Fine tuning the wireless

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This article appeared in the Issue 185, 14 November 2005 issue of CRN magazine.

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BigAir managing director Jason Ashton is, at the ripe old age of 33, somewhat of an Australian internet pioneer, having founded his first company in 1993, sold it for a huge profit six years later, and then launched a wireless broadband ISP following a network build out, which is now set to list on the ASX.

Born in Sydney in 1972, Ashton always had an interest in computing. "I got my first Compaq portable with 10-inch green screen in 1983 — a big white box that I loved to play with as a kid. I was always tinkering with it, trying to gain an understanding of how the technology worked," he recalls.

After finishing high school at Sydney Grammar in 1989, Ashton completed a physics, chemistry and applied mathematics degree in 1992. He then commenced a law degree, which after about a year he decided was not for him, though he did later complete a Master of Commerce degree.

His appetite for business and technology had already been whetted by a part-time job he had taken at uni. "I was working on data collection systems in the IT department of a printing company called Diamond Press. It allowed me to indulge what was rapidly becoming a passion for two things — IT and commercial challenges," Ashton says.

Business opportunities

This led to Ashton thinking of his own business possibilities, and less than a year later, he and three school friends hit on an idea. "We all had an interest in the internet, long before it was the World Wide Web. In 1993, it basically consisted of Unix stations and bulletin boards. The only real online services being offered at the time were in programs such as freeware and shareware," Ashton says. At about the same time, Australia’s first ISP, OzEmail, was in the throes of launching.

Ashton and his friends realised there was an opportunity to offer higher-speed internet services to businesses primarily in Sydney’s CBD. They wrote a business plan and, with $100,000 in funding from family and friends, founded Magna Data with 12 14/4 modems hooked into a serial bus. "We plugged it into an SCO Unix box, which was a glorified 486 PC running at 266MHz, which was the fastest thing we could get our hands on back then."

They needed more modem lines and got one into one of the founder’s apartments, then lobbied AARNET and the AVCC (Australian Vice Chancellor’s Committee), which, Ashton says, was the only internet source in Australia at the time. "Telstra didn’t even have an internet connection available for us then," he says. They managed to get an ISDN connection provisioned from Telstra, though they then had the added problem of getting it from Sydney to Melbourne University to share with dial-up modem users.


Rapid growth

Charging about $35 a month, Ashton and his colleagues had the grand vision of signing up around 500 customers within two years. "What we actually achieved was over 3000 [customers] within the first six months," he says. This, Ashton says, was achieved by being able to innovate and offer internet speeds which, "long before broadband as we know it existed, were highly competitive".

Magna Data started offering services at 28Kb/s, then quickly moved to 56Kb/s when the faster modems were released onto the market, before provisioning ISDN lines and graduating to 128Kb/s.

By early 1994, Magna Data had eked out a respectable share of the burgeoning ISP market, along with other pioneers such as OzEmail, connect.com, IInet in WA and a few other smaller providers.

"We made a decision quite early on in the piece to pitch to business. We were not a big brand name, so we had to go and pound the pavement to differentiate ourselves as the serious business alternative," Ashton says. "Within four years, we had signed up virtually all the major law firms, major banks and Fairfax, whom we helped to build the Sydney Morning Herald website in 1995 with a lot of HTML coding.

In 1995, two years before the telecommunications industry was deregulated, Magna Data tested HDSL lines. They were also using Telstraprovisioned lines from their office to other offices. "Telstra would put copper together between exchanges — a piece of copper which ran all the way from point A to point B. We put an ADSL modem on top of that. However, because we could not actually go into Telstra’s exchange, we put HDSL over Telstra copper. They weren’t very happy about that and threatened to change the rules," Ashton says.

Starting in 1996, Magna Data was one of the first ISPs to offer a 2MB HDSL service (both ways) for $1000, seriously undercutting Telstra by using their copper and targeting the services to the business community, Ashton says.


Tidy profit

By early 1999, Magna Data had close to 10,000 dial-up customers and a core of more than 2000 high-quality SMEs and corporates using their HDSL services. Their turnover was close to $10 million a year and their staff number had grown to around 65.

In April of the same year, Ashton and his partners decided to cash out, selling the company to Davnet for just shy of $20 million. Magna Data later got segmented out to Davnet Communications, which was later segmented off to NTT when it invested in Davnet in December, 1999.

"We were pretty green, but we learnt a lot in a very short space of time, competing against the likes of Telstra. By the time we sold the business the market had become very competitive," Ashton says.


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