Lighting the fiber optic loop

City’s superfast network gets first private customers

by R.W. Clever

It was just over a year ago that Mount Vernon Mayor Skye Richendrfer, in his official capacity, cut the ribbon for the opening of a facility that many hoped would help bring new high-tech businesses into the area.

The e-Tech Campus, as it was called, was to provide tenants with quality information technology services, video conferencing and high-speed, fiber optic connectivity. The lead tenant was WebEKG, a company offering business clients its expertise in what it termed application performance management for large-scale, multi-tiered development projects.

Basically, the company was marketing its ability to create software used in testing and monitoring business information systems to assure that they worked according to design before being deployed.

The campus property was co-owned by local developers John Ellis and Daniel Mitzel, along with Paul Schweikert III, president of WebEKG, in a partnership called EMS Properties.

Mitzel stated the hope of his partners on ribbon-cutting day by saying, “Technology companies are the future of this community.”

That, too, has been the belief of Richendrfer, a former software executive who has committed the city to that high-tech future by pushing development of the now-seven-mile fiber optic loop. The system has the ability to move huge quantities of data with lightning speed.

Heralded by many observers as one of America’s best small city mayors, the bagpipe playing Richendrfer has spread the gospel of technology in the Skagit Valley as a means of diversifying the area’s economy, long dependent on the agriculture, forestry and fishing industries – all in decline.

He was pushing the fiber optic system at a time when most valley dwellers were still trying to figure out how to work their TV remotes and the Internet was available to most only by means of a slow, dial-up connection.

“We’ve tried to position ourselves strategically for the future,” said Richendrfer. “Mount Vernon has done a lot of catching up because there’s a lot of catching up to do.”

Several government entities, including Mount Vernon, Skagit County, Skagit Valley Community College and others, are already plugged in to the loop. But it has taken years to prepare for the first private businesses to gain access.

That day has finally arrived. Under a contract with the city of Mount Vernon, CSS Communications of Bellingham has begun to connect the first private users of the network.

CSS says the first business in line for the fiber optic connection is Independent Marketing Services (IMS), which moved to Mount Vernon in January of 2001. The company performs contract services for the insurance industry, such as rehabilitating out-of-date files, tracking down policyholders to update information and convincing those with lapsed policies to renew.

Krishna Fells Mathison, chief operating officer of the company, was a deputy to former Insurance Commissioner Deborah Senn, now an attorney in private practice after her failed U.S. Senate race in 2000.

Mathison said she moved the company to Mount Vernon from Redmond because of the lifestyle and the incentives offered through Gov. Gary Locke’s economic vitality initiative. The program was created by the governor to encourage businesses to relocate into economically distressed areas. Skagit County, with its declining agricultural and natural resource job base, is classified as economically distressed.

Part of the governor’s program includes a telecommunications pilot project, which offers companies that depend upon information technology tax credits to build or remodel facilities in distressed counties.

Locke’s office provided a $500,000 grant to Mount Vernon to expand fiber optic infrastructure based on the location of IMS and WebEKG in the city. Skagit County’s hard-working economic development association helped bring the two companies to the community.

IMS is a significant user of information technology. It receives thousands of files from its insurance company clients every week via its internet connection.

“We used to take a whole day to download data,” said Mathison. “Now it will just take a couple of hours.”

She said her company’s needs are not so much for bandwidth as speed.

“We’re not like WebEKG; we don’t work records online,” she said. “We only want to use the data. We don’t want to keep it.”

Mathison said her company had delayed any major capital spending on information technology in order to take advantage of the fiber optic system. Her new connection should be up and running within the month.

Business customers like IMS will pay about $400 for the equipment and installation by CSS and a monthly user fee based on the numbers of computers being connected.

Robert Janyck, sales manager for CSS, says that the system will be “a little spendy” for the average residential customer but most businesses will find it worthwhile and a boost to productivity.

He says the company is working on connections for Skagit State Bank and, for the bank’s employees, communications between branches will be so fast it will be like “they were in the next room.”

As for high-speed internet connections, Janyck said that download speeds up to 45 megabits per second are possible. That’s roughly 200 times current DSL speeds and more than 1,000 times current dial up speeds. Fees would be based on the megabits used.

Under the contract with CSS, Mount Vernon sells the fiber optic bandwidth to the company which then sells it retail to the customers. CSS will manage the overall system, handle the hookups, service and billings. It will provide services to the city at no charge.

The first services to be available will be high speed Internet access and private Virtual Local Area Network (VLAN) services, such as those to be provided to Skagit State Bank. The network will handle data, voice and video services.

The main obstacle to extending fiber optic services to the private sector has been the high cost of the so-called last mile – the cable link to the individual business or household user. It costs about $4,000 to run a cable 100 feet, said Janyck.

But the technology now exists to provide wireless links to individual customers. Where the customer is too far from the system hub to make it feasible to run cable, the connection will be via wireless link, which will make the system available to most customers right away.

“As demand for direct fiber capabilities increase, additional fiber extensions will be installed to connect directly to the end customer,” according to CSS literature.

CSS describes itself as a “premier” network integration firm that had its beginnings in the Skagit Valley in the late 1980s and is now headquartered in Bellingham. In 1995 CSS began building last mile networks and a large-scale distribution network for Internet and Virtual Private Network deployment. The company has extended its network through the use of wireless technology.

One key to the company’s success to date, said company president Ray Poorman, is that “we don’t overbuild.” A lot of companies that did try to extend their systems too far, too fast, ran into financial problems.

“We take a fiscally responsible approach,” said Poorman.

Mount Vernon’s approach to deploying fiber optic fits CSS’s model well. The city has gradually extended its cable, largely taking advantage of federal and state grants and developing public-private partnerships.

“Mount Vernon is still leagues ahead of the entire nation in doing this,” said Poorman. “Other government organizations try to spend their way into it and get themselves into trouble.”

He said that many public utility districts were “sold a bill of goods. This was to be the Holy Grail, a new fiefdom.” The PUD in Whatcom County is “still floundering” in its attempt to go into the fiber optic business, he said.

The past several months have been rough for WebEKG as well.

Almost as soon as the e-Tech Campus was opened for business, WebEKG’s fortunes took a turn. The economy had already been on a downward slide when the terrorist attack on New York City’s Twin Towers sent the economy into convulsions. Much of corporate America put software development on the back shelf. Capital financing all but dried up.

WebEKG was forced to lay off most of its staff. Some of those let go were key people who stayed in Mount Vernon to launch yet another high tech business — Cevian Technologies, specializing in the “enterprise and government geographic information systems.”

By the end of November of last year, WebEKG had been hit with a federal tax lien of nearly $210,000. And at the end of January of this year the company went to federal court with a Chapter 11 filing to give it time to reorganize and develop a plan to regain solvency and pay off its creditors.

Jack Hamilton, WebEKG’s vice president for operations, acknowledges that the past year has been tough on the company. But he emphasizes that things are turning around and WebEKG is hiring again, particularly senior consultants.

“Our industry was really put to the test in the last couple of years,” said Hamilton. “For us, the key has been development dollars. If people are developing software, it’s good for us. But, if not…”

Hamilton says that the company is on track to file its recovery plan by the end of July. The key feature of that plan will be something uncommon in Chapter 11 proceedings – “dollar for dollar repayment of creditors.”

WebEKG founder Schweikert has staked his own fortune on the recovery of the company, says Hamilton.

In fact, according to the Chapter 11 filing in Western Washington District Court, Schweikert is the largest single creditor of WebEKG at $335,000. Other major creditors are Horizon Bank, $241,000 and $53,000 to EMS Tenancy, the partnership of Ellis, Mitzel and Schweikert in the operation of the e-Tech Campus.

The good news, said Hamilton, is that “we’re now in the black.” The company closed a deal late last year to provide consulting services to the Nautilus Group and has been working at that company’s site. WebEKG also has negotiations ongoing with three other companies for contract work.

In addition, Hamilton says that the company is now offering its information technology and networking consulting services to small businesses in northwest Washington.

“When the layoffs occurred, Paul (Schweikert) said ‘we’re going to get through this; within a year we’ll be back in growth mode’,” said Hamilton.

“We’re most of the way out of the woods now,” he said. “If we get struck by lightning I’ll always be proud of how we conducted ourselves. Repaying debt dollar-for-dollar wasn’t my idea; that was the mandate I was given.”

Despite short-term setbacks brought on by industry forces and economic downturn, the region’s high-tech future seems unavoidable. The only question remaining is, “how much, how fast?”

Richendrfer and information technology experts see one of the biggest obstacles right now not as finance or the technology itself, but in how soon the public can be educated to the importance of such developments as optical fiber.

To that end, the city of Mount Vernon is sponsoring a “technology summit” in September to spread the knowledge of what information technology can do for businesses and the community.

Mike Almvig, information technology manager for Skagit County, is a believer. He says communications among county departments has been vastly improved along with productivity. The county also has an award-winning website that provides the public with information on a wide variety of topics, including minutes of county commission meetings, press releases and online access to county records.

Almvig sees the county’s connectivity and quality of life as a draw for older people who want to raise families, as opposed to the GenX dot-commers who are more attracted to the urban pleasures of Seattle.

High tech businesses with skilled payrolls – “that’s the type of company we want to attract to Skagit County,” says Almvig.

The college is a participant in the Cisco Networking Academy, a program developed by the industry leader in switches and routers for intranet and internet connectivity. Through the program students can prepare for testing to be certified technicians on Cisco’s systems.

Courses cover such things as networking components and basic network design, industry standards, local area networks, remote access networks, troubleshooting and other important aspects of information technology.

Koci says the college has added courses dealing in computer forensics, a field in law enforcement that specializes in analyzing computer content for evidence in criminal cases.

The college works with focus groups from the community to “make sure we have the skill sets that match up regionally,” said Koci.

Another strategy to keep the college’s curriculum as current as possible involves having faculty members take time out to work in the industry and bring their experience back to the classroom.

Koci said the college also works with some 230 people from the business community who comprise advisory groups that help keep course offerings relevant to the needs of the workplace.

Koci is also a great believer in Mount Vernon’s deployment of the fiber optic loop.

“Our economic development depends on having that in place,” she said.

Skagit Valley College has responded to the challenge of preparing a new generation of information technology workers. The trick is to try to make sure that training that takes place now is still relevant when the student graduates from the program.

“I trying looking out two years from now,” said Michelle Koci, SVC’s dean of professional / technical education. “Our role is to make sure skills are transferable and will be relevant two years out.”