Jay Brown remembers the moment he knew Crown Castle, a provider of wireless infrastructure, would hit it big.
Nine years ago, only 25 percent of Americans used cell phones, which back then, weren’t the sleek, high-performing devices they are today. Add to the fact that they were primarily used for making calls, and the growth potential for a cell tower company like Crown Castle seemed pretty limited.
Then, the iPhone was introduced. Brown remembers watching Steve Jobs take the stage to introduce the revolutionary first iPhone. He waited in line for hours to buy one and took it back to the office to show it off. It was then, when he was searching the internet and sending photos with his iPhone, that he realized the company he worked for had an enormous opportunity.
On June 1, Brown took over as CEO and president of Houston-based Crown Castle International Corp. (NYSE: CCI), succeeding Ben Moreland. Prior to his role of CEO, Brown, an accountant by trade, served as CFO, treasurer and other various corporate finance roles for the company over the past 17 years.
Today, the business is still changing. Every day, more devices are being connected to the network, pinging billions of bits of data around the country, and it’s Crown Castle’s equipment that are responsible for moving that data around.
Is Crown Castle building its network from scratch, or acquiring existing towers and fiber lines?
We’ve done about $10 billion in acquisitions over the past five years. Of those, about $7.5 billion would have been acquisitions of towers, then about $2 billion of acquisitions of small cell-related spaces, which would be fiber and small cells. Going forward, it’s likely you’ll see us spend more capital in small cells than towers. Historically, we found acquisitions in the tower space, today the carriers have sold all of their assets, so the vast majority of growth in towers comes from adding equipment in towers, which is driven by data traffic today. As consumers use devices more, have more tablets combined with things like augmented reality, virtual reality or the internet of things, all of those require some sort of wireless connectivity.
On the small-cell side, we’re increasing the reach or scale of the assets, and on the tower side, you have much more of a large reach and the growth is adding additional equipment.
How do you keep up with all the new demand with devices coming on line?
The carriers have to deploy additional spectrum and equipment to keep up with the demand. There was a study that expects between now and 2020, the total data usage per consumer will increase threefold. The amount of growth is exponential, and a part of that is being driven by not only what we’re using the devices for, but all of the other ways the devices are being used. Take an app like Waze that measures traffic patterns and activity, where if you have the app on, you’re using the wireless network even though you don’t realize it. You may just be feeding information so other users are better able to plan their path from A to B. That happens everywhere.
What’s the next big growth market for Crown Castle?
We think it’s the U.S. It’s the largest and fastest-growing wireless market in the world. We think there is no better place to put capital than the U.S. The U.S. has done a very good job of balancing carrier returns over time and them being able to achieve attractive returns on the capital they put into their networks.
Where in the U.S.? Rural or metropolises?
It’s both. Maybe one way to think about it is that since 2013, our employee base is up about 60 percent. That is driven by the investment the wireless carriers are putting into network deployments, so we’re hiring additional people to help get the network deployed. From an incremental investment, the carriers today are putting in about what they put in the last two or three years. They’re continuing to add to the network on an annual basis.
So in an area like Houston, where are areas you want to invest heavily in?
We have 1,100 towers in the greater Houston area, many of which have been operating for the past two decades, and some of which have previously been in the hands of the wireless operators and we acquired them over time. If you look at small cells, we have systems in the Texas Medical Center, The Woodlands and Cinco Ranch that are up and running. Then we have systems coming on line in Discovery Green. We’re close, we’ll be ready for the Super Bowl at Discovery Green. We have systems going up in the Galleria, and one in the Greenway area just went up and is operating.
You have said currently that 90 percent of the business makeup is towers and 10 percent is small cell. Where do you see the balance evening out at?
I wouldn’t pin it down that closely for what the business is going to look like. A better way to look at it is, we think both businesses are going to grow, we’ll continue to see the carriers invest in the network and we’ll put more equipment up, but the growth rate in small cells will be higher.
What’s an event like the Super Bowl like for a network system?
The carriers will scale it for things they can see in the immediate future, and then as demand or usage gets close to the network capacity, they’ll add even more capacity over time. The networks have never built three years in advance.
We’ve done a number of Super Bowls and one thing we’ve found, in systems we’ve built for Super Bowl stadiums, you can go to a college campus today and there’s that much traffic on a college campus with maybe half the number of people in the stadium on Saturday, where that was only Super Bowl levels three or four years ago.
What’s the biggest challenge for you right now?
Access to talent. Finding folks to join the company can be difficult at times. When you’re in a business growing as fast as ours is, everyone is searching for talent, so locating and finding great folks is definitely a challenge for us.
Where do you find it?Competitors? Colleges?
We do both. We have a college recruiting effort where we look for skilled college folks coming out. We recruit in the industry, and we also recruit outside the industry. In a place like Houston, we find talented real estate folks, and we bring them in and teach them the business. With our most recent hire, our CFO came from energy, our new general counsel was the managing partner at Lock Lorde. Our two most recent senior hires have been outside our industry.
It has to be an interesting blend in the hiring pool between real estate and tech savvy, right?
Exactly. That’s the fun part as well. There’s this stable aspect to the business you typically find in real estate, but being tied to mobile usage gives a real growth tailwind to the business.
You mentioned hiring has been up 60 percent. Who are those people?
They’re a combination of (highly skilled and lower level employees). We have 40 offices around the U.S., so we would hire people around the U.S. in all skill sets.
What’s the hiring look like going forward?
We’re likely to continue to be in a hiring mode as we’re deploying these networks. We’re constantly looking to build out the team and get better.
What would your employees say about you?
They’d tell you I’m laid back and fun. There’s a sense in the role that people are a bit tepid when I’m in the room, so I try and bring down the walls and be a normal guy. If I can lower the amount of pressure in the conversation, people do a lot better. Practically, I try and take down the angst in the room and let there be a good, straightforward conversation.
This interview has been edited for length and clarity.
The Brown File
Age: 43
College: Bachelor’s from Baylor University
Hometown: Arlington, Texas
Family: Married, six kids
Hobbies: Golf, reading, spending time with kids, coaching their sports.
Leadership style: “I’m very laid back. I’m a delegator. My biggest aim is to get the right people in the right spots and make sure they have the right resources.”
Charitable causes: Board member of Living Water, which drills clean water wells around the world; Galveston Urban Ministry, which helps kids develop reading and other skills.
