When network operators and service providers build out infrastructure, there’s a whole ecosystem of companies at the engineering and construction layer that they turn to in order to make it happen. One of those companies is Hylan, which has been doing a bit of consolidation work of its own lately and dramatically expanding its geographical reach. Hylan takes a turnkey, in-house approach to infrastructure projects rather than breaking them up and subcontracting them out. With us today to let us know what Hylan is up to is CEO Robert DiLeo.
TR: What are the origins of Hylan? How did it come to be what it is today?
RDL: Hylan was founded in 1960 by my dad, primarily as a small local electrical contractor in the boroughs of New York City. Around the late 1970's he was approached by the initial cable builders which became Time Warner Cable -- back then it was Paramount Cable and Manhattan Cable -- to build a cable tv network. The project encompassed trenching streets and pulling coaxial cable into buildings and into residential neighborhoods. They spent years building up cable infrastructure and when the cable market first went into fiber in the mid-80s or early 90s, so did Hylan. That led us to go more into working for companies competing for the telephony market like NFM, MFS, WorldCom, etc. In the early 2000s when the telecom boom imploded and most of that work dried up, it forced us to get into the heavy electrical infrastructure work on street lighting and traffic signals on highways and bridges and roads. More recently, in 2007, 2008 when the wireless market really started to go heavy into needing fiber to towers, it kind of tied the whole company together because we were a fiber contractor, we were also a utility contractor, and we were also a municipal contractor. So we kind of fit right into that and built the initial build for NextG Networks, which was later bought by Crown Castle. That launched us into the wireless market where we are now. Today we sit backed by private equity firms and we are now in growth mode both organically and via acquisition.
TR: What types of projects are you mostly working on today?
RDL: Our biggest growth sector is wireless. With small cells and future 5G builds, they need a lot of fiber. So for us this means putting up small cell attachments, modifying the municipalities’ street furniture, and bringing fiber to those builds. We're also seeing a lot of municipalities needing fiber for smart highway projects, like tolling projects and cap assistance. We still see steady growth from the cable sector because they're always looking bring more bandwidth to homes, which means more fiber.
TR: What do you have to do differently to support 5G than you have done for past projects?
RDL: Well the technology on the equipment side is definitely different, so we have to stay up with all the proper gear and the proper tools of the trade to deploy 5G from a fiber perspective. We have to deploy bigger count cables, because they need more fiber and they need it closer to the wireless devices. Obviously we've been through this before, but if we took fiber to every intersection before, now we might now take it to the mid-blocks. They need a lot more nodes which turns into a lot more fiber.
TR: Lately you have expanded far beyond New York City, what drove that decision and how did you go about it?
RDL: New York is probably one of the toughest cities to work in in the US. We felt that the model that we built here was unique. We pride ourselves on being a full turn-key, in-house operator. There are a lot of contractors in the US, but we are one of the few primary contractors that does all of our services in-house. You'll have plenty of electrical contractors in New York, but you don't have electrical contractors that are utility contractors, are fiber contractors, are wireless contractors, and do design and engineering as well. And we felt we should go and try to deploy this model into other cities. That is why we brought on some private equity teams to help, and we recently made expansions into Washington DC and Virginia via acquisition and we went into neighboring Philadelphia and Baltimore organically. Our most recent acquisitions take us into Chicago, Phoenix, Dallas, Sacramento, and the LA market.
TR: How do you approach M&A?
RDL: Our M&A model would be to go and find local savvy operators who are successful in their markets, and then add another part to what they don't do, like engineering or RF services. We'll take that from the mothership and help train their individuals on the tasks that they don't do. We don't want to reinvent the wheel, so we want to acquire the local savvy contractor who knows the municipalities, knows their way around the land. They know the permitting process. They know the do’s and don'ts of the towns or the cities.
TR: How has the integration of these new markets gone so far?
RDL: It has gone well, but it is still new and fresh. The first acquisition, Down Under Construction in Washington and Virginia, closed about six months ago. We're starting to expand their services as we speak. And the Tetra Tech divisions that we purchased closed only a month or two ago.
TR: What potential new markets are you interested in? Do you foresee further expansion on the I-95 corridor, e.g. Boston?
RDL: We are actively looking at most major US cities, but we are also interested in Atlanta, Boston and the Florida area. It's also important where our clients have their biggest pain points. If some of our clients say that they're really struggling in Atlanta, we will look for a target there to acquire.
TR: How much do regulatory challenges vary across the geographies you serve?
RDL: They vary tremendously and are some of the biggest pain points that our clients have It's not the same process in New York City that you would have even next door in New Jersey. If we have a fiber project that's going through New Jersey, we might have to call up 20 towns to get permitting and rights of way and access, whereas in New York City we would go to the DOT. So when you acquire the local guy that's been doing it for 15 or 20 years and knows the ins and outs of weaving his way around a permitting or process, then you really have to keep that talent on board after you do the acquisition. That’s why in our M&A model we don’t try to change what they primarily do. With Down Under Construction, their president Daryl Dunbar is now the president of that division, which is still named Down Under Construction.
TR: How much work is there to be done for 5G still?
RDL: Just take New York alone. From 2014-2017 we built hundreds of nodes, and in 2018 we probably built the most we've ever built. But in 2019, they're talking about thousands of nodes. Depending on the technology, the amount of bandwidth demand is going to determine of how many nodes we need to deploy. The more nodes they need, the more fiber they need.
TR: How does consolidation among service providers affect you? Sprint/T-Mobile for instance?
RDL: For these big companies it takes a year and a half for them sometimes to even integrate their management teams. When it gets down to networks, we're talking a few years out before we start to see real changes in their networks. Eventually, it probably will affect some of our business because there would be some consolidations, although Sprint's network is very different than T-Mobile's network. So there will also be added work in the beginning as they try to tie the two networks together. But then eventually, it wouldn’t make sense for Sprint and T-Mobile to build on the same block. They would build one network eventually but it's going to take a long time. Yet we always see new competitors pop up as well.
TR: What are the biggest challenges ahead as you deploy network for the next generation of wireless services?
RDL: For the part we are involved with, I would say the biggest challenge is always the municipalities and the regulatory issues behind their approval processes. The cities only want you to disrupt so much. They only want you to go so fast, and so they put a lot of restrictions there. When we sit with our clients and create a map and deployment schedule for them, that’s generally the biggest challenge on the table. It's always subject to the city agreeing to let us to go as fast as we need to go.
TR: Cities and towns also have an interest in better bandwidth. Has that helped the regulatory environment to evolve?
RDL: I think it has evolved a little bit in that cities as they are a little bit less stringent; however, they think our clients have very deep pockets. For example, if we're digging a trench along a side street in a New Jersey town, they might try to get us to pave the whole lane for restoration. In New York City, requests to make more space on the utility poles for fiber attachment tend to get bogged down. But we tend to take most of that on ourselves because it gives us the more turn-key effect for our clients by taking all that pain away.
TR: Thank you for talking with Telecom Ramblings!