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INTERNET ASCENDANT, PART 2: GOING PRIVATE AND GOING PUBLIC
Posted on October 22, 2020November 13, 2020 by technicshistory
In the summer of 1986, Senator Al Gore, Jr., of Tennessee introduced an
amendment to the Congressional Act that authorized the budget of the National
Science Foundation (NSF). He called for the federal government to study the
possibilities for “communications networks for supercomputers at universities
and Federal research facilities.” To explain the purpose of this legislation,
Gore called on a striking analogy:
> One promising technology is the development of fiber optic systems for voice
> and data transmission. Eventually we will see a system of fiber optic systems
> being installed nationwide. America’s highways transport people and materials
> across the country. Federal freeways connect with state highways which connect
> in turn with county roads and city streets. To transport data and ideas, we
> will need a telecommunications highway connecting users coast to coast, state
> to state, city to city. The study required in this amendment will identify the
> problems and opportunities the nation will face in establishing that highway.1
In the following years, Gore and his allies would call for the creation of an
“information superhighway”, or, more formally, a national information
infrastructure (NII). As he intended, Gore’s analogy to the federal highway
system summons to mind a central exchange that would bind together various local
and regional networks, letting all American citizens communicate with one
another. However, the analogy also misleads – Gore did not propose the creation
of a federally-funded and maintained data network. He envisioned that the
information superhighway, unlike its concrete and asphalt namesake, would come
into being through the action of market forces, within a regulatory framework
that would ensure competition, guarantee open, equal access to any service
provider (what would later be known as “net neutrality”), and provide subsidies
or other mechanisms to ensure universal service to the least fortunate members
of society, preventing the emergence of a gap between the information rich and
information poor.2
Over the following decade, Congress slowly developed a policy response to the
growing importance of computer networks to the American research community, to
education, and eventually to society as a whole. Congress’ slow march towards an
NII policy, however, could not keep up with the rapidly growing NSFNET, overseen
by the neighboring bureaucracy of the executive branch. Despite its reputation
for sclerosis, bureaucracy was created exactly because of its capacity, unlike a
legislature, to respond to events immediately, without deliberation. And so it
happened that, between 1988 and 1993, the NSF crafted the policies that would
determine how the Internet became private, and thus went public. It had to deal
every year with novel demands and expectations from NSFNET’s users and peer
networks. In response, it made decisions on the fly, decisions which rapidly
outpaced Congressional plans for guiding the development of an information
superhighway. These decisions rested largely in the hands of a single man –
Stephen Wolff.
ACCEPTABLE USE
Wolff earned a Ph.D. in electrical engineering at Princeton in 1961 (where he
would have been a rough contemporary of Bob Kahn), and began what might have
been a comfortable academic career, with a post-doctoral stint at Imperial
College, followed by several years teaching at Johns Hopkins. But then he
shifted gears, and took a position at the Ballistics Research lab in Aberdeen,
Maryland. He stayed there for most of the 1970s and early 1980s, researching
communications and computing systems for the U.S. Army. He introduced Unix into
the lab’s offices, and managed Aberdeen’s connection to the ARPANET.3
In 1986, the NSF recruited him to manage the NSF’s supercomputing backbone – he
was a natural fit, given his experience connecting Army supercomputers to
ARPANET. He became the principal architect of NSFNET’s evolution from that point
until his departure in 1994, when he entered the private sector as a manager for
Cisco Systems. The original intended function of the net that Wolff was hired to
manage had been to connect researchers across the U.S. to NSF-funded
supercomputing centers. As we saw last time, however, once Wolff and the other
network managers saw how much demand the initial backbone had engendered, they
quickly developed a new vision of NSFNET, as a communications grid for the
entire American research and post-secondary education community.
However, Wolff did not want the government to be in the business of supplying
network services on a permanent basis. In his view, the NSF’s role was to prime
the pump, creating the initial demand needed to get a commercial networking
services sector off the ground. Once that happened, Wolff felt it would be
improper for a government entity to be in competition with viable for-profit
businesses. So he intended to get NSF out of the way by privatizing the network,
handing over control of the backbone to unsubsidized private entities and
letting the market take over.
This was very much in the spirit of the times. Across the Western world, and
across most of the political spectrum, government leaders of the 1980s touted
privatization and deregulation as the best means to unleash economic growth and
innovation after the relative stagnation of the 1970s. As one example among
many, around the same time that NSFNET was getting off the ground, the FCC
knocked down several decades-old constraints on corporations involved in
broadcasting. In 1985, it removed the restriction on owning print and broadcast
media in the same locality, and two year later it nullified the fairness
doctrine, which had required broadcasters to present multiple views on
public-policy debates.
From his post at NSF, Wolff had several levers at hand for accomplishing his
goals. The first lay in the interpretation and enforcement of the network’s
acceptable use policy (AUP). In accordance with NSF’s mission, the initial
policy for the NSFNET backbone, in effect until June 1990, required all uses of
the network to be in support of “scientific research and other scholarly
activities.” This is quite restrictive indeed, and would seem to eliminate any
possibility of commercial use of the network. But Wolff chose to interpret the
policy liberally. Regularly mailing list postings about new product releases
from a corporation that sold data processing software – was that not in support
of scientific research? What about the decision to allow MCI’s email system to
connect to the backbone, at the urging of Vint Cerf, who had left government
employ to oversee the development of MCI Mail. Wolff rationalized this – and
other later interconnections to commercial email systems such as CompuServe’s –
as in support of research by making it possible for researchers to communicate
digitally with a wider range of people that they might need to contact in the
pursuit of their work. A stretch, perhaps. But Wolff saw that allowing some
commercial traffic on the same infrastructure that was used for public NSF
traffic would encourage the private investment needed to support academic and
educational use on a permanent basis.
Wolff’s strategy of opening the door of NSFNET as far as possible to commercial
entities got an assist from Congress in 1992, when Congressman Rick Boucher, who
helped oversee NSF as chair of the Science Subcommittee, sponsored an amendment
to the NSF charter which authorized any additional uses of NSFNET that would
“tend to increase the overall capabilities of the networks to support such
research and education activities.” This was an ex post facto validation of
Wolff’s approach to commercial traffic, allowing virtually any activity as long
as it produced profits that encouraged more private investment into NSFNET and
its peer networks.
DUAL-USE NETWORKS
Wolff also fostered the commercial development of networking by supporting the
regional networks’ reuse of their networking hardware for commercial traffic. As
you may recall, the NSF backbone linked together a variety of not-for-profit
regional nets, from NYSERNet in New York to Sesquinet in Texas to BARRNet in
northern California. NSF did not directly fund the regional networks, but it did
subsidize them indirectly, via the money it provided to labs and universities to
offset the costs of their connection to their neighborhood regional net. Several
of the regional nets then used this same subsidized infrastructure to spin off a
for-profit commercial enterprise, selling network access to the public over the
very same wires used for the research and education purposes sponsored by NSF.
Wolff encouraged them to do so, seeing this as yet another way to accelerate the
transition of the nation’s research and education infrastructure to private
control.
This, too, accorded neatly with the political spirit of the 1980s, which
encouraged private enterprise to profit from public largesse, in the expectation
that the public would benefit indirectly through economic growth. One can see
parallels with the dual-use regional networks in the 1980 Bayh-Dole Act, which
defaulted ownership of patents derived from government-funded research to the
organization performing the work, not to the government that paid for it.
The most prominent example of dual-use in action was PSINet, a for-profit
company initially founded as Performance Systems International in 1988. William
Schrader and Martin Schoffstall, the co-founder of NYSERNet and one of vice
presidents’, respectively, created the company. Schofstall, a former BBN
engineer and co-author of the Simple Network Management Protocol (SNMP) for
managing the devices on an IP network, was the key technical leader. Schrader,
an ambitious Cornell biology major and MBA who had helped his alma mater set up
its supercomputing center and get it connected to NSFNET, provided the business
drive. He firmly believed that NYSERNet should be selling service to businesses,
not just educational institutions. When the rest of the board disagreed, he quit
to found his own company, first contracting with NYSERNet for service, and later
raising enough money to acquire its assets. PSINet thus became one of the
earliest commercial internet service providers, while continuing to provide
non-profit service to colleges and universities seeking access to the NSFNET
backbone.4
Wolff’s final source of leverage for encouraging a commercial Internet lay in
his role as manager of the contracts with the Merit-IBM-MCI consortium that
operated the backbone. The initial impetus for change in this dimension came not
from Wolff, however, but from the backbone operators themselves.
A FOR-PROFIT BACKBONE
MCI and its peers in the telecommunications industry had a strong incentive to
find or create more demand for computer data communications. They had spent the
1980s upgrading their long-line networks from coaxial cable and microwave –
already much higher capacity than the old copper lines – to fiber optic cables.
These cables, which transmitted laser light through glass, had tremendous
capacity, limited mainly by the technology in the transmitters and receivers on
either end, rather than the cable itself. And that capacity was far from
saturated. By the early 1990s, many companies had deployed OC-48 transmission
equipment with 2.5 Gbps of capacity, an almost unimaginable figure a decade
earlier. An explosion in data traffic would therefore bring in new revenue at
very little marginal cost – almost pure profit.5
The desire to gain expertise in the coming market in data communications helps
explains why MCI was willing to sign on to the NSFNET bid proposed by Merit,
which massively undercut the competing bids (at $14 million for five years,
versus the $40 and $25 millions proposed by their competitors6), and surely
implied a short-term financial loss for MCI and IBM. But by 1989, they hoped to
start turning a profit from their investment. The existing backbone was
approaching the saturation point, with 500 million packets a month, a 500%
year-over-year increase.7 So, when NSF asked Merit to upgrade the backbone from
1.5 Mbps T1 lines to 45Mbps T3, they took the opportunity to propose to Wolff a
new contractual arrangement.
T3 was a new frontier in networking – no prior experience or equipment existed
for digital networks of this bandwidth, and so the companies argued that more
private investment would be needed, requiring a restructuring that would allow
IBM and Merit to share the new infrastructure with for-profit commercial traffic
– a dual-use backbone. To achieve this, the consortium would from a new
non-profit corporation, Advanced Network & Services, Inc. (ANS), which would
supply T3 networking services to NSF. A subsidiary called ANS CO+RE systems
would sell the same services at a profit to any clients willing to pay. Wolff
agreed to this, seeing it as just another step in the transition of the network
towards commercial control. Moreover, he feared that continuing to block
commercial exploitation of the backbone would lead to a bifurcation of the
network, with suppliers like ANS doing an end-run around NSFNET to create their
own, separate, commercial Internet.
Up to that point, Wolff’s plan for gradually getting NSF out of the way had no
specific target date or planned milestones. A workshop on the topic held at
Harvard in March 1990, in which Wolff and many other early Internet leaders
participated, considered a variety of options without laying out any concrete
plans.8 It was ANS’ stratagem that triggered the cascade of events that led
directly to the full privatization and commercialization of NSFNET.
It began with a backlash. Despite Wolff’s good intentions, IBM and MCI’s ANS
maneuver created a great deal of disgruntlement in the networking community. It
became a problem exactly because of the for-profit networks attached to the
backbone that Wolff had promoted. So far they had gotten along reasonably with
one another, because they all operated as peers on the same terms. But with ANS,
a for-profit company held a de-facto monopoly on the backbone at the center of
the Internet.9 Moreover, despite Wolff’s efforts to interpret the AUP loosely,
ANS chose to interpret it strictly, and refused to interconnect the non-profit
portion of the backbone (for NSF traffic) with any of their for-profit networks
like PSI, since that would require a direct mixing of commercial and
non-commercial traffic. When this created an uproar, they backpedaled, and came
up with a new policy, allowing interconnection for a fee based on traffic
volume.
PSINet would have none of this. In the summer of 1991, they banded together with
two other for-profit Internet service providers – UUNET, which had begun by
selling commercial access to Usenet before adding Internet service; and the
California Education and Research Federation Network, or CERFNet, operated by
General Atomics – to form their own exchange, bypassing the ANS backbone. The
Commercial Internet Exchange (CIX) consisted at first of just a single routing
center in Washington D.C. which could transfer traffic among the three networks.
They agreed to peer at no charge, regardless of the relative traffic volume,
with each network paying the same fee to CIX to operate the router. New routers
in Chicago and Silicon Valley soon followed, and other networks looking to avoid
ANS’ fees also joined on.
DIVESTITURE
Rick Boucher, the Congressman whom we met above as a supporter of NSF
commercialization, nonetheless requested an investigation of the propriety of
Wolff’s actions in the ANS affair by the Office of the Inspector General. It
found NSF’s actions precipitous, but not malicious or corrupt. Nevertheless,
Wolff saw that the time had come to divest control of the backbone. With ANS +
CORE and CIX privatization and commercialization had begun in earnest, but in a
way that risked splitting the unitary Internet into multiple disconnected
fragments, as CIX and ANS refused to connect with one another. NSF therefore
drafted a plan for a new, privatized network architecture in the summer of 1992,
released it for public comment, and finalized it in May of 1993. NSFNET would
shut down in the spring of 1995, and its assets would revert to IBM and MCI. The
regional networks could continue to operate, with financial support from the NSF
gradually phasing out over a four year period, but would have to contract with a
private ISP for internet access.
But in a world of many competitive internet access providers, what would replace
the backbone? What mechanism would link these opposed private interests into a
cohesive whole? Wolff’s answer was inspired by the exchanges already built by
cooperatives like CIX – NSF would contract out the creation of four Network
Access Points (NAPs), routing sites where various vendors could exchange
traffic. Having four separate contracts would avoid repeating the ANS
controversy, by preventing a monopoly on the points of exchange. One NAP would
reside at the pre-existing, and cheekily named, Metropolitan Area Ethernet East
(MAE-East) in Vienna, Virginia, operated by Metropolitan Fiber Systems (MFS).
MAE-West, operated by Pacific Bell, was established in San Jose, California;
Sprint operated another NAP in Pennsauken, New Jersey, and Ameritech one in
Chicago. The transition went smoothly10, and NSF decommissioned the backbone
right on schedule, on April 30, 1995.11
THE BREAK-UP
Though Gore and others often invoked the “information superhighway” as a
metaphor for digital networks, there was never serious consideration in Congress
of using the federal highway system as a direct policy model. The federal
government paid for the building and maintenance of interstate highways in order
to provide a robust transportation network for the entire country. But in an era
when both major parties took deregulation and privatization for granted as good
policy, a state-backed system of networks and information services on the French
model of Transpac and Minitel was not up for consideration.12
Instead, the most attractive policy model for Congress as it planned for the
future of telecommunication was the long-distance market created by the break-up
of the Bell System between 1982 and 1984. In 1974, the Justice Department filed
suit against AT&T, its first major suit against the organization since the
1950s, alleging that it had engaged in anti-competitive behavior in violation of
the Sherman Antitrust Act. Specifically, they accused the company of using its
market power to exclude various innovative new businesses from the market –
mobile radio operators, data networks, satellite carriers, makers of specialized
terminal equipment, and more. The suit thus clearly drew much of its impetus
from the ongoing disputes since the early 1960s (described in an earlier
installment), between AT&T and the likes of MCI and Carterfone.
When it became clear that the Justice Department meant business, and intended to
break the power of AT&T, the company at first sought redress from Congress. John
de Butts, chairman and CEO since 1972, attempted to push a “Bell bill” –
formally the Consumer Communications Reform Act – through Congress. It would
have enshrined into law AT&T’s argument that the benefits of a single, universal
telephone network far outweighed any risk of abusive monopoly, risks which in
any case the FCC could already effectively check. But the proposal received
stiff opposition in the House Subcommittee on Communications, and never reached
a vote on the floor of either Congressional chamber.
In a change of tactics, in 1979 the board replaced the combative de Butts – who
had once declared openly to an audience of state telecommunications regulators
the heresy that he opposed competition and espoused monopoly – with the more
conciliatory Charles Brown. But it was too late by then to stop the momentum of
the antitrust case, and it became increasingly clear to the company’s leadership
that they would not prevail. In January 1982, therefore, Brown agreed to a
consent decree that would have the presiding judge in the case, Harold Greene,
oversee the break-up of the Bell System into its constituent parts.
The various Bell companies that brought copper to the customer’s premise, which
generally operated by state (New Jersey Bell, Indiana Bell, and so forth) were
carved up into seven blocks called Regional Bell Operating Companies (RBOCs).
Working clockwise around the country, they were NYNEX in the northeast, Bell
Atlantic, Bell South, Southwestern Bell, Pacific Telesis, US West, and
Ameritech. All of them remained regulated entities with an effective monopoly
over local traffic in their region, but were forbidden from entering other
telecom markets.
AT&T itself retained the “long lines” division for long-distance traffic. Unlike
local phone service, however, the settlement opened this market to free
competition from any entrant willing and able to pay the interconnection fees to
transfer calls in and out of the RBOCs. A residential customer in Indiana would
always have Ameritech as their local telephone company, but could sign up for
long-distance service with anyone.
However, splitting apart the local and long-distance markets meant forgoing the
subsidies that AT&T had long routed to rural telephone subscribers,
under-charging them by over-charging wealthy long-distance users. A sudden spike
in rural telephone prices across the nation was not politically tenable, so the
deal preserved these transfers via a new organization, the non-profit National
Exchange Carrier Association, which collected fees from the long-distance
companies and distributed them to the RBOCS.
The new structure worked. Two major competitors entered the market in the 1980s,
MCI and Sprint, and cut deeply into AT&T’s market share. Long-distance prices
fell rapidly. Though it is arguable how much of this was due to competition per
se, as opposed to the advent of ultra-high-bandwidth fiber optic networks, the
arrangement was generally seen as a great success for de-regulation and a clear
argument for the power of market forces to modernize formerly hidebound
industries.
This market structure, created ad hoc by court fiat but evidently highly
successful, provided the template from which Congress drew in the mid-1990s to
finally resolve the question of what telecom policy for the Internet era would
look like.
SECOND TIME ISN’T THE CHARM
Prior to the main event, there was one brief preliminary. The High Performance
Computing Act of 1991 was important tactically, but not strategically. It
advanced no new major policy initiatives. Its primary significance lay in
providing additional funding and Congressional backing for what Wolff and the
NSF already were doing and intended to keep doing – providing networking
services for the research community, subsidizing academic institutions’
connections to NSFNET, and continuing to upgrade the backbone infrastructure.
Then came the accession of the 104th Congress in January 1995. Republicans took
control of both the Senate and the House for the first time in forty years, and
they came with an agenda to fight crime, cut taxes, shrink and reform
government, and uphold moral righteousness. Gore and his allies had long touted
universal access as a key component of the National Information Infrastructure,
but with this shift in power the prospects for a strong universal service
component to telecommunications reform diminished from minimal to none. Instead,
the main legislative course would consist of regulatory changes to foster
competition in telecommunications and Internet access, with a serving of
bowdlerization on the side.
The market conditions looked promising. Circa 1992, the major players in the
telecommunications industry were numerous. In the traditional telephone industry
there were the seven RBOCs, GTE, and three large long distance companies – AT&T,
MCI, and Sprint – along with many smaller ones. The new up-and-comers included
Internet service providers, such as UUNET, and PSINET as well as the IBM/MCI
backbone spin-off, ANS; and other companies trying to build out their local
fiber networks, such as Metropolitan Fiber Systems (MFS). BBN, the contractor
behind ARPANET, had begun to build its own small Internet empire, snapping up
some of the regional networks that orbited around NSFNET – Nearnet in New
England, BARRNet in the Bay area, and SURANet in the southeast of the U.S.
To preserve and expand this competitive landscape would be the primary goal of
the 1996 Telecommunications Act, the only major rewrite of communications policy
since the Communications Act of 1934. It intended to reshape telecommunications
law for the digital age. The regulatory regime established by the original act
siloed industries by their physical transmission medium – telephony, broadcast
radio and television, cable TV; in each in its own box, with its own rules, and
generally forbidden to meddle in each other’s business. As we have seen,
sometimes regulators even created silos within silos, segregating the
long-distance and local telephone markets. This made less and less sense as
media of all types were reduced to fungible digital bits, which could be
commingled on the same optical fiber, satellite transmission, or ethernet
cable.
The intent of the 1996 Act, shared by Democrats and Republicans alike, was to
tear down these barriers, these “Berlin Walls of regulation”, as Gore’s own
summary of the act put it.13 A complete itemization of the regulatory changes in
this doorstopper of a bill is not possible here, but a few examples provide a
taste of its character. Among other things it:
* allowed the RBOCs to compete in long-distance telephone markets,
* lifted restrictions forbidding the same entity from owning both broadcasting
and cable services,
* axed the rules that prevented concentration of radio station ownership.
The risk, though, of simply removing all regulation, opening the floodgates and
letting any entity participate in any market, was to recreate AT&T on an even
larger scale, a monopolistic megacorp that would dominate all forms of
communication and stifle all competitors. Most worrisome of all was control over
the so-called last mile – from the local switching office to the customer’s home
or office. Building an inter-urban network connecting the major cities of the
U.S. was expensive but not prohibitive, several companies had done so in recent
decades, from Sprint to UUNET. To replicate all the copper or cable to every
home in even one urban area, was another matter. Local competition in landline
communications had scarcely existed since the early wildcat days of the
telephone, when tangled skeins of iron wire criss-crossed urban streets. In the
case of the Internet, the concern centered especially on high-speed,
direct-to-the-premises data services, later known as broadband. For years,
competition had flourished among dial-up Internet access providers, because all
the end user required to reach the provider’s computer was access to a dial
tone. But this would not be the case by default for newer services that did not
use the dial telephone network.
The legislative solution to this conundrum was to create the concept of the
“CLEC” – competitive local exchange carrier. The RBOCs, now referred to as
“ILECs” (incumbent local exchange carriers), would be allowed full, unrestricted
access to the long-distance market only once the had unbundled their networks by
allowing the CLECs, which would provide their own telecommunications services to
homes and businesses, to interconnect with and lease the incumbents’
infrastructure. This would enable competitive ISPs and other new service
providers to continue to get access to the local loop even when dial-up service
became obsolete – creating, in effect, a dial tone for broadband. The CLECs, in
this model, filled the same role as the long-distance providers in the
post-break-up telephone market. Able to freely interconnect at reasonable fees
to the existing local phone networks, they would inject competition into a
market previously dominated by the problem of natural monopoly.
Besides the creation of the CLECS, the other major part of the bill that
affected the Internet addressed the Republicans’ moral agenda rather than their
economic one. Title V, known as the Communications Decency Act, forbade the
transmission of indecent or offensive material – depicting or describing “sexual
or excretory activities or organs”, on any part of the Internet accessible to
minors. This, in effect, was an extension of the obscenity and indecent rules
that governed broadcasting into the world of interactive computing services.
How, then, did this sweeping act fare in achieving its goals? In most dimensions
it proved a failure. Easiest to dispose with is the Communications Decency Act,
which the Supreme Court struck down quickly (in 1997) as a violation of the
First Amendment. Several parts of Title V did survive review however, including
Section 230, the most important piece of the entire bill for the Internet’s
future. It allows websites that host user-created content to exist without the
fear of constant lawsuits, and protects the continued existence of everything
from giants like Facebook and Twitter to tiny hobby bulletin boards.
The fate of the efforts to promote competition within the local loop took longer
to play out, but proved no more successful than the controls on obscenity. What
about the CLECs, given access to the incumbent cable and telephone
infrastructure so that they could compete on price and service offerings? The
law required FCC rulemaking to hash out the details of exactly what kind of
unbundling had to be offered. The incumbents pressed the courts hard to dispute
any such ruling that would open up their lines to competition, repeatedly
winning injunctions on the FCC, while threatening that introducing competitors
would halt their imminent plans for bringing fiber to the home.
Then, with the arrival of the Bush Administration and new chairman Michael
Powell in 2001, the FCC became actively hostile to the original goals of the
Telecommunications Act. Powell believed that the need for alternative broadband
access would be satisfied by intermodal competition among cable, telephone,
power communications networks, cellular and wireless networks. No more FCC rules
in favor of CLECs would be forthcoming. For a brief time around the year 2000,
it was possible to subscribe to third-party high-speed internet access using the
infrastructure of your local telephone or cable provider. After that, the most
central of the Telecom Act’s pro-competitive measures became, in effect, a dead
letter. The much ballyhooed fiber-to-the home only began to actually reach a
significant number of homes after 2010, and the only with reluctance on the part
of the incumbents.14 As author Fred Goldstein put it, the incumbents had “gained
a fig leaf of competition without accepting serious market share losses.”15
During most of the twentieth century, networked industries in the U.S. had
sprouted in a burst of entrepreneurial energy and then been fitted into the
matrix of a regulatory framework as they grew large and important enough to
affect the public interest. Broadcasting and cable television had followed this
pattern. So had trucking and the airlines. But with the CLECs all but dead by
the early 2000s, the Communications Decency Act revoked, and other attempts to
control the Internet such as the Clipper chip16 stymied, the Internet would
follow an opposite course.
Having come to life under the guiding hand of the state, it would now be allowed
to develop in an almost entirely laissez-faire fashion. The NAP framework
established by the NSF at the hand-off of the backbone would be the last major
government intervention in the structure of the Internet. This was true at both
the transport layer – the networks such as Verizon and AT&T that transported raw
data, and the applications layer – software services from portals like Yahoo! to
search engines like Google to online stores like Amazon. In our last chapter,
we will look at the consequences of this fact, briefly sketching the evolution
of the Internet in the U.S. from the mid-1990s onward.
[Previous] [Next]
1. Quoted in Richard Wiggins, “Al Gore and the Creation of the Internet” 2000.
2. “Remarks by Vice President Al Gore at National Press Club“, December 21,
1993.
3. Biographical details on Wolff’s life prior to NSF are scarce – I have
recorded all of them that I could find here. Notably I have not been able
to find even his date and place of birth.
4. Schrader and PSINet rode high on the Internet bubble in the late 1990s,
acquiring other businesses aggressively, and, most extravagantly,
purchasing the naming rights to the football stadium of the NFL’s newest
expansion team, the Baltimore Ravens. Schrader tempted fate with a 1997
article entitled “Why the Internet Crash Will Never Happen.” Unfortunately
for him, it did happen, bringing about his ouster from the company in 2001
and PSINet’s bankruptcy the following year.
5. To get a sense of how fast the cost of bandwidth was declining – in the
mid-1980s, leasing a T1 line from New York to L.A. would cost $60,000 per
month. Twenty years later, a OC-3 circuit with 100 times the capacity cost
only $5,000, more than a thousand-fold reduction in price per capacity. See
Fred R. Goldstein, The Great Telecom Meltdown, 95-96. Goldstein states that
the 1.55 mpbs T1/DS1 line has 1/84th the capacity of OC-3, rather than
1/100th, a discrepancy I can’t account for. But this has little effect on
the overall math.
6. Office of Inspector General, “Review of NSFNET,” March 23, 1993.
7. Fraser, “NSFNET: A Partnership for High-Speed Networking, Final Report”,
27.
8. Brian Kahin, “RFC 1192: Commercialization of the Internet Summary Report,”
November 1990.
9. John Markoff, “Data Network Raises Monopoly Fear,” New York Times, December
19, 1991.
10. Though many other technical details had to be sorted out, see Susan R.
Harris and Elise Gerich, “Retiring the NSFNET Backbone Service: Chronicling
the End of an Era,” ConneXions, April 1996.
11. The most problematic part of privatization proved to have nothing to do
with the hardware infrastructure of the network, but instead with handing
over control over the domain name system (DNS). For most of its history,
its management had depended on the judgment of a single man – Jon Postel.
But businesses investing millions in a commercial internet would not stand
for such an ad hoc system. So the government handed control of the domain
name system to a contractor, Network Solutions. The NSF had no real
mechanism for regulatory oversight of DNS (though they might have done
better by splitting the control of different top-level domains (TLDs) among
different contractors), and Congress failed to step in to create any kind
of regulatory regime. Control changed once again in 1998 to the non-profit
ICANN (Internet Corporation for Assigned Names and Numbers), but the
management of DNS still remains a thorny problem.
12. The only quasi-exception to this focus on fostering competition was a
proposal by Senator Daniel Inouye to reserve 20% of Internet traffic for
public use: Steve Behrens, “Inouye Bill Would Reserve Capacity on
Infohighway,” Current, June 20, 1994. Unsurprisingly, it went nowhere.
13. Al Gore, “A Short Summary of the Telecommunications Reform Act of 1996”.
14. Jon Brodkin, “AT&T kills DSL, leaves tens of millions of homes without
fiber Internet,” Ars Technica, October 5, 2020.
15. Goldstein, The Great Telecom Meltdown, 145.
16. The Clipper chip was a proposed hardware backdoor that would give the
government the ability to bypass any U.S.-created encryption software.
FURTHER READING
Janet Abatte, Inventing the Internet (1999)
Karen D. Fraser “NSFNET: A Partnership for High-Speed Networking, Final Report”
(1996)
Shane Greenstein, How the Internet Became Commercial (2015)
Yasha Levine, Surveillance Valley: The Secret Military History of the Internet
(2018)
Rajiv Shah and Jay P. Kesan, “The Privatization of the Internet’s Backbone
Network,” Journal of Broadcasting & Electronic Media (2007)
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