CEO Yannis Macheras discusses Parallel Infrastructure’s goals and the wireless revolution

With its roots in the railroad industry, tower developer Parallel Infrastructure has taken a circuitous path to its current role as a trusted infrastructure partner to the nation’s wireless carriers. During the past 7 years, industry veteran Yannis Macheras has been at the helm, guiding the company to success through ownership transitions and an ever-changing wireless market.

After graduating law school in New Orleans in the late 1990s, Macheras headed to Massachusetts where he went to work for what was then an entrepreneurial upstart company – American Tower Corp. – doing legal work for a build-to-fill program in New England. This role launched him into further opportunities during the next 15 years that allowed him to learn and lead almost all aspects of telecom infrastructure development and operation at the company.

Phase 2 of his career began in 2014, when Fortress Investment Group tapped Macheras to lead a new telecommunications infrastructure company called Parallel Infrastructure that notably held a railroad right-of-way management business. He focused on putting together a strong team, executing master agreements with carriers, and building towers.

In 2017, Parallel Infrastructure was sold to Australian company Lendlease, which was diversifying its business holdings in the United States. After just two years, Lendlease elected to refocus on its core business lines and sold Parallel Infrastructure last year in October to Apollo Global Management.

“During these changes with capital investors from Fortress to Lendlease and now to Apollo, the team has remained the same and in fact has grown as have our relationships with our customers and suppliers,” said Macheras, now CEO of Parallel. “Most important to me is that delivery consistency has been stellar, and we now operate as a completely standalone, self-sufficient business with a very healthy capital plan.”

Parallel is focused on the development, acquisition and operation of macro towers and is open to exploring complementary business lines, although Macheras said it has maintained discipline and remained laser focused on being the best in class at developing and operating towers as an engaged and responsible owner. In addition to the hundreds of towers Parallel has built nationwide on its own and the hundreds in its development pipeline, the company retains the right to build, manage and collocate on towers in the areas that buffer around the railroad tracks belonging to some railroad companies, the largest of which is Burlington Northern Santa Fe (BNSF). Macheras said BNSF has hundreds of towers situated along 65,000 miles of railroad track that were originally built for railroad communications and operations. Many of those towers are commercial grade, which makes them suitable for wireless carrier colocation, and Parallel Infrastructure has the exclusive right to operate them while also building brand new towers within the BNSF right of way.

Macheras sat down with WIA to share his vision for Parallel Infrastructure and his thoughts and perspectives about the wireless infrastructure industry.

How does Parallel see tower infrastructure developers relative to the carriers they serve?

The carrier community which we service is significantly more dynamic and more complicated than we are. That’s just a fact. They need to keep their eye on everything from should we buy a Super Bowl ad, to should we do a deal with Apple with regard to iPhone 15? What’s our pricing model? Should we open a new kiosk in downtown Boston? Should we own content? My head spins a little bit, and I realize our business really is pretty primitive compared to what they have to deal with. Do we as a partner to the carriers really want to overcomplicate our business recognizing that their business is already complicated? Shouldn’t we recognize that our business is simple and share that simplicity with the carriers to relieve them of some of the burden they already have? If you think that you are the center of their universe, you are gravely mistaken, because you’re not. And it’s important that we all recognize that. It’s not to diminish your value. It’s to put it in perspective.

What are Parallel Infrastructure’s core principles?

We believe the best way to treat our customers, suppliers, service providers and landlords is as partners. Partners look out for each other. Partners collaborate and believe that a rising tide lifts all ships. This mentality is DNA deep at Parallel. Additionally, we believe that being honest and transparent is integral to operating a sustainable business. Exhibiting integrity is not only the right way to operate but it’s the only way. Likewise, safety is paramount. We have an ethical, moral and bottom-line obligation to ensure we build and operate safe sites. It is tragic when someone is hurt on a tower development project. Everyone deserves to go home safely at the end of each day. On that note, the word “everyone” is important: at Parallel we want everyone to feel like they are empowered and engaged. We are highly selective when we recruit because once a team member is onboarded, we trust them. We can’t have decisions bottlenecking when we’ve taken the time to hire the best of the best. It would undermine our mission, which is to deliver for our customers with speed, flexibility and reliability. We want to be the drama-free partner of choice for the wireless service providers.

What does Parallel Infrastructure do to be the partner of choice for carriers?

While every company says they’re the best, and certainly the leadership of a company is going to go around saying they are the best, I don’t know if we are the best or not. It doesn’t really matter if we’re the best or not. What matters is the perception the carriers have when they think of us. The carriers are looking for reliability, number one. They are building a network that their customers need to be reliable, and so they in turn need reliability from their partners. Second, they need flexibility. These networks change on a dime. By the time you’ve unwrapped your new iPhone there’s a new one that’s been pushed out to the market. This business is constantly changing, and their priorities change, and we recognize that. Beyond that, it’s about just putting your head down and getting the job done, recognizing that they need to do it quickly and they need to do it in the manner that was advertised. The worst thing that can happen to a business, I think, is to be perceived as setting the wrong expectations with your customers or setting the wrong expectations with your investors or partners. It doesn’t mean that you understate what you’re capable of, but it certainly means that you don’t overstate what you’re capable of and you don’t make promises that you cannot deliver on. You don’t have to be the cheapest. You don’t always have to be the fastest. You don’t always have to be at the so-called best. What you have to be is reliable. You have to be flexible. And you have to be in tune with the needs of your customer. If your customer is happy with you then de facto maybe you are the best.

What makes Parallel Infrastructure’s railroad operations valuable?

While the vast majority of our organically built towers and our development pipeline have nothing to do with railroad right of ways, railroad ROWs are unique real estate assets that are worth pointing out. The railroads are the lifeblood of transporting cargo all over the country. We all like to go to our grocery stores to buy a box of Frosted Flakes. Well how did that box of Frosted Flakes ever get there? The railroads have their fingerprint on it. Truck drivers are important too, don’t get me wrong, but the railroad is definitely moving large quantities of goods across the country. Their tracks inevitably go through No Man’s Land, we all know that. But they also travel into the urban centers. They have to terminate near places where people are — outside of Chicago, Los Angeles, Boston, New York, for instance. There are freight rails that come into those areas and they absolutely naturally have footprint around them that is suitable for communication towers to service the areas nearby.

Tell me about any other unique real estate Parallel has access to.

We have a unique program to provide carriers with access to domestic military bases, locations which typically require a developer to go through a lot of hoops to build a tower.  With our partners we will have already navigated those hoops, in advance.  Because there’s a constant ecosystem of back and forth on these bases, the military recognizes that they need to provide better coverage and more amenities to their service members. We don’t live in the Dark Ages anymore. It’s 2021. Service members want to have their iPhone just like you and I.  We can help make that happen by providing the necessary infrastructure on those bases to our carrier partners.

What trends do you think are shaping the wireless infrastructure industry?

There are a variety of different trends that this sector is experiencing. I break them into two categories: those that are responsive to perceived carrier needs and those that are opportunistic. The former includes the bundling of services and/or solutions that the tower business can provide to a carrier and the latter is focused on new market entrants that make unsustainable offers to shock their way onto the carrier’s radar. The former is really up to each business to determine. Every business is different, and each business needs to decide for itself what solutions and services they are confident they can successfully provide to a carrier. The latter is disruptive, but not in a good way, and is typically the product of misinformed businesses making promises they simply can’t deliver on.

What is the climate at the local level for siting?

Local jurisdictions are mandated by federal law to provide due process for the development of critical infrastructure. Even in the peak of COVID, the Department of Homeland Security issued letters to companies like ours to ensure 24/7 access to sites to ensure that communication infrastructure continued to be developed and maintained. This action on the part of the federal government just reenforces the notion that what we build is “critical” infrastructure. On the one hand, jurisdictions – zoning boards and the like and even the court systems – cannot go virtual and in the other hand make it impossible to develop the very networks that allow them to go virtual. That said, some jurisdictions continue to have decision makers that would prefer to deny the siting of a new tower due to local political pressure and then force tower developers to seek the wisdom of the courts to order the necessary approvals. We end up in the same place, we just take a longer route, and the local politicians can point to the judiciary as the reason a tower was built. It adds cost and time, but it doesn’t stop the actual process completely in its tracks. That said there’s also a good number of jurisdictions that do a fair and decent job of allowing tower companies to move through their siting processes and hopefully come out the other end in a manner that’s good for everybody.

Why is colocation important not only to your business but the industry as a whole?

Colocation promotes sustainability and efficiency in the development of infrastructure. It is far less capital intensive and much more environmentally friendly to develop one element of passive network infrastructure – in this case, a tower – than to develop carrier-centric macro towers. Additionally, colocation facilitates speed to market for the carriers – it is much faster to colocate than to site and then build a new tower. My basic thesis when it comes to site selection from a towerco’s perspective is that ideally when an anchor tenant commissions you to develop a tower for them, you as the tower operator are able to articulate why that tower will be attractive to subsequent tenants. There is some science that you can wrap around your analysis to give you some confidence you are in fact correct that the tower is desirable to future tenants. Where it becomes less science-based and more art is the timing of when those subsequent tenants will want the tower. That’s the perpetual struggle that tower companies have in general: it is not identifying whether or not an asset of theirs has desirability beyond the anchor but when that desirability will actually consummate.

You have been in the wireless tower business a long time, what has changed and what hasn’t?

Clearly the technology has changed. The use of the networks has increased dramatically, and the type of new uses are akin to something from a science-fiction novel. The introduction of the iPhone effectively changed everything – forever. The utility of current smartphone devices – assuming they are tethered to a reliable network – is simply amazing. The need for more cell sites – both macro and micro – has increased as a result of the technology changes and those technology changes are the response to consumer demand for more and faster content and capabilities. Broadly speaking, the carriers have three tools available to them to supply the bandwidth that the modern superhighway requires: they can deploy more spectrum, make their current spectrum holdings more efficient through improved technology – represented by their migrations from 2 to 3 to 4 and now to 5G – and they can deploy more cell sites.

What else do you want people to know about Parallel?

My answer is relatively short and sweet. I would like Parallel to be known as a preferred partner that the carriers empower to develop critical infrastructure that benefits all of us as we march forward in what is undoubtedly a wireless revolution. I would also want all the key members that work in this sector, including the carrier network teams, the towercos, the fiber providers, the equipment manufacturers and the service providers to remember that we all need one another. We are part of a delicate ecosystem that creates the foundation upon which many other sectors of the global economy rely. What we do together is amazing. It really is amazing. End of story.