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First Article Installment

Wednesday, June 04, 2008

The First ISP

By Alan Wilensky

Barry Shein, owner of Software Tool & Die, the first company ever to offer dial-up access to the
Internet (then called ARPANET), asserts, "Al Gore will be elected and will mandate expanded
federal funding of the Nation's public data infrastructure.” This opinion might be discounted out
of hand coming from a 29 year-old college dropout turned net-trepreneur, burning through his
mezzanine funds like Pizza and Jolt cola; but Barry Shein is wiser than his younger self. He has
run Software Tool & Die (brand name “The World”) for eleven years, and seen it grow to over
10,000 paying, loyal subscribers. I met with Barry at the World’s tidy offices located under the
SS Pierce Clock tower in Brookline, Massachusetts.

The events that led to the birth of the first ISP spawned a gradual, even haphazard process,
fostered by exceptionally serendipitous circumstances. This was before the era of the net-IPO
frenzy. Shein's realization in 1988 that people might need access to the net would be financed by
the STD partners out of pocket. The dot com had not been invented yet.

Shein had his first ARPANET account in 1977 at Harvard University. From 1983-1988, while at
Boston University as a Ph.D. Candidate in Computer Science, he held the full time position of
Special Projects Manager of the Distributed Systems Group.

Newcomers to net life, or even "pro's", may not know that this was the time the details of
interconnected computing, network protocols, and packet routing were being hashed out in a
mostly collegial environment. There were a few large computer and defense companies with net
access, whose numbers were climbing steadily. The economy had a great deal to do with the
future of the net's commercialization, but not in the way you might think!

Shein explained, "You have racks of equipment and phone lines, user support requests, etc. It was
like trying to manage the university's PBX or heating plant; what started as an academic pursuit in
the evolving science of wide area connectivity, turned into keeping the system up for the users."
He mused, "Is this what the university really wanted? To operate a huge, experimental WAN/LAN
operation just so grad students can have e-mail?"

Companies and universities with and without ARPANET would sometimes have terminal access
to super computing centers or math department minis. But at B.U., the academic pursuit of
internetworking and distributed computing was slowly turning into an institutional
communications service. It was obvious to Shein that academics and professionals leaving their
institutions might want private net access.

Software Tool & Die actually began its life as a UNIX shop, with most of the original group
coming from B.U. With one foot still in academia, Shein started fulfilling the few requests for mail
and news group access, from just these recently departed academics and tech workers. "You had
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the situation where net access for these early adopters morphed from purely experimental to
almost a practical necessity."

Before even considering making a business out of it, Shien had a workstation dialing out every
hour or so, downloading the latest e-mail and news group articles, and storing the message traffic
for its users who would dial in. The lack of a dedicated connection didn't matter then, as all of the
traffic was text based, and real time access was just not seen as a necessity. Of course, this was
1989, and the evolution of the Internet was making any predictions short-lived.

A historic moment occurred when Rick Adams, from the then new Uunet, called Shein to beg
some co-location space for a T1 and 'some other stuff.' This meant, among other things that STD
would now have a dedicated, real time connection to the Internet proper. I asked Shein what deal
was struck between UUnet and STD. I was wondering about strategic relationships and the like.

"No, no, no," Shein replied, "it was completely informal - our space in exchange for access to
Uunet and free route peering arrangements.” The two companies shared an Ethernet LAN, the
appropriate router and address pool magic was done, and viola. Part II of this article will focus
more on the World’s technical adolescence. But at this point in the story, it’s the late 1980's, and
things were starting to heat up.

What drove the business in its early days? What was the defining event that caused the STD
partners to make serious capital investments in the new Internet arena? Shein's answer took me
aback: "It was the recession of the late1980's....”

"DOD cutbacks hit the Rt. 128 companies hard. And many of these defense and computer
companies, like DEC and DG were thinning the ranks.” So it was that net access was a perk at
these companies, and departing workers were loathe to give up their net access.

"Indeed,” says Shein, "few of these institutions had any provision for remote access off premises,
security issues aside. The employees knew, of course, that the paycheck would stop, but whined,
'Why can't the company continue their user accounts'? An STD "The World" flyer helped the
companies answer that question. " Outplacement companies assisting laid-off DEC and DG
employees in their career transitions also helped by allowing STD to leave brochures in their
offices.

Things started to move into high gear. The STD partnership, now connected via T1 to Uunet, and
with its six 2400 baud modems, was pouring blood money into capital system's expansion. It was
a gamble for sure; there was no precedent for such a venture. After all, who wanted net access?
The answer was soon supplied: academics and professionals leaving their jobs and institutions,
who were desirous of continued net access.

December 1989 is the date Shein gives for the official offering of live net access, UNIX shell
accounts, ftp, and e-mail. The next two years were to be less fun and playful, for serious decisions
had to be made that would directly affect the bottom line. In all, the STD crew enjoyed a
monopoly on net access for a brief four months.

Shein reflected, "I remember siting here, when we set up the original system, and thought, 'If we
can just pay for the phone lines, and the machine leases, I'd be happy.’" STD was leasing a used
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Sun 4280 at the time, with payments running around $2500/ mo. Electricity and phone bills shot
up with each system upgrade, and there was concern that user accounts might not meet expenses.

But the accounts did become profitable, with the World eventually building out POPs in
Massachusetts only. "We just went along,” said Shein, referring to the contravention in operating
plans that existed between the big national ISPs and STD.

Plant upgrades were to be a way of life from then on. In step with this evolution of ISP
technology, customers were crossing into the 1990's with more powerful PC's. At this point,
savvy users were downloading the first incarnations of noncommercial Mosaic, a web browser
later to be improved upon by its inventor, Marc Andreeson, at Netscape.

Barry Shein and company were, as always, preoccupied with system upgrades. From Sun to
Solborne, the first SMP UNIX box, to SGI. Remote access and modem standards were changing
every few months, as was the very network; the IETF was growing its ranks to include more
commercial members. STD was kept up to speed quite well due to its close working relationship
with UUnet, which continues to this day.

The World was entering the '90's with several thousand loyal users, I among them. I was installing
the new Windows 3.1, and buying a new modem every three months. And STD? Shein recalled,
"We were going through a period of painful expansion, being courted by the UNIX SMP
hardware vendors - struggling of course with the changing modem standards, and trying to see
into the future, technically and strategically -- it makes me feel so nostalgic."

In next week's installment, we look at the nuts, bolts and business strategy of the Nation's first
ISP.
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A decade is a long time in the ISP world. When Barry Shein talks to partners or vendors, they
often say, 'Wow..ten years...you are solid!'. The difference between the World and other ISP's is
reflected in its heritage, its capacity, and its intellectual capital. But it was a long road getting
there.

The early '90's put the few existing ISP's not more than a hop or two from their peers. The
feeling of distance relating to network latency and performance was absent, unlike today. The
World enjoyed a direct route to Western Europe's EU net.

Network operations were marked in their informality. Shein stated, "An incredible mishmash of
one-of-a-kind boxes and equipment, not always used in their intended capacity was crammed in
every corner. It wasn't uncommon for you to receive a call from a fellow systems operator, saying
‘Hey, do you have a red light on that box? Will you cycle the power for me?'"

Shein remembers the days when choices in routing equipment were sparse. "When I brought
ARPANET into B.U., you had a choice of upstream routers. Either you bought a BBN IMP
(Internetworking Message Processor), or you dedicated an old mini, and ran experimental routing
software. It’s hard to picture now in 2000, but this was a time when line provisioning took
months. Software and machine platforms also changed almost quarterly.”

Software Tool and Die, now know as "The World,” must have done some soul searching about
whether to crank up the heat and start investing in capital systems. The defining moment came
when the partners decided to increase dial in and server capacity. Shein said, " These were the
most trying and difficult times, because there was no one else in the business, except the new
national NSP's Uunet and PSInet.."

End users who today rely on SMP UNIX will never know the long nights spent by Shein and his
crew, as each version was rolled out and patched continually. Remote access was as new to the
vendors as any other operating system supported feature, including the arcane yet critical
applications that kept the net alive, DNS, BGMP, OSPF, etc.

According to Shein, it took at least two years before operations settled down enough to consider
enhancement to end user access. The first jump off point after 9600 bps, was the 28k-33.3k mess.
"It seemed that other than the few early adopters, none of the access vendors was willing to go
out on a limb and make a stand. It wasn't until 56k came along that we felt that we could trust
USR to deliver a real solution. We then, at that point could offer X2 56k, ISDN (1BRI only, there
was no multilink PPP), with the future promise of a cohesive standard, later know as V90".

But really, it was just toughing out the decision-making process, Shein explained. If the
substantial investment in the access gear turned out to be a fad, it was STD that would take the
blow. In those early days, such a mistake could cost the farm.

There were decisions to be made regarding selling bandwidth downstream, which they decided
against. Instead the seminal decision was made to take the 'Heavy Iron route’, and invest in a 24
CPU SGI Challenge XL, augmented by two smaller SGI SMP servers for mail and news. This
was a system they could grow into, as opposed to those of other providers who were essentially
using server sized PC's running BSD, or later still NT. Financing for about a cool million over
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time and upgrades, along with a bandwidth boost to 45 mbs T3, and keeping the old T1's for peak
loads or fail over, rounded out the happy franchise.

Now the nailbitting began in earnest. Owning 2.5 gigs of RAM and 150 gig of disk space -
holding sway over your 6,000 MIPS, doesn't print your money for you. But the World's new-
found power made the users happy with fast response times. Down time has been minuscule, with
the SGI server logs showing up to 265 days between restarts.

As the user accounts grew, and more businesses chose STD as a Web Host, Barry Shein looked to
the future. What were the options? What was happening in the industry? I put these questions to a
thoughtful, 46 year old Shein:

“The true question”, he replied, “is not what others are doing, it’s whether or not the World will
orient itself towards the internal ownership of domain based content services, enhanced e-
commerce, or the continued build-out of connectivity. A mature company might provide any
number of possible value added services.”

"The matter, it seems, is that World will make connectivity a basic service, with DSL and wireless
access being considered within twelve months, depending on end user fees falling to around the
under 50 dollar magic price point. We will continue to meet with vendors and CLECS, and also
look into other ways to provide these services."

I brought up the possibility of advanced carrier class network hardware, super switches and
routers, that provide VOIP and integrated messaging. Was STD interested in these things? How
about VPN's? Hosted apps like outsourced Intranets and extrranets?

"These services are for NSP's and MAP's with regional or greater POP coverage. Cisco, although
they say that they will support these services, is actually lagging behind the more exotic
equipment vendors. But as for us in straight IP routing, we will stay loyal to Cisco Systems, for
now. We have a big investment in them here."

But shared Pipe services are very much in the World’s future. "Co-location is the way of the
future for companies that can provide the expertise in UNIX and NT, it’s as easy for an engineer
to baby-sit 20 servers as our two."

The World is still growing and Shein and Co. are very much strategists. It’s their baby; they raised
it. It will be very difficult for a technology fad to faze this team. I brought up free ISP's: Did this
specter bother Shein?

"I get calls every so often from the trade and general press community saying, 'what are you going
to do now that you are dead!' This happened when modem standards changed, when Microsoft
was to get into the net biz, or MSN, now its free ISP's. I don't want to sound too cocky, but STD
was here before all of them, we are still here."

Furthermore, Shein offered a piercing analysis of these free rivals: "The Edgar filings for some of
these free national ISP's seems to show, in some cases at least, that they have three quarters of
working capital left. The VC’s will have to decide if the IPO will happen, or if it did, we may see
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many of these fail to meet their advertising revenue goals.” Barry Shein is no fool when it comes
to the ISP biz.

Final words on the future of the World, Mr. Shein? "We have partnership deals that will be capital
intensive, but very rewarding." I continued to press for a glimpse of the future. "The World will
offer dial up as a nominal service, but content will reign as king, We will become an increasing
destination for more businesses.”

And Al Gore, Barry?

"Ah yes, did you know that it was his dad who pushed through the national highway
infrastructure bills? He was indeed the champion of our Interstate highways! His son just may be
the champion of our national data highways, re-consolidating cable and fiber under a reorganized
and consolidated national communications imperative; maybe even reuniting the RBOC's!”

Heady stuff, even from a fellow who regularly gets offers ranging from 20 to 25 million for his
ISP business. But maybe not so farfetched coming from the President of The World !