PART A -Internet, a technological breakthrough

There have been many different explanations and definitions of the Internet. A full definition of
the Internet is hard to put in one single sentence, different definitions of the internet can be found
in Appendix A. Better is to explain and propose the most common characteristics of the Internet.

• It is a global information hierarchical network, consisting of computer networks.

• It is decentralized in many subnetworks, it has no central point.
• It is based on the packet-switching technology and uses Internet Protocol (IP) and
Transmission Control Protocol (TCP) to support communication.
• It consists of many technologies and services that enabled new ways of communication, such
as the World Wide Web, E-mail, FTP etc.
• It connects millions of computers worldwide, enabling many more people to share information
in a rather cheap way.

As stated above the World Wide Web (WWW) is not the same as the Internet, it is a part of it. The
development of the Internet (sprung out of the ARPANET, explained later in this paper) has
caused a huge shift in information treatment. It has been, together with the development of the
personal computer, which of course has been essential to the success of the Internet, one of the
biggest breakthroughs of last century. The information technology and computer industry have
become multi-billion dollar businesses and also have had an incredible influence on other
industries. Nowadays a world without the Internet, the network which has created possibilities for
a huge array of applications as E-mail, WWW, Electronic Data Interchange (EDI), E-Marketplaces
and many more, would be unimaginable. Since the real commercial expansion of the Internet in
the beginning of the ‘90s, after the development of the World Wide Web, more than half a billion
people from around the world have access to this rather new medium.

PART B -Pattern of development and diffusion

In this part the way leading to the invention of the Internet and the events that follow after
introduction. How has Internet become one of the biggest networks of communication? When did
the commercial expansion occur? What have been the most important actors and factors in the
different stages of the development and diffusion of the Net?

a.1. Events leading to the development of ARPANET

Internet cannot exist without computers, because it is a networks of computers and
supercomputers. Before we look at the development of what would later be the Internet, we first
look at the origins of the computer.

Short history of the computer1

From 1947 on the development of commercial computers started because of the invention of the
transistor (predecessor of the computer chip) at Bell-Labs and memory (RAM) for computers. The
computers were enormous machines and had limited capabilities, mainly calculations. The
introduction of binary language in computing made it conceivable to programmers and computer
scientists to write programs and algorithms, which have improved the possibilities in use. In 1952
the computer showed its possibilities by forecasting the presidential election to the public. In
1953 IBM started the production of the type 650, the first mass-produced computer and
introduced program language FORTRAN, which was to be used by many scientists and
programmers and became the common program language. Many applications, operating systems,
software programs and program languages other than FORTRAN have been developed in the
years after. In 1958 the first integrated circuit, the chip as we know now, was introduced
commercially and offered many advantages compared to the transistors, computers were getting
smaller, better and cheaper. At Bell-Labs the first modulator-demodulator, i.e. modem, was
invented in 1958, which enabled computers to communicate through telephone lines. From the
1
http://www.thocp.net -- The History of Computing Project
end of the ‘50s on computers were used in more and more industries, in many research centers,
schools and universities and other institutions where information had to be stored, calculated or
used in some other manner, while the applications and possibilities of the computer had kept on
growing. Above a short summary of the very first computers is outlined, which shows that the
adaptation of the computer in use, not yet personal use (the first PC was sold in the ‘80s), grew
with an enormous speed. The demand for the ability to share information over a network also
originated in that time, though the computer industry emphasized the development of chips and
computers and not on communications. The first working concept of a network of computers, able
to communicate with each other, was in the beginning of the ‘70s. This will be explained in the
following text.

The Russians and ARPANET

To say that the Internet exists because of the Cold War would be very questionable, if not untrue.
It is true that an agency, which was part of the US Department of Defense, has played a vital role
in developing the network what later will be called the Internet. The fact is that this agency, the
Advanced Research Projects Agency, was formed by the military on a reaction on the Soviet
Union’s launch of the Sputnik, the first artificial earth satellite, in 1957 to utilize their investments
in computers.2 It was also the same year that NASA was established. The emphasis of ARPA
though was on research, not on military. The goal that this governmental institution had in mind in
this matter was to develop a distributed system3 (a central system would be too vulnerable for
attacks) way to share information and communicate using computers. A very important role was
put for the head of the program, J.C.R. Licklider, who had high interests in communications. He
founded the Information Processing Techniques Office (IPTO) because of a lack of interest in
communications from the computer industry. This office has supported the R&D at universities
and corporations which led to the creation of ARPANET.4

Schedule and budget

The first intentions of creating a network of computers of differing types was done in 1967, with
the foundation of the first meeting between ARPA and other researchers doing the same sort of
research, they called themselves the Primary Investigators (PI). These PI-meetings were essential
to the creation of the ARPANET. Two main issues were handled in these meetings, which was the
problem of constructing a physical subnetwork and the problem of designing protocols and
procedures for each connected computer in order to make use of the network effectively. The first
draft of an IMP, Interface Message Processor 5, was developed by Stanford University in 1968. In
the same year a 5-year schedule to solve the problems mentioned above was made and a
several-million dollar budget was stated by the Defense Administration.

Development of the network

In 1968 ARPA sent out a Request for Quotation, which was sort of a tender contract for a
communication network based on IMPs. The bid was won by the old employer of Licklider, the
relative small company Bolt, Baranek and Newman (BBN), which has through the years acted as a
pioneer in computing and has contributed enormously to the creation of the Internet and
computer-related inventions and introductions. The assignment consisted of developing the
hardware (IMPs etc.) and the software (routers using packet switch technology) for a network of
four computers. The IMPs were developed by BBN and Honeywell and the software was developed
by BBN. Within a year, on October 1, 1969, the first two IMPs were installed and a connection was
made between UCLA and Stanford Research Institute (SRI). The first network (of only two) was a
fact! Very soon the other two IMPs were installed and from then on the network quietly expanded
and consisted of 23 sites in April 1972 and approximately 100 in 1975. By this time e-mail was
invented as well and became the most important mode of traffic within the network.

2
http://www.dei.isepp.ipp.pt/docs/arpa--5.html -- History of ARPANET
3
See for differences and inventor notes in Appendix B
4
From Wartime Tool to the Fish-Cam, Scott Ruthfield, ACM Crossroads Student Magazine, Sept. 1995
5
An IMP was the processor connecting the first few computers of the ARPA Network.
The first public demonstration of NCP and ARPANET
The sites of the ARPA Network were mostly placed at universities and research centers. The
calculated advantage of this was that these institutions made use of the net by sharing
information about that what they were developing, the net itself. This, of course, was all based on
a very open relationship between the scientists. Part of this group was called in by SRI to
formulate and build protocols for the system, i.e. a standard network interface, this group was
called The Network Working Group (NWG). In 1971 this group was about a hundred people and a
working protocol, the Network Control Program (NCP), was successfully introduced at a big
meeting at MIT. This protocol was replaced by TCP/IP, also developed by ARPA, in 1983. The
development of this protocol was the outcome of several years of collaboration between many
computer scientists on a very open and free base. The communication took place in meetings and
over the net and the way it happened in the latter manner was similar to the way forums work.
This was called RFC, Request For Comments, the medium where e-mail has its origins as well.
BBN played an important role in developing the packet-switching techniques and the introduction
of the Transmission Control Program (TCP) in 1974, which enhanced compatibility between
different networks.

In October 1972 the first public demonstration of the ARPA Network took place in Washington DC,
on the First International Conference on Computer Communication. The event where 40
computers communicated has taken away almost all skepticism that existed at the time. The
system proved itself being robust and responsive and a big promise for packet switching
technologies. From that moment on scientists from all over the world began explore techniques
for this technology and an international group of researchers was formed to set international
standards and protocols for packet switching, the International Network Working Group. The
commercial development of packet switching techniques started and systems as Telnet, which
connects a computer to a server, were made.

Expansion of ARPANET and the coming up of other networks

The ARPA Network was set up by ARPA and researchers at different universities and institutions.
Naturally in the beginning the network consisted of computers located at those places (UCLA, SRI,
BBN, UCSB etc.), because of the research and development that had to be done. After the first
successful demonstrations and tests the network stayed an instrument for researchers all over
the world. Servers were set up at universities, research institutions and big technology
companies. The number of hosts, and of course the number of users, which is much and much
bigger than the number of hosts, grew with a relative small percentage in the years that followed.
From 1973 to 1983, the ARPANET grew with some 40% a year in hosts. This seems a lot, but it is
not compared to the huge expansion of the Internet in the ’90s. An exact number of users is very
hard to give, because of the limited resources available. In 1975 the ARPANET was stable with
around 10.000 users and was turned over to the Defense Communications Agency for operational
management. This agency limited growth pretty much, so the number of users grew less in the
years to follow than the years past.6 In 1973 the first international connections were made to the
UK and Norway. In the graph depicted below an outline is given of the number of hosts from the
moment the first nodes were connected in 1969 until the end of 2002.

6
http://www.mids.org/pay/mn/605/usergrow.html
Figure 1 - Number of hosts
The graph reflects the number of hosts of first the ARPA Network, later NSFNET and finally the
Internet and hosts of numerous other smaller networks. A vague s-curve can be derived from the
graph. Since almost any country in the world is connected and networks have come into being at
even the most remote places, one could say that further expansion of the physical backbone will
slow down in the future. Probably the diffusion of networks depends on the economic visions of a
country and their government (i.e. China, North-Korea). In appendix C some other graphs are
shown, regarding number of domains, networks and websites.

In 1995, when NSFNET became the Internet by handing over the control to commercial
corporations, the number of users was about 16 million. Nowadays 10 percent of the world
population is connected, almost 700 million people, and the number is still rising.7 Expected is
that by 2005 more than a billion people are connected to the Internet.8 In the table below the
recent and expected figures are described per continent. The biggest developments take place in
Asia. In appendix D another graph can be found showing the number of users from 1995 until
2002.

Year-End 2001 2004 2007

Worldwide
Internet Users (millions) 533 945 1,460
Wireless Internet User 16.0% 41.5% 56.8%
Share

USA
Internet Users (millions) 149 193 236
Wireless Internet User 4.5% 27.9% 46.3%
Share

Asia-Pacific
Internet Users (millions) 115 357 612
Wireless Internet User 34.8% 50.9% 60.4%
Share

W. Europe
Internet Users (millions) 126 208 290
Wireless Internet User 13.9% 49.6% 67.0%
Share

7
http://www.nua.ie/surveys/how_many_online/index.html
8
http://www.c-i-a.com/pr032102.htm  Computer Industry Almanac Inc.
 Table 1 - Recent and expected number of users
Another important factor is shown in the table, i.e. the coming up of wireless Internet. This will be
handled later in this document.

In 1971 a resolution is passed by the Commission of the European Community to create a network
to be called Euronet. Half way the ’70s other networks were emerging within companies, research
groups, governmental and educational institutions in the US, but also in other continents and of
course intercontinental. A few examples of these networks were the National Science Foundation
Network (NSFNET), the High Energy Physics Network (HEPNET) and the Magnetic Fusion Energy
Network (MFENET). In 1983 FIDONET was created, which relied on PCs and calls over normal
telephone lines. In 1980 another network was connected to the ARPA Network. This was Usenet, a
fairly big network for UNIX-based computers (also developed by Bell-Labs). In 1981 BITNET and
CSNET started, connecting many educational, research, and even commercial organizations that
couldn't get connected to the ARPANET. In 1984 the government, pushed by NSFNET, decided to
split off the real defense network into an separate, better secured network and provided free
access to the ARPA Network, which was much faster, for almost any US Research or educational
institution. This effort stimulated a big expansion of the network by connecting many regional,
smaller networks.9 This is considered the real start of the Internet, the network of networks using
the new protocol (which was suitable for more users), TCP/IP. The National Science Foundation
was charged with the management of the network and recognized a deregulating market.
Therefore they decided work towards a privatized network as soon as possible. NSFNET became
the most important Internet provider in the world, connecting numerous countries a year. Also the
government had decided in the 1980s to commercialize the Internet technology by financing
computer manufacturers in America to include TCP/IP in their protocols. In the beginning of the
’90s most computers in the US had networking capabilities and commercial diffusion of the
Internet could take place. Also several Internet providers built their own networks, based on the
original ARPANET design, making the Net grow on a global base. 10 The net was introduced globally
and many countries around the world were connected to the Net (usually ARPANET or Usenet). In
1995 NSFNET reverts back into a research based network, leaving the exploitation of the
backbone to other commercial providers, ARPANET itself ceased to exist in 1990.11

Mark I & II, Videotex and X.25

In the ’60s two computer networks were built in England by the National Physical Laboratory
(NPL). These networks, called Mark I and Mark II, were based on packet-switching technology and
the development had preceded the ARPANET. The General Post Office was approached to
implement this new technology and to develop a national communication network based on it
(Castells). There was no interest in setting up a network like that until 1977, when the Post Office
set up a network based on an ARPANET technology. ARPANET became the dominant design.

Videotex is also a forerunner of the Internet, referring to almost any commercial online system
that electronically deliver text, numbers and graphics via telephone lines, two-way cable,
computer networks, or any combination of the three, for display on a television set, video monitor
or personal computer.12
In 1979 British Telecom launched its videotex service, called Prestel, in Great Britain. This service
aimed for the supposedly more lucrative market of business users and gave little attention to the
normal consumer. The services proved to be too expensive, especially because of the adapted
televisions which were used as mode of information transfer.
In France Minitel (i.e. Teletel) is deployed by France Telecom (FT) in 1981. The name Minitel comes
from the device which was delivered by FT free of charge. The broad range of services (plain
tickets, weather, stock prices etc.) that are delivered are pretty expensive, but is was a very

9
http://users.galesburg.net/~atkins/ARPAnet.html  Article for the World of Computer Science encyclopedia
10
The Internet Galaxy, Manuel Castells, Oxford University Press 2001, chapter 1
11
http://www.zakon.org/robert/internet/timeline
12
http://iml.jou.ufl.edu/carlson/History/videotex.htm
successful and popular system. The services were delivered through telephone lines and revenues
were shared among FT and the local providers.
Other examples of early digital networks emerging in that time are Teletext, Viewtron, Telset
(Finland) Viewdata, Ibertex (Spain), The Source, Captain (Japan), Viditel (Netherlands), Qube, Alex
(Quebec), Telidon (Canada), Viatel and Discovery 40 (Australia). At the time of the introduction of
these videotex services, most of them made use of the X.25 packet-switch technology, which was
the proven technology. Some of these networks have become obsolete, since they were not
compatible with TCP/IP, thus were only useful for local services that are connected to this (usually
decreasing) network. Others were taken over by big providers or still exist (Teletext).

Price development
In the beginning online services were pretty expensive, as one would expect. It ranges from 13
cents a minute (Compuserve, 1984) to more than a dollar a minute (GEnie, 1985) in the beginning
to unlimited access for only $6.95 a month (Atlanta Access, 1990). Still, these services were
limited to for example business sections of newspapers or other specific services, nothing like the
possibilities one can expect of the Internet of today. Online services as certain databases or
newspapers still exist today and sometimes are paid well for, but most of it is still related to the
Internet or obtained through it.

The first Internet Service Provider (ISP) was the World, providing dial-up internet access for
anyone with a computer and a telephone line.13 After that many more internet service providers
originated. Prices were high, for example the price of one hour Internet by AOL in 1993 cost about
$2,50.14 The average price of 20 hours of internet access per person between 1995 and 2000 was
$56 and the number of hosts per 1000 inhabitants had a global average of 78.15 In 2001 the price
of unlimited access by AOL (the biggest provider) was $24 per month. Today unlimited access
prices range per country, in the US prices for unlimited access, depending on connection speed
and region, range from less than $10 per month to $30 a month.

Part c - Market actors and factors

This part considers the most important market actors and factors that have contributed in the
different phases. Although some is explained in the previous text, it provides some overview in
the realization of the Internet. The different phases can be defined by the development phase and
the diffusion phase. The reason that there is no testing phase is that the Internet (ARPANET) was
used immediately after development and that development happens during and through
diffusion.

a.2. Development phase (1963-1972)

Two words are very important in the development phase: ARPA and packet-switching. The origins
of the Internet are more or less embedded in these words. ARPA created a development
atmosphere which was very unlike the time. Packet-switching technologies were developed just
before the creation of ARPANET, what enabled scientists to make distributed networks, one of the
most important features of the Internet. Of course, many more actors and factors have proven to
be essential in the creation of the Net, such as the diffusion and development of (personal)
computers and their applications. Packet-switching technology provided possibilities in the need
of distribution of information(flow), but it was invented separately from ARPA or any other
research institute active in communication. The technologies that sprung out of the invention,
such as TCP/IP or x.25 dó have their origins at those institutes.

ARPA
As explained earlier, the Advanced Research Projects Agency was the most important player in
the creation of the Internet. Together with BBN they created the network between first few nodes
where communication took place. The Defense Administration set up ARPA in response of the
13
http://world.std.com
14
http://iml.jou.ufl.edu/carlson/1990s.shtml
15
OECD, Telcordia Technologies: www.netsizer.com, May 2001
launch of the first communications satellite by the Russians during the Cold War. The emphasis of
the agency though was on research, above all research on possibilities of communication on
computers. There was a deliberate research program towards setting up a network of computers
and the first network was created by only a small group of pioneers, consisting of scientists and
engineers of different universities and BBN. The budget to develop this first outline of the Net
came from Defense and was a couple of million dollars.

a.3.Diffusion and development (1972-1995)

After the first public demonstration in 1972 many more hubs and nodes were added to the
network. All of these nodes were placed at research centers and universities throughout the US
and some were placed in Europe. Because the network consisted of only scientists and engineers
who had a good understanding of how the network worked and there was a very open culture in
providing each other information and knowledge, the further development and tuning of the
network happened on very fast. This open culture, that is still a very important aspect of the
internet (i.e. newsgroups, communities etc.) and that was pretty unusual in that time, has given
the expansion of applications and the speed of development an enormous boost. On the other
hand, adding nodes was very easy and most software was open and available, so costs stayed
low. For a long time ARPA (or a division of ARPA) was the main driver behind the development and
control of the network, but because of the open-mindedness of the directors a huge network of
scientists, engineers, students and hackers originated. In this way users became producers of the
technology and shapers of the whole network (Castells). Also the development of protocols
happened in this manner, with the creation of the Network Working Group. This group developed
TCP/IP, the main protocol that is used by almost any computer connected on the Internet. In short,
the further development of ARPANET/Internet, so after the first demonstration, happened on a
very cheap and open manner. The geographical broadness of development reached to any
computer connected to a network (ARPANET or any other big network), that consisted of
universities and research centers, mainly in the US, in the beginning and bigger corporations later
on. Nowadays development is more in e-business and web-related applications and not on the
network itself. E-business has become a multi-billion dollar business.

As mentioned the expansion of the network happened at universities and other (mainly public)
institutes that had interest in computers and their possibilities. In the ’70s many subnetworks
came up in the US and in Europe, but a commercial market still did not emerge. Very important
factors in the diffusion of the network were compatibility of different networks through TCP/IP, the
openness and cheapness of software and the fact that the network expanded within research
centers. This last made the technology, when finally introduced to the market, commercially
exploitable, because of the technical qualities it had and the broad range of possibilities that were
already developed and proven within these institutes.

The actors that contributed to the diffusion and development in this phase are ARPA and the other
connected institutes (of course). Later on NSF created their own network and made TCP/IP the
basic protocols to connect hosts to the Net. NSFNET became the biggest network worldwide by
co-opting ARPANET in 1989, and later turned into the Internet.4 One of the most important events
of the history of the Internet took place in Switzerland, at the research institute CERN, which was
connected to the ARPANET. Here the World Wide Web was developed by one man, Tim Berners-
Lee, who also invented the first browser. He spread the software he made as open-source
software, so that anyone could modify. Other important actors are the computer corporations and
software developers. They transformed the computer from an extraordinary big calculator into a
multifunctional fast machine with millions of possibilities.

a.4.Further diffusion and commercialization (1995-2004)

Between 1989 and 1995 not many changes were made in the structure of the network, so
development of it was put on a side track, the time had come for commercialization. With
commercialization the commercial exploitation of the network is meant. Internet-related
companies already existed in the ’80s and, as depicted earlier, commercial networks of videotex
services existed in the late ’70s. In the beginning of the ’90s (the first one in 1988) many online
service providers started commercial exploitation of the Net, merely providing e-mail services.
The National Science Foundation (NSF) decided to commercialize their network from 1990 on.
Between 1990 and 1995, the year management of the Net was handed over to commercial
organizations, the popularity of the Net had grown immense and the business had turned into one
of the biggest and most promising in the world. NSF played a crucial role in the early expansion of
the Internet, but also in the commercialization of it. In the ’80s they built a large network of
supercomputers which became very handy by the time big magazines ran cover stories about
‘cyberspace’, which was available on the network of NSF.

In 1993 federal legislation allowed NSF to commercialize the backbone and in 1995 the network
was handed over to big telephone companies and other big companies that were interested in
this booming technology. These commercial corporations took care of new infrastructure and
maintenance, sometimes subsidized by public institutions as NSF. Many factors can be considered
important in the vast popularity if the Internet, but one of the most important is the range of
possibilities that it provided to companies, but also to individuals. Another important factor, it is
actually a feature of the Internet, is the network advantage. More users, more companies making
internet-related software, more information stored online provide more advantages to the users.

Because governments saw opportunities in the Internet in getting competitive advantages

programs were set up to inform their citizens and companies of the advantages and sometimes
subsidized the construction of the infrastructure.16 The most important role is put to the
companies that have originated or already existed providing the Internet to individuals and
companies. As said governments played an important role in subsidizing and providing
information, but also in legislation. Almost any company in the computer industry has provided
more possibilities of the Internet and are very important as well. The decrease in price of personal
computers made it possible that almost anyone could pay for a computer.

a.5.Future developments
The Internet backbone is still growing, especially in the Third World, but development of the
structure has slowed down.17 The emphasis in this context is more on regulation and permissions.
The development of Internet-related applications is fast and e-business is booming. Any possibility
provides market opportunities and companies are still eager to take these. First of all there is
wireless internet. This new technology, using satellites, provides a broad range of possibilities.
Any possibility creates chances for companies to build software or applications, thus making a
whole new market. Other trends are the desire to work at home or on the road, e-learning,
globalization and the popularity of PDA’s and other mobile devices with possibilities within the
Internet. Although the Internet has grown to be a standard way to communicate, we are still at
the basis of it. With applications becoming cheaper and technologies enabling newer ways of
information flows there is still a long way to go.

16
http://www.ez.nl/default_bel.asp?pagina=ict_infrastructuur
17
The only ‘new’ development is the integration of a better protocol, Ipv6