Al Gore never exactly said he invented the Internet.
And neither have Karl Vollbrecht and Tim Chase.
But the two Milwaukee entrepreneurs sure had their hand in the heady, early days of commercial Internet access in southeastern Wisconsin.
Having sold their successful high-speed connectivity service, alpha dot net, to PSInet in December of 1999, the two are now starting from scratch, offering hard-wired and fixed wireless connections to businesses in southeastern Wisconsin. Onlight – the duo’s new venture – was formed as a limited liability corporation in May of last year, and by Dec. 15 was up and running with a handful of commercial accounts.
Vollbrecht purchased a 14,000-square-foot building at 757 N. Water St. The firm is occupying the second floor and leasing the remaining space.
"We had to own our own building," Vollbrecht said. "This is important because we needed to have our own facility where we could control things. What we found in the past was that as soon as a landlord finds out you are making money by bringing fiber into their building, they start charging by the linear foot. It’s like putting a surcharge on power. It’s absurd."
The firm works with companies that spend $500 a month and up on their Internet connectivity. They are wagering that their exclusive antennae locations on the roof of the Firstar Building – which provides commercial clients high-speed Internet access via antennae on their own roofs – will win them some turf.
That type of access eliminates outages that result when a misguided backhoe bucket collides with the wrong cable down the block. Wireless connections also deliver savings and increased freedom from contractual obligation for business users because they spare the cost of running cable the last mile to the building. Internet Service Providers (ISPs) will often recover this cost by requiring longer-term contracts.
Dollars and sense
Despite the bad taste that the bursting of the Internet stock bubble left in some people’s mouths, Vollbrecht emphasized that it is possible to run a successful Internet business.
"People have started to think they are one and the same – Internet, bankruptcy – bankruptcy, Internet," Vollbrecht said. "But that’s not what we are about. We aren’t in this to lose money for a long time in the hopes that eventually we will make money."
According to director of sales and marketing Nick Laird, another difference between Onlight and the failed Web-related businesses is the commitment to grow in a controlled fashion.
"We need to make the first step work before we proceed to the next," Laird said about the prospect of expanding wireless beyond the downtown area. "That was the undoing of about 90% of the failed dot coms right there."
History repeats itself
As Onlight gears up for growth, its founders are finding potential in their former client list. PSInet, the "Internet supercarrier," overextended itself, purchasing more than 75 ISPs and other companies domestically and overseas, including the $1.7 billion Metamor acquisition, which added IT consulting and systems development to PSINET’s roster of services.
While PSInet entered regional markets, assembling a formidable fiber-optic network, critics charge that it did not maintain local presences in markets it had bought into. Some clients jumped ship due to what Laird describes as failure in the "soft" side of the business (service, billing). Other clients fell by the wayside in the crash of the Internet stock bubble. In November of 2000, the company further irritated its clients when a secret deal it had signed with a purveyor of spam came to light. The agreement netted PSInet a fee of $27,000 for allowing a Slidell, La., company, Cajunnet, to send millions of unsolicited e-mails on its system.
PSInet declared bankruptcy in June of 2001.
Vollbrecht and Chase, who founded alpha dot net in 1994, stressed that while they had received plenty of offers to buy their company, the sale of their ISP service to PSInet was due in part to their belief that PSInet had the resources to properly care for its customer base.
It is not surprising the duo was in the dark about how precarious PSInet’s grip on solvency really was. In a development that has new relevance given the Enron scandal, a group of PSInet investors has sued the company alleging its management made false claims about the company’s cash position and the nature of the Metamor purchase. Attorneys representing preferred and common stock holders and bond holders point to statements made in PSInet’s August 2000 prospectus.
According to a complaint drafted by Daniel Sommers, a partner at Cohen, Milstein, Hausfeld & Toll of Washington, D.C., "As now revealed, defendant issued materially false and misleading statements in its prospectus concerning its financial results, the impact that the merger with Metamor was having on the company, the profitability of its consumer ISP business and the company’s financial ability to execute its business plan."
Chief among these allegedly false statements, according to Sommers, is the role of Metamor in the PSInet’s strategy. While statements from PSInet officials suggested the operations of Metamor would be merged with PSInet to create a comprehensive package of information technology services, Sommers claims that in fact, PSInet intended all along to sell off substantial portions of the company."
An attempt by PSInet’s attorneys to have the complaint dismissed was denied by United States District Court Judge Leonie Brinkema in March of last year. The case is pending in the United States District Court for the Eastern District of Virginia.
Grew from co-op
The firm Chase and Vollbrecht sold to PSInet had grown from a rag-tag co-op of area firms who shared a T-1 connection to the Internet hub in Dallas that Vollbrecht and Chase had established for their software programming firm, Technetics.
At the time, many people in the state were using Wiscnet, a connectivity service offered through the University of Wisconsin system. Technetics had been using an unofficial connection through the University of Wisconsin-Milwaukee – gained through programing work the firm did for the university – to transmit programs to automotive clients in Detroit. Instant transmittal of data helped compress the project timeline as days devoted to courier transport were eliminated.
"Wiscnet used a series of 23 connections to get to the Internet," Vollbrecht said. "So naturally on any given day one of those connections could be down. That’s why we went to Dallas."
Technetics began granting access through its T-1 to other area businesses and, by 1992, Vollbrecht found his employees’ time was consumed more and more by the demands of working with their connectivity clients. So alpha dot net was spun off as its own entity.
"I remember that Karl Vollbrecht was the toast of the town when he started alpha dot net," City of Milwaukee CIO Randy Gschwind said. The city was an early alpha dot net client. "They were the first locally-owned ISP in the area. As I recall, alpha dot net gave the city library a one-year connection to the Web for free as kind of a marketing gesture."
Later, in an effort to gain an access point closer to Milwaukee, Vollbrecht and Chase would be instrumental in founding the current system of Network Access Points (NAPs) through the National Science Foundation. The current system of hubs – including one in Chicago – gives ISPs nationwide more reliable connectivity. The information superhighway now has four "onramps" located in San Francisco, Chicago, New York and Washington, D.C.
"We authored the peering agreement that made that system work," Vollbrecht said.
The first
peering agreement
At that time, according to Chase, none of the NAPs had standard agreements that allowed smaller providers to share bandwidth and data. Peering agreements help small ISPs because if they can send data across each other’s networks, they do not have to pay a major provider like AT&T, MCI or Sprint. Major players with huge networks tend not to charge each other for bandwidth, but do charge smaller entities.
"When a NAP has a multilateral partnering agreement, it makes it more attractive for new providers to connect to the NAP," Chase said.
The peering agreement Chase and Vollbrecht authored covered the financial and technical standards that would allow data exchange by signatories.
Eventually, the Chicago NAP had about 75 agreement signatories out of about 120 users.
In more recent years, as good-sized providers like Onlight have divested from peering agreements, the utility of the peering agreements has changed.
"Now, the peering agreements help keep local traffic local," Chase said.
This means a computer accessing a server in the Midwest would not necessarily be bouncing the request around disparate parts of the country.
March 15, 2002 Small Business Times, Milwaukee
