KEY POINTS:
Malcolm Dick's phone keeps going to voice mail. The telecoms industry veteran, founder and now executive chairman of CallPlus, is testing out a new messaging system his company will soon release to customers.
He hasn't quite got the hang of it yet.
"There's definitely something wrong," he says
when he calls back.
Known for his low-key style and innovative mind, Dick could well be talking about the telecoms industry in general.
The 11-year-old CallPlus may generate annual turnover of $80 million, employ close to 200 people and have grown 30 per cent in the past year, but it still only claims 0.7 per cent of the telecommunications market.
"It hasn't changed a lot," Dick admits.
After Telecom and TelstraClear, the company is the third-largest full-service telco in the country, grouped with a handful of small players trying to take on Telecom's calling monopoly.
Local loop unbundling (LLU) is supposed to be their big chance of gaining a foothold, though Dick, numbed by years of regulatory chain-dragging, is sceptical.
"Overseas experience has shown it doesn't really get going for five or six years," he says.
LLU, naked DSL, unbundled bitstream - they're all technical things Dick has been pushing for nearly a decade. Now that he's about to get them, he's looking to the wireless technology WiMAX to give CallPlus the reach it has been lacking.
A reorganisation announced this week will split CallPlus into four divisions with different management, sales and marketing and product teams. It's an acknowledgement of the changing shape of the telecoms industry, where a mix of regulatory concessions and new technologies may finally see some real competition in the broadband and calling market.
It's a wonder Dick, who with his now estranged wife and business partner Annette Presley made a fortune in the late 90s building a toll calling business in Australia, has even stuck around long enough to see such change. He's certainly not in it for the money - the National Business Review put his and Presley's combined fortune at $70 million last year.
"I enjoy doing this," he says.
"There aren't many ways to make a difference in New Zealand. We think we know this business pretty well, so it's an area where we can do something."
Despite Slingshot picking up the NetGuide award for internet provider of the year this month, it's been a tough time for Dick.
"It hasn't been an easy year, everyone was having these huge issues relating to Telecom's network," he points out.
The real trouble arrived in the form of the very public breakup of Dick's marriage to Presley, who also ran Slingshot.
It was the kind of bust-up no one in the industry would ever have expected Dick to get tangled up in.
While Presley, who has two children with Dick, was always the one staging the publicity stunts - giving bread away on the steps of Parliament, offering to take Theresa Gattung's job, appearing in the reality TV show Dragon's Den, Dick was the one holding the fort in the CallPlus office, working on the nuts and bolts of the business.
But he showed last June he could create a media storm of his own when he issued a press release claiming Presley had decided to step aside as chief executive of Slingshot to "pursue new opportunities".
He didn't forewarn Presley, who was holidaying on a yacht in Fiji at the time. Her indignant denials to reporters that she was stepping down made for one of the more bizarre business stories of last year.
Dick got his way. Annette is no longer the public face of Slingshot.
"She's still a shareholder in the business. It hasn't really been resolved," he says, without a hint of bitterness or regret.
Presley is still listed as the chief executive of Slingshot on the company's website, though Mark Callander, a longtime CallPlus executive, was made general manager of Slingshot in last week's restructuring.
If there's a pressing reason to put the baggage of the past behind him and CallPlus, it's that Dick may soon have US$450 million to invest in New Zealand courtesy of a Japanese group.
It's the largest sum of money any player has indicated it is willing to put into the local telecoms market in years. The Japanese interest, says Dick, is in building an alternative to an incumbent network using WiMAX wireless technology to offer phone and internet services.
"They're one of the huge Japanese investment banks. They've set up a telecoms division and are trying to pick the new access technologies. They've invested in other WiMAX embryo businesses around the world as well."
A few things have to fall into place before the money begins to flow. Securing enough radio spectrum to offer the services nationally is crucial.
The industry is awaiting a Government-run auction of 2.3GHz spectrum which is suitable for WiMAX. The action was to begin this month, but has been put off while the Government decides how to sell it.
"The importance of this spectrum is it is the key spectrum for the rollout of the new broadband wireless services," said Communications Minister David Cunliffe.
Dick and his fellow executives Graham Walmsley and Martin Wylie have been urging the Government to exclude Telecom and Vodafone from the auction to give second-tier players a chance to grab enough spectrum to roll out WiMAX nationally.
Dick said: "If they just want to get as much money as possible out of the auction they should let them in, I guess. But if they're serious about generating competition they shouldn't.
He points out that key players have been excluded from spectrum auctions overseas. "In Australia it happened with the 3.5GHz local loop bypass spectrum. They banned Telstra and Optus from participating.
"The other thing they actually do in parts of the world is a beauty contest. They actually give the spectrum to someone they like the look of."
Vying for spectrum also will be Woosh Wireless, which has already attempted to build a national wireless network using different technology, but struggled to gain traction.
Dick says WiMAX has a better chance of succeeding in a mass-market than the IP Wireless technology Woosh chose to use.
"I think it was probably the wrong technology. But I take my hat off to them. They've paved the way for us."
If the availability of spectrum will determine whether CallPlus' network plans come off, the company hasn't shelved its WiMAX plan in the meantime. It has spent $3 million building and testing Blue Reach, a network in Whangarei where small businesses and residential subscribers can sign up to a wireless phone and internet package priced from about $80 a month.
The cost of WiMAX equipment and installation is high but expected to drop quickly, says Dick. Even then it is likely that CallPlus will wholesale services from Telecom or take advantage of local loop unbundling to access inner city areas, saving WiMAX for suburban areas, provincial towns and rural regions.
The Japanese funding could be used for "WiMAX or any other access technology we need. We'll use WiMAX with local loop unbundling. The challenge is having enough spectrum to do it on a large scale."
A former shareholder in internet provider ihug, Dick is surprisingly relaxed about the company's purchase by mobile giant Vodafone.
"It didn't really worry us," says Dick, who believes previous owner iiNet was not a good fit with ihug.
"Iinet was never really interested in the New Zealand market. They only wanted the Australian part of ihug, but we wouldn't sell it to them."
It's likely CallPlus will soon be selling Vodafone's mobile service through a wholesaling arrangement, but Dick sees the voice over internet protocol (VoIP) technology his fixed-line customers are already using increasingly being applied to mobiles as well.
"A lot of the high-end phones have Wi-Fi and VoIP capability built into them. I come into the office and my phone switches over to Wi-Fi," says Dick.
It means that where there is coverage, subscribers will increasingly be making phone calls via a wireless link to the internet rather than the mobile phone network.
WiMAX also allows for mobile devices to connect to a network for calls and broadband services.
"But the jury is still out in our minds on mobile WiMAX," said Dick "There isn't a lot of phones around yet."
With the investment from the Japanese, Dick said CallPlus would look to raise money this year to expand. A share market listing is not on the cards, however.
"We haven't seriously looked at doing that," says Dick. "We think we can do it through private equity, from local and offshore sources."
MALCOLM DICK
CallPlus executive chairman and founder
Home: Auckland
Age: 54
Education: Auckland Grammar School, no tertiary education
Career:
* 1972-1988: Freightways (various IT roles)
* 1988-1992: Netway (a Freightways-Telecom joint venture)
* 1993: Formed Call Australia with Annette Presley
* 1996: Formed CallPlus (returned to Auckland to run it after selling Call Australia in 1997)
* 2005: Launched WiMax venture Blue Reach
