As his former company turns 10, the founder of 2degrees, Tex Edwards, looks back on the turbulent journey - and what's next.
What a fabulous milestone for the team at 2degrees, 10 years of making a difference to the lives of Kiwis everywhere. Every day I enjoy seeing the company continue its legacy of challenging incumbents and setting the Commerce Commission and MBIE an example on how public policy interfaces with achieving great outcomes for consumers and innovation.
But it shouldn't have taken 13 years for Kiwis to get number portability or more equitable distribution of spectrum. Getting 2degrees started was a long haul. I am sure the Commerce Commission will continue to look at bottlenecks in new industries and understand the impact of dominant OTT (Over The Top ) software players on infrastructure investors.
The company wouldn't have got going if MBIE hadn't graciously accepted my casually scrawled personal cheque for $13,452,321 for the 1800mhz spectrum in March 2001, with the NZD amount handwritten on my GBP cheque book.
It took MBIE four weeks to cash the cheque, by which time I had rushed back to London and, after a hell of a struggle, managed to bridge finance it. That cheque was proudly pinned to the office wall for several years.
So confident was I in the new Telecommunications Act of 2001 and the Government's determination to have a competitive telecommunications market that I rented a car for three months.
However, I soon noticed how well-entrenched incumbent operators Vodafone and Telecom were in the Government's policy formation, and eight years later I was still driving the same car.
I still drive it today , after I was virtually given it by the nice bloke at Avis.
I was grateful for the new investors understanding how stressful it was for an entrepreneur having a $10m mortgage on a $500,000 house and buying me out of my stake at an appropriate time.
I am very grateful to Trilogy International Partners for financing the company and delivering on the mission. Brad Horwitz deserves a knighthood for his delivery to NZ as an investor and board member. And he has been very respectful to Māori along the way.
The telecommunications industry has been a great career journey after 15 years in international banking. I enjoyed working in Africa, the Middle East and PNG on projects that transformed countries. It was Strive Masiyiwa and his group of engineers who taught me how to build mobile networks in Zimbabwe after I helped finance their company.
I am still friends with Strive today and still a shareholder in the Zimbabwe mobile network.
That proved a great training ground for the rigours of competition combat in New Zealand and the understanding of how to build cost-effective cell towers.
In 2016 when I sold my shares in 2degrees and delivered my exit speech, I warned about the problems of dominant over-the-top or "OTT" operators changing the value chain of telecommunications. Switching – the core telco service - used to be carried out by telecommunications infrastructure owners. It's now done by OTT software operators like Facebook, who have dominance and collect data as calls are made.
Today, it's really strategically important for infrastructure investors to understand the impact of the FTC, ACCC, and EU commission's investigations into OTT operators and the dominant internet software providers. The network effects of winner-take-all business cases can't exist for ever and, I believe, will eventually be regulated.
There is a case for the US Federal Trade Commission to deal with Facebook in the same way to how they dealt with ATT in 1980. IT's quite possible that Facebook will be forced to un-merge WhatsApp and Messenger from Facebook. Watch this space.
Today I'm no longer in the telco business - other than as a director of Hawaiki undersea cable, which provides much needed competition to international internet connectivity to New Zealand.
The area that has now captured my focus is affordable housing. I have been totally inspired by how motivated politicians and officials are to transform the way we assemble quality and affordable houses. I'm backing their enthusiasm. I have used the capital I received from selling my stake in 2degrees to fund research into OSM (Off Site Manufacture) of houses, using robots to build panels and volumized pods.
I have toured 22 international house-building factories and have been studying international best practise in affordable house construction. I'm confident that OSM, is the technology of the future: it's the new GSM and will do to affordable housing in the 2020s and 2030s what GSM did to telecommunications in the 1990s and 2000s.
There is no doubt in my mind that innovation and scale will solve our housing affordability crisis, once again, an industry transformation making a positive difference to the lives of Kiwis.
Tex Edwards founded 2degrees, which is celebrating the 10th anniversary of its commercial launch today.