Profile: The sky’s the limit

From Australian Internet industry pioneer to dotcom rich kid, Jason Ashton, now 35, is facing probably his biggest challenge to date – managing a public company whose shares have steadily fallen since its IPO 18 months ago amidst an increasingly competitive wireless Internet industry.

BigAir, the company Ashton co-founded with ex-PowerTel executive Patrick Choi, was a pioneer in wireless broadband Internet access and remains at the leading, even bleeding edge of alternative carrier infrastructure. The company’s latest projects, which include 10Gbps wireless Ethernet links, tread a path no other Australian company has attempted from a technology perspective.

This is where Ashton wants to be, however. Not content with following a “cookie-cutter” approach to broadband access, Ashton continues the pioneering ways that saw him launch one of Australia’s first Internet Service Providers back in 1993.

“It’s not like you can buy a book at Dymocks that says this is how you do a wireless rollout,” he said, comparing the “bleeding-edge” millimetre wave systems the company is putting together to the DSLAM rollouts most Australian ISPs are undertaking.

Born in Sydney in 1972 and schooled at Sydney Grammar, Ashton first did a University of Sydney science degree, majoring in physics and math while working part-time in the IT department of a printing company. He then started and subsequently abandoned a law degree, but has since managed to fit in a Masters of Commerce degree from the University of New South Wales.

Back in the early 90s, the year after his first graduation, Ashton and three buddies were frustrated because they couldn’t get Internet access after they left university. To remedy this they decided to start a business providing the services to Sydney companies who they figured would gladly pay to access the Internet.

That wasn’t as easy as it might be today. Back in 1993 the Internet was still an embryonic network of mostly research and tertiary institutional computers represented in Australia by the Australian Academic and Research Network (AARNet). This meant universities promised the only hope of interconnect, so Ashton, along with MagnaData co-founders Luke Carruthers, Mark Cramer-Roberts and Vivian Stewart had to lobby the AVCC (Australian Vice Chancellor’s Committee) to give them access.

“Telstra didn’t even have an Internet connection available for us then,” Ashton told CRN. But the AVCC would only give them access at Melbourne University which provided Internet services for dial-up modem users.

The fact that MagnaData was based in Sydney meant the fledgling company had to interconnect via a Telstra 64k ISDN circuit between the two capitals. Along with a handful of other pioneering ISPs such as OzEmail and iiNet, MagnaData started pounding the pavements, explaining what the Internet was and convincing companies they needed access to it.

High tech
“We were out pitching the Internet to people who didn’t even have an email address never mind a website,” he said about pre-web days.

Initially MagnaData’s infrastructure consisted of a Unix 486 and a Cisco router sharing a 64Kbps link to 14K modem users. Later though it became the first company to offer high-speed services using Symmetric HDSL which allowed Megabit speeds over copper after finding “a tricky way to do it over Telstra pair gain”. Something Telstra was not all too pleased about according to reports.

This was back in the days before deregulation in 1995 and it was probably those days that sparked Ashton’s dislike of dealing with Telstra that ultimately led him to becoming a carrier in his own right at BigAir.

By the time MagnaData was sold to Davnet in 1999 there were only two of the original co-founders still involved in the business. All four became instantly wealthy though when Stephen Moignard’s Davnet paid them $16 million in cash and shares for MagnaData. Some of them took the cash, but Ashton, still committed to the business, took less than half his share as cash and opted for eight million Davnet shares at 30 cents a piece. Those shares later reached nearly $6 a piece.

“I don’t begrudge going to work. I enjoy it. It keeps you young to an extent. I think if you retire early you run the risk of ending up with cancer or something,” he said, explaining why he hasn’t retired yet.

Ashton stayed on to manage the company and initially served as COO with Davnet until 49 percent of the Davnet Telecommunications division was sold to Japanese telco giant NTT for $119 million. Ashton was appointed president of the merged entity and stayed on until late 2001 when the company was finally bought entirely by the Japanese. Ashton duly exited the company.

New beginnings
By the middle of 2002 Ashton was jumping feet first into a new venture. One that would see BigAir become the first licensed carrier in Sydney to commercially launch a wireless broadband service using Class Licence spectrum. One that would go on to an IPO and again one that Ashton seems determined to follow through to conclusion.

“I got frustrated with always buying things from Telstra,” he told CRN. “So when the opportunity to start wireless provisioning without buying anything from Telstra, I jumped at the chance.”

That chance had come via an industry colleague he met during his DavTel days. Patrick Choi, co-founder and now company secretary and CFO of BigAir, moved to Australia with Williams Communications before later joining PowerTel as director.

It was after a lot of work that the company first officially launched a commercial wireless service in western Sydney in 2004, but it was only another two years until BigAir listed on the ASX in April 2006. The IPO sold 40 million 25 cent shares worth 42.5 percent of the company. Today its shares are worth just seven cents and have been as low as 2.2 cents in the past year. Ashton remained a shareholder in the business and stayed on as CEO.

“I still enjoy what I do. I feel like I’m learning. I like what we do here and we are doing something really unique. We are not at a scale where there is no innovation,” he said.

He describes the float as “very taxing” and “very distracting” to the business. The company had to delay its IPO, originally scheduled for December 2005, when it announced a deal to buy the wireless access business, including 3000 subscribers, from fading ISP, OzEmail.

BigAir had already recently acquired another wireless access business, Veritel, which had 4000 subscribers under wholesale agreements with iBurst and Unwired. The two deals must have kept Ashton and Choi very busy in the lead up to the float.

Ashton said the IPO involved a lot of work “doing non-revenue generating” activities such as roadshows and pitching to potential investors, plus a lot of work setting up the prospectus and doing legal and accounting work. “We are glad we did it. At the end of the day [the board] is there for a reason, governance is critical. And having a board is good to bounce ideas off.

Going for growth
The post-IPO period began with another few acquisitions. First an additional 800 iBurst customers joined BigAir when it took over T3 Wireless, a subsidiary of Pacific Internet. Then in July 2006 the acquisition of W Home Communications, a subsidiary of E-Pay (which was once SkyNetGlobal), added another 1000. With two deals Ashton had added more than a million dollars in revenue. At the end of the first fiscal year as a public company shareholders were rewarded with a 1100 percent increase in revenues. The shares spiked but couldn’t regain their IPO price despite the good news.

A year later, trading results for the first full financial year as a publicly listed company recently showed revenues had grown by 32 percent and now stood at $9.1 million, most of which was the result of organic growth. Gross profit had grown 60 percent to $3.2 million (double the revenue growth rate), but with an ambitious network build still underway, the company reported an eight per cent reduction in EBITDA loss of $0.98 million. During the year the company repaid all its loans, wrote off $300,000 in Veritel Goodwill and finished the year with $2.7 million in cash.

But the business still needs some work. In the last fiscal year the high-margin fixed wireless share of operating revenues represented just 24 percent of the business. This highly profitable part of BigAir could be accelerating though. In the first month of the current fiscal year, it accounted for more than a third of operating revenues and nearly two thirds of the profit (65 percent).

Mobile wireless is an increasingly competitive business and BigAir has no infrastructure of its own. Ashton needs to grow the fixed wireless portion of revenue to counter the threat posed by mobile phone carriers.

“At this point in time I am still pretty happy doing what I’m doing,” he said. “I would like to get involved in sales every day, often the difference between winning and losing a piece of business comes down to innovation and not a cookie-cutter solution.”

“Maybe in 12 months’ time, hopefully, it will be cookie-cutter approach, but for the moment we are very focused on building the business. We have got a lot yet to achieve,” he added.

Written by Adam Gosling