From publisher to retailer to...wireless wizard

In a business sense, David Spence has tried his hand at many things. His first foray into the IT industry was with publisher Australian Consolidated Press, where he landed a job in 1989 as general manager of computer publications, overseeing titles like Australian Personal Computer, PC Week and PC User. He had emigrated from Cape Town, South Africa, to Australia in 1988.

"Up until then, I’d never had a computer job or a telco role. I’d always been in retail or distribution," Spence says.

He left publishing and went back into retail (running Freedom Furniture) before joining Sean Howard who had raised $2 million to start OzEmail in 1995.

"Sean asked me to come and run it as managing director. We grew it until we listed it on Nasdaq and in 1999 we sold it to Worldcom. We split it into three: OzEmail became a retail business, the corporate business became UUnet and all the global customers went to Worldcom.

"I was CEO of OzEmail and UUnet. After a year with Worldcom I couldn’t hack them anymore so I left."

Spence also tried his hand at the satellite broadband business through Access One, and content through the float of Chaos Music and an online advertising business dubbed emitch, which is still in operation today.

"I thought content was the next big thing to get into after internet access. I was right and wrong.

"It was the wrong time. The only broadband network viable out there was ADSL and that means reselling Telstra and there’s no life for anybody reselling Telstra.

"The only other alternative was satellite but it was costing me a fortune in terms of installing each customer," he recalls.

Spence: You can get distracted - you need to sit back and look at where the world is going, the overall trends, not just Sydney

He admits it was a tough school. "I was trying all these things and they were not going anywhere," Spence says.

He chucked it all in and went back into retail, joining a business partner at retailer OPSM. In 2003, Spence sold out.

"The day I sold, Peter Shore [current chairman of Unwired] phoned me up and said, 'I’ve found some new technology -- broadband is going to be back in again and we’re going to build the network like a mobile phone network, and I shouldn’t miss this great opportunity'."

Spence recalls suggesting that building a new mobile network would be an expensive task. Shore raised $100 million, mainly from overseas investors, and together they launched Unwired.

Spence joined in January last year. "I’ve been a little bit smarter [this time] -- we’ve been more consistent building good systems and getting our marketing right. There was a mad scramble to get the network built in eight months, getting all the systems in, billing and launching the service."

The Unwired service was launched in August last year. Two months ago, the company announced it had secured 25,000 customers, mostly residential.

"We’re going along quite nicely. We’re tracking towards our break-even point for Sydney, which is about 70,000 customers, and we’ve got plenty of dollars left in the bank. We are now starting to work out how we are going to do the rest of the country," he says.

Last month, Austar agreed to trade some of its 2.3GHz spectrum licences to Unwired in a deal aimed at spreading wireless broadband further around Australia.

Unwired is also lobbying the government to get behind alternative broadband infrastructure for the bush. Spence claims Unwired is getting its message across.

 "We think wireless broadband is the only way to get it done in rural Australia." Unfortunately, companies like Unwired get ‘outmarketed’ by Telstra in those areas, Spence says.

He is adamant that the only way to get broadband quickly out to non-metropolitan Australia is for it to be wireless. "It will take 20 years and so many billions of dollars from Telstra to do it via the copper method.

"We built a whole Sydney network for $28 million, which covers 4.5 million people. We could do 75 percent of Australia with a capital expenditure of only another $150 million," he says.

Unwired is, of course, looking for more money. "To do the rest we need money, whether it’s going to come from investors or partnerships. I do think broadband needs to be rapidly rolled out across Australia."

The development of the forthcoming WiMAX standard will also drive wireless in the future. "What GSM did for mobile phones, WiMAX is going to do for mobile data. We feel we’re in a great position owning the right amount of spectrum and have a WiMAX road map.

"Once Intel starts producing WiMAX chips going into laptops, PCs, handheld devices and phones, you won’t need 'the rabbit' [the Unwired modem]," he says. "I think [with WiMAX] you’ll see a whole lot of new developments in the internet space because of the mobility of data.

"At the moment our customers download 40MB a day -- over 1GB a with peer-to-peer business going on will change the way things are done," he says.

"The cost of running out wireless broadband is a fraction of the cost of running DSL and it’s highly convenient and very easy to use."

Spence wants to see 50 percent of the Australian population covered by the time WiMAX is deployed in a chip inside laptops in early 2007.

"We like to employ people who are passionate about the business and who love the business and feel part of it -- from our CFO to our marketing person to our chief technical officer -- live and breath the business.

"If you can build that culture up and at the same time be focused and consistent with your strategy, then I think you can deliver. When things go wrong, as they do, they’ve got to join in and sort it out," he says.

Spence sits amongst his staff in an open plan office. "In the early days, customer service sat right next to me. I could see when they’re busy and when they’re not busy. I like seeing people make the right decisions and the idea is to get them comfortable where they can make decisions.

"There must be four or five people who have worked for me once before."

Small Brisbane and Melbourne Unwired offices will come online soon and would be staffed by only three or four people.

"That’s the beauty of the way we have set this business up -- we don’t need a lot of people. All the building of the network, we have outsourced to Ericsson; we outsource our fulfilment so we don’t have to get couriers and all that every day. What we’ve kept here is everything on the planning and project management side and facing the customer [marketing and PR]."


The business

"Peter Shore was right -- this coming together of the mobile phone and internet industry into this new platform is what the next five years is all about."

However, the problem with the industry is that things are so exciting that it is often hard to say no, Spence laments. "You can get distracted easily by competitive behaviour and you need to sit back and look at where the world is going, the overall trends, not what’s happening here in Sydney. I probably don’t travel enough."

Like many ISPs, if there’s anything Spence would like to see happen in this industry it would be the separation of Telstra between wholesale and retail. "I’m an absolute advocate of that -- much like what has happened with BT in the UK. But other than that, no, I have a lot of great friends at Telstra although they are fi erce competitors. I think strategically for the country [Telstra separation] would be better."

These days, Spence says he works hard Monday to Friday but keeps his weekends free for leisure activity. "One week a year I spend in the bush with a backpack on my back. I’ve been in Arnhem Land for a week. In five-and-a-half days I didn’t see another man-made thing. Not even a plane in the sky."