 90% of internet traffic through their system at a price of…

… $0.01 per gigabyte.

Now, I don’t know about you, but if I update the podcasts on my smartphone when I’m not using wifi, I’m getting charged TEN BUCKS PER GIGABYTE that I use over my allocation.

Rift Valley’s deal with ARK Mediacom gives them a deal 1000x better than what I’m currently getting, which means they’re either geniuses or I’m a rube.

Probably both.

But hey, I hear you ask, how are they going to reach those millions of consumers? That’s going to be a massive marketing spend, right? They’ll need to raise tens of millions, right?

Nah man. They have TV stations.

“If you’re watching this station, you can have fast internet access tomorrow.”



SOLD.

Why hasn’t anyone done this before?

A few reasons. First, not everyone has a massive TV network at their disposal. Second, the FCC just brought into practice the new ATSC 3.0 broadcast television standards, which makes this possible, in November of 2017.

Here’s some background on that:

ATSC 3.0 improves the current version of free, over-the-air TV beloved by a certain population of cord cutters who don’t want to pay for cable, satellite or streaming live TV. It promises resolutions up to Ultra HD 4K TV, high dynamic range, refresh rates up to 120Hz, better reception indoors, better mobile reception, and more. For free. So yes, ATSC 3.0 is certainly something to get excited about.

The question is when. Nobody knows for sure, but Dennis Wharton, executive vice president of communications at the National Association of Broadcasters, told CNET that we’ll likely see TVs that can actually receive ATSC 3.0 in stores by Christmas 2020. That’s the most solid estimate we’ve heard, but it’s still a ways off, and it will be even longer before all, or even most most of the current HD stations offer ATSC 3.0 broadcasts.

How does this apply to the internet?

Broadcast TV will know what you’re watching

One of 3.0’s more controversial features is a “return data path,” which is a way for the station you’re watching to know you’re watching. Not only does this allow more accurate count for who’s watching what shows, but it creates the opportunity for every marketer’s dream: targeted advertising.

And, if you’re clever, the internet.

So, let’s say you want to watch an episode of House of Cards on Netflix. Okay, so you send that click through your vanilla old dialup internet or wifi or however you do currently, and your ARK system sends you the big fat video file, caching the traffic as it does so.

Someone else in your neighbourhood also wants to watch that episode, so rather than pulling it down through a satellite or miles of glass pipe, the local POP just serves it up. Last mile, instead of all miles.

Instead of a video being transported millions of times on demand, it will be transmitted once across ARK’s entire network, and stored locally in millions of edge devices. The video then only needs to be “released” from its DRM protected storage when the viewer wants to watch it. ARK can broadcast 7-10 TB/month of content per station, which equates to 2,300-3,300 hours of HD video per month.

Says ARK Mediacomm CEO and recently announced RIft Valley Resources non-executive Chairman Vern Rotheringham:

“ATSC 3.0 offers an interesting opportunity for broadcasting to reassert itself with its unique advantage of one to millions. You marry that up against what’s happening in the over-the-top video world. It’s literally a world where 95 percent of the downloads are about 5 percent of the titles. That’s a broadcasting paradise. We were made for that mission.”

All of this is important not just from a consumer joy perspective, but from an economic development perspective. If you have broadband internet services, it’s estimated that increases economic activity by 300% over three years.

That’s substantial, game-changing economic growth.

Fotheringham is the key to all this. He’s one of those guys who you just don’t get to sit down with, because you don’t run in Bill Gates-level circles. He’s built the massive TV network ARK Mediacom runs on, he was chairman and CEO of Kymeta Corp, Gates’ run at the next generation of satellite antenna solutions, and he’s Chairman of Satcast, which is to satellite TV what ARK is to broadcast. He IPOed Advanced Radio Telecom (ART) to a $225 million raise and NASDAQ debut. And if that’s not enough for you, shut up, sit down, you’re in the way.

This is all amazing, so what’s missing?

You’ll recall we opened this show with talk about how we kept pushing Rift Valley backwards from the Equity.Guru starting line, how we wanted to see more. Well, we’re still a little low on milestones.

The website is better now, though the ARK Mediacom website is far superior and information filled.

Part of the disparity may be that the deal that brings ARK and RVR together is still being finalized. We’re missing that big announcement that says the two are together on the public markets and hell’s coming with them.

And we’re missing some expected dollars in the bank. RVR announced a recent $1.12 million financing, and the first tranche of that came to $125k. There was a previous $1.12 million financing that brought in $462k. Go back a year ago, and the company was closing a $92k tranche of another raise. These are small tranches of what appears to have been overly ambitious raises, and that presents investors with questions.

That said, the fact that the company has closed off early tranches with regularity would appear to indicate they don’t give a crap whether you read into that or not, they’re just quick to close and cash out incoming cheques.

What they do have for that money is a plan to build their debut TV White Space wireless network in little Ardmore Oklahoma, as a test market, and then apply to Microsoft to fund the rest of the network under that company’s Rural Airband Initiative.

The Airband Initiative is a funding opportunity available to organizations who build wireless networks in rural areas of the globe, with a specific emphasis on networks that use TV White Space, like Ruralink. If Microsoft takes part, they will pay 100% of all network capital costs and recoup this funding with a revenue royalty for a set period.

[Metrolink Solutions Inc] has completed construction of its first seven QwikCom modular telecom units (MTUs) at its Idaho fabrication facility, which can manufacture 20 QwikCom MTUs per month.

QwikCom MTUs are rapidly deployed modular telecom platforms that can be individually custom equipped to provide a varied range of communications and monitoring services, including, but not limited to:

• Ability to be equipped with cameras, monitors and sensors for reliable property and border surveillance;
• Associated telecom system that can link video and other surveillance data by satellite to remote monitoring locations virtually anywhere in the world;
• Multiple MTUs can be wirelessly interconnected to provide wide-area coverage for communications, Internet access or video surveillance.

You don’t need to read tea leaves to see where this is going. ARK Mediacom needs last mile equipment to make their TV whitespace comment work, and MetroLink is building that equipment. That’s how a local company with a $2 million market cap gets itself into a deal that, conceptually, could be a billion dollar business.

RVR provides the wireless network and gets a piece of the action, ARK gets on the public markets and avails itself of public financing to spring out of the blocks before other big fish realize what they’re doing.

And yes, I did say RVR has a $2 million market cap. If the deal with ARK materializes in even a small way, that cap is a launchpad.

Part of the reason the valuation on this stock is tiny, and the raises are tiny, is because it’s unpolished. There’s still much work to be done in explaining the finer details, such as the financial model, to an audience thirsty for non-traditional tech investment possibilities.

The website must go deeper. The info must get deeper. The investor deck must go deeper. The news releases must reveal progress.

But while we wait for those things, we note the arrival of Fotheringham as a big legitimizer. He’s not a guy short on dough and would never expose himself to a Vancouver junior shell if he didn’t have a plan to take that shell and propel it.

Ultimately, we’re torn here. We love to buy a low priced, high upside, tech deal when it’s unloved. But we might want to see a small nudge before we go all in, a little more firming up of their news, a little more info on the deal.

Either way, it’s a good time to watchlist this one.


— Chris Parry, publisher www.equiy.guru


FULL DISCLOSURE: Rift Valley Resources is a Stockhouse Publishing client and an Equity.Guru marketing client. The author has purchased stock.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.