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ONLINE BUSINESS

Parallel Universe

What's an expanding city to do when it runs out of room? Take it online.
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Evanston, Ill., ran out of room to grow. So an enterprising group of residents is expanding the city online

Evanston, Ill., doesn't look much like the City of the Future. After all, Evanston remains pretty much what it's been for the past century: a pleasant, bustling suburb and college town clinging to the shore of Lake Michigan just north of Chicago. But to longtime residents like Ron Kysiak, Bill Floyd, and Patricia Widmayer, the leafy midwestern municipality has all the makings of a model community for the 21st century. Especially online.

For starters, they'll tell you, Evanston is uncommonly diverse for a city of 73,000. It's got old-money heirs and new-economy millionaires, working- and middle-class families, senior citizens, and college students, as well as neighborhoods filled with Hispanic, Asian, Indian, Caribbean, and Eastern European immigrants. It's got a major university (Northwestern), several smaller colleges, and a high-tech research park. It's got a vibrant downtown full of such charming, locally owned businesses as a Himalayan restaurant and a bird-watchers' boutique. And it's got a rich heritage of innovation: previous Evanston natives invented Tinkertoys, the block party, and the ice-cream sundae.

That innovative history notwithstanding, Evanston is no business nirvana, and nobody knows that better than Ron Kysiak. As director of Evanston Inventure Inc., the local economic-development organization, Kysiak has monitored the city's commercial activity for some 15 years. Unlike the city's wide, tree-lined streets and miles of beachfront parks, its business landscape hasn't always been a pretty sight.

Right now most Evanstonians who want jobs have them; earlier this year the city's unemployment rate was just 4.3%, only a hair above the national average of 4.1%. But Evanston literally has no room to grow: the city, which measures just 8.5 square miles, ran out of open space long ago. That means there's no place to accommodate new factories, office parks, malls, or retailers. In recent years Washington National Insurance Co., Illinois Superconductor Co., and Rust-Oleum Corp., among others, moved from Evanston to communities with more or cheaper space. So did the back-office operations of two Chicago-area banks and the headquarters of Peapod Inc., the online grocery-shopping service. "It's costly to redevelop in a city like Evanston," says Kysiak, who previously headed economic development in Milwaukee and New Haven, Conn. "You have to knock something else down first."

Although today Evanston is home to 3,000 businesses, 9 of its 10 largest employers are nonprofits. First on the list: Northwestern University, with 4,000 employees, followed by two hospitals, the city government, the public schools, and the world headquarters of Rotary International, to name some. That worries Kysiak, a tall, thoughtful fellow with a Tim Conway-like manner that manages to convey mildness and intensity at exactly the same moment. "They're a huge economic engine, but they don't pay property taxes," he says of the nonprofits. That, in turn, pushes up taxes for commercial businesses, which then move to cheaper digs elsewhere, boosting city taxes even higher. Kysiak, who thinks carefully before he speaks and doesn't seem prone to overstatement, sums up the result this way: "It's a death spiral."


E-Tropolis Evanston is executing a simple, yet wildly ambitious, mission: providing constant high-speed Internet access to every business, home, school, institution, and government office in town, at competitive rates.


Meanwhile, since their built-up city has no malls and few big retailers, Evanstonians spend a lot of their money in neighboring Skokie and Wilmette, and even in Chicago's Loop, just 13 miles away. And because Evanston's highly educated, computer-savvy populace already uses the Internet -- 60% have connections at home -- Kysiak and others began worrying about losing business and sales taxes to E-commerce ventures like Amazon.com.

So about four years ago, Kysiak -- who also oversees a high-tech park jointly run by the city and Northwestern -- decided to focus on wooing small high-tech start-ups to fill existing office space, boost the tax base, and hire local residents. The only problem: his counterparts in other Chicago-area communities were doing exactly the same thing.

Clearly, Evanston's high quality of life wasn't going to be a big enough bargaining chip. The city needed to bring something distinctive to the table, something to offset not only the lack of space, but also the high taxes, limited parking, and awkward location several miles from the nearest freeway. Technology companies want good technology. Perhaps, Kysiak mused back in 1996, Evanston could provide the best. And perhaps everybody in town could benefit from it.

He already had a model right down the street. Northwestern had recently rewired its 150-building campus with a 222-mile fiber-optic network. He enlisted Patricia Widmayer, the university's manager of IT planning and development, to help him design the same kind of project for Evanston. Over countless working lunches, the two -- Kysiak the visionary, Widmayer the organizer -- began pulling together a 20-person community task force to design the electronic city.

Among the task-force members was Bill Floyd, a big, sandy-haired man who had lived in Evanston since 1973. He had recently retired from his job as chief information officer at Chicago-based Novus Services Inc., now Discover Financial Services. He was antsy and looking for something to do. His technical knowledge supplied the project's missing piece.

Today the group -- now a nonprofit organization called E-Tropolis Evanston, led largely by Kysiak, Widmayer, and Floyd -- is executing a simple, yet wildly ambitious, mission: providing constant high-speed Internet access to every business, home, school, institution, and government office in town, at competitive rates.

The underlying concept -- equal access for all -- isn't new. During the early 1990s at least three dozen other communities set up "free-nets," offering free or cheap Internet service. But those early networks generally focused on helping people reach the global electronic village rather than on building a local electronic community. And back then people got what they paid for: pokey dial-up connections, usually through text-only bulletin boards.

Today many other cities brand themselves as "America's most wired community," usually citing their sophisticated new fiber-optic networks that provide almost unimaginable bandwidth. (See " On the Wired Front.") By those standards, Evanston isn't yet a world-class wired city: its fiber-optic system won't be up for at least a year. Meanwhile, E-Tropolis Evanston offers Internet access over existing telephone lines using digital-subscriber-line technology, which allows a fast Internet connection that's always on and doesn't tie up telephone lines.

What does distinguish Evanston's E-Tropolis effort is its founders' insistence on looking beyond the wires. From the start, Kysiak, Widmayer, Floyd, and their colleagues envisioned an electronic version of the city, a parallel community where residents could chat, send mail, post announcements, get maps and weather forecasts, read local headlines, shop in local stores, order take-out, reserve tennis courts, apply for building permits, pay parking tickets, and even download the homework that kids forgot to bring home from school. The E-Tropolis founders believe their electronic community ultimately will both better serve Evanston's residents and woo the high-tech businesses that the city's economy needs to thrive in the next decade. But even as the first group of subscribers sign up for service, it's not clear whether it's possible -- or even desirable -- to wire everybody in town.

Once they are wired, residents will be able to access the Internet up to 30 times faster than they could using a standard household modem. And long downloading times will go the way of Prohibition (a movement that, by the way, traces its roots to Evanston, home to Frances Willard, a pioneer in the Woman's Christian Temperance Union).


Once they are wired, residents will be able to access the Internet up to 30 times faster than they could using a standard household modem.


The monthly cost of the service is $43 to $50 for home subscribers and small businesses, depending on the connection speed and the customer's distance from the telephone company's central office. That's a break-even proposition for people who will be able to dump their current Internet service providers and second telephone lines. Larger businesses pay $100 to $260 a month. All installations, currently free, will eventually cost $99. Residential subscribers get up to 10 E-mail addresses on a single account, home-page space, and free training; businesses get home pages enabled for limited E-commerce. Once the fiber-optic system is in place, the E-Tropolis founders also hope to offer cable TV, local and long-distance telephone service, and networking capability.

But defining E-Tropolis Evanston solely in terms of speed and wires is like describing the real Evanston by way of its streets and sewer system. The E-Tropolis visionaries want more for the people of Evanston than warp-speed Web connections, some local content, and a few conveniences. They want transformation. They believe E-Tropolis ultimately could improve the quality of life in ways its creators can't yet imagine. "It's not just a new way to communicate," says Kysiak. "It's a carefully thought out strategy to redefine and revitalize the entire community."

The founders also hope the project might help improve relations between Evanston and Northwestern, a relationship that careens from neutral to tense to downright ugly. Kysiak, Widmayer, and others with a foot in each camp believe E-Tropolis Evanston might be one venue for bringing the two sides together.

It's too early to say whether E-Tropolis Evanston will realize any of its lofty goals. Launched last spring, the service had signed up just 50 paying customers by early summer, many of them task-force members. Another 150 subscribers were awaiting hookups, a process delayed because wiring each home or business involves scheduling three separate contractors -- the telephone company, to wire the outside of the house or building; an Internet service provider, to set up the inside; and an E-Tropolis employee to configure the desktop.

But the founders say they've reached several goals, ones that are less tangible than simply signing up subscribers. Most of all, they're pleased that they've been able to retain community control of E-Tropolis Evanston rather than turning it over to a telecommunications company or a government agency. The founders launched the program without spending a penny of public money; the city's mayor and two city council members are just three more members of the nonprofit group's board of directors. "The mere fact that it's here adds to our image as a city of technology, and that benefits all of us," says Evanston mayor Lorraine Morton, an Evanston resident for nearly 50 years. But even though the city supports, uses, and helps publicize E-Tropolis Evanston, the project will remain privately financed, she adds.

And the E-Tropolis Evanston group's efforts have evolved into an unprecedented partnership with a new for-profit company, E-Tropolis Partners Inc., in Chicago. That new venture is picking up the project's multimillion-dollar price tag in exchange for most of the revenues and the rights to market Evanston's E-city model to other communities. (See "King of the World?" below.)

Meanwhile, the folks at E-Tropolis Evanston grapple with some sticky social problems. Chief among them: preventing low-income Evanstonians -- even in this strong economy, some residents remain unemployed and 30% of the public high school students come from low-income families -- from being shut out of their own virtual neighborhoods because they can't afford computers or the subscription fee. That possibility so concerns Kysiak that during a recent interview he returned to the subject repeatedly. "This kind of high-speed information has the potential to drive an even deeper wedge between the haves and the have-nots," he said at one point. "Nobody has answers. We don't, either."

Eventually, E-Tropolis Evanston plans to set up a computer-refurbishing center where local residents and businesses can donate older machines that technicians will overhaul and donate to low-income families. The nonprofit group will also get 5% of the revenues its for-profit spin-off, E-Tropolis Partners, makes from doing installations and charging monthly service fees; that, too, will be used to help Evanston's poorer residents get online.

But such philanthropy remains somewhere in the futuristic city's future. For now the founders are concentrating on more prosaic matters: putting down wires and signing up subscribers.

In laying the groundwork for E-Tropolis Evanston, Kysiak started by looking 1,000 miles away, at a rural community in the Blue Ridge Mountains. Blacksburg, Va., home of Virginia Tech, had gotten headlines as early as 1992 for deciding to offer low-cost Internet connections to everyone in town. Today more than 80% of Blacksburg's 36,000 residents have Internet access, and the project has slowly helped pump up the isolated community's high-tech research center to 85 companies employing more than 1,200 people.

But after attending a one-day "how-we-did-it" seminar in Blacksburg, Kysiak went home convinced that the model for Blacksburg's first-generation E-village, although impressive, wouldn't transfer wholesale to Illinois. For one thing, Virginia Tech ran Blacksburg's project; Kysiak envisioned a broader public-private venture for Evanston. Like those of the "free-nets" before them, Blacksburg's connections at that time were dial-up, not the "always-on" high-speed hookups Evanston's high-tech community would expect. (Even today, half of Blacksburg's users still use modems.)

"Blacksburg certainly sold me on the idea of the E-city," recalls Kysiak, who moves seamlessly from scholarly commentary on the Greek origins of the word e-tropolis to referring to E-Tropolis Evanston's various capabilities as "really neat" and "very cool." "I admired their creativity and the fact that they were earlier. I just wanted to do a lot more."

He and Widmayer started by pulling together a task force that looked like a "Who's Who of Evanston." Members included city and school-district officials, top employers, and leaders of civic groups ranging from the chamber of commerce to the NAACP. The group had no budget. Evanston Inventure covered about $15,000 in office and telephone expenses; Kysiak's and Widmayer's employers donated their time, and everyone else volunteered.

Over the next two years the task force hit one technology roadblock after another. Early on, the group considered using cable modems but dropped that plan when the local provider said it would wire only homes, not the city's 3,000 businesses. Then the group solicited and reviewed proposals from six telecommunications companies, ultimately rejecting them because each wanted to regulate E-Tropolis's policies and, to a large extent, its content. "They pretty much said, 'You finance it, we'll build it, and then you keep your noses out of our business,' " Kysiak recalls. But E-Tropolis proponents insisted on retaining local control. When talks with the last contender, AT&T, collapsed, in December 1998, the Evanston group very nearly threw in the towel. "If it had been a paid effort, I think we would have cut our losses and shut it down," Widmayer recalls. "Because it was running on ideas and energy, we were able to keep going."


"This kind of high-speed information has the potential to drive an even deeper wedge between the haves and the have-nots."

--Ron Kysiak, director of economic development organization
Evanston Inventure Inc.

They kept going just long enough to return to an oddball proposal from an unlikely source: Tim King, a community planner at Loebl Schlossman & Hackl, a 75-year-old architectural firm in downtown Chicago. King ran the firm's then-18-month-old technology division, known as the Performance Group, and he had repeatedly offered to manage Evanston's project. Convinced they wanted a telecom partner, task-force members had repeatedly rejected King's proposal.

But early in 1999 the two sides shook hands on a 10-year agreement. Their contract leaves no doubt about who controls what, says King. "They do policy and content," he says of the community. "We deliver circuits and components. We invest in infrastructure and build their portal." In exchange for underwriting those costs and taking a share of the revenues, E-Tropolis Partners Inc. gets to market the E-Tropolis project to other communities.

Meanwhile, even some E-Tropolis boosters think the idea of a 100%-wired city remains not just futuristic but unrealistic. For one thing, although Evanston is progressive in many ways, it remains a bedrock of conservatism. For instance, the city was "dry," prohibiting alcohol sales, from the 1850s until the 1970s; its first liquor store opened in the mid-1980s.

Vestiges of that resistance to change remain even today. Paul Giddings, co-owner of Evanston's FolkWorks art gallery and a past president of the chamber of commerce, regularly leads workshops to introduce other merchants to E-Tropolis. Some just aren't interested. "Of the 60 businesses in my neighborhood, I'd say a good half see absolutely no value in this," he says, citing a barbershop and a gas station in particular. Although he's an E-Tropolis Evanston board member, Giddings himself plans to get Internet service only at work, not at home.

The project's founding trio know that they probably won't reach every single home and business. But they nonetheless maintain that the 100%-wired goal is a worthy aim for what they see as a grand and pioneering experiment. "I don't know if it's possible," Kysiak acknowledges. "But we'll try to get as close as we can."

Anne Stuart is a senior writer at Inc. Technology.


King of the World?

When Tim King looks at E-Tropolis Evanston, he sees a blueprint for E-Tropolis Anywhere. "We believe we're on the brink of creating a whole new industry," says King, CEO of E-Tropolis Partners Inc.

Well, maybe a few steps back from the brink. The Chicago-based company just launched its first project: the "E-Tropolis," or high-speed citywide network and community Web portal, that it's building next door in Evanston, Ill. King has barely broken ground there -- at best, about 10% of the town's 31,000 homes and businesses will subscribe this year. But he's already planning other E-communities. Lots of others.

King, 44, a veteran technology consultant, has identified at least 1,000 U.S. cities as prime locations for self-sustaining electronic communities like Evanston's. Worldwide, he estimates, there could be 25,000. And nearly all those top-choice towns have neighbors who might be interested in sharing the benefits and expenses of a regional E-Tropolis. Throw in those locales, King says, and the market climbs to 100,000 places worldwide.

"Can we ever conceive of going after all of them? Sure," he says. "There really is no hurdle in front of this being widely adopted."

If those sentiments sound evangelical, the guy uttering them doesn't. The pleasant, unassuming King shares his vision in a direct, matter-of-fact manner, speaking with a native Chicagoan's flat vowels and a consultant's fondness for research, charts, and models. Over a roast-beef sandwich in his office on the 34th floor of a skyscraper near Lake Michigan, he calmly outlines plans to create a $100-million industry by 2003, launching about 150 electronic cities and growing his 12-person staff to 500.

Electronic-community building seems a natural next line for King's résumé. He directed technology development for Chicago-area architectural and engineering companies for 15 years before launching his own consulting business, in 1994. A few years later he joined Loebl Schlossman & Hackl architects, where he founded a technology- and energy-consulting wing known as the Performance Group.

By late 1998, King was starting to think about ways to tie it all together: planning, communities, technology, the Internet. Then he heard about the network-building effort in Evanston. The local task force coordinating the project picked King over half a dozen competitors -- all big telecom companies -- because he alone promised to let Evanston set the policy for the network his company would finance and develop. The possibilities the project suggested so excited King that last year he carved out E-Tropolis Partners as a new division of the Performance Group that would focus on building electronic cities nationwide.

The Evanston task force agreed to let King's new company resell its model to other municipalities. Yonkers, N.Y., expects to launch its own E-Tropolis later this year; King has also gotten nibbles from places as diverse as Keene, N.H., and East Lansing, Mich. "Yes, it's about technology," King says of the digital subscriber line and fiber-optic networks he plans to build. "But at the end of the day, this is really a community-redevelopment plan."


Please e-mail your comments to editors@inc.com.

Last updated: Sep 15, 2000




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