How the Internet Became Commercial:
Innovation, Privatization, and the Birth of a New Network

Shane Greenstein

This book is an economist’s perspective on the Internet. It has many clues for would be entrepreneurs or investors. The epilog serves as sort of an executive summary.

My ‘take-away’ inspired mainly by the book, is that the government, which controlled the ARPA net, uncharacteristically stepped aside and let go of the tail of the tiger, so that it could not be captured by any one particular institution. The FCC’s uncharacteristic creation of unlicensed spectrum for WiFi played a significant role. In short the US government acted in large under a libertarian perspective. This followed a period when the FCC and the courts were undoing the mandated AT&T monopoly. Decentralization was a popular notion. I have heard no credible speculation on how AT&T could have brought about something like Internet.

As I Read:

L 636: Packets in Internet or ArpaNet are not fixed size. (Perhaps they should be.) This is a probably harmless error.

L 719: To speculate on privatization must include speculation on service and its prices. Perhaps they got some of this wrong.

L 1200: Greenstein discusses Internet governance (or nongovernance) from an organizational perspective. Internet developed much as a technology develops within an informal company, but there was no encompassing company for Internet.

L 1620: Greenstein has a funny section on “honest policy wonks” who pushed for a utopian vision of communications against traditional special interests. I do not view the old AT&T as corrupt, but it was a special interest. I would love to know how Greenstein would view DSR.

L 1729: Greenstein describes early network operators offerings. He does not mention who owns the long wires and fibers that actually move the bits.

L 1862: “rights to operate a NAP [Network Access Point]” what are those? According to whose laws? The NSF was extricating itself.

L 3191: The subject is the emergence of early ISPs. Greenstein avoids the obvious question of the dial up protocol. Did the client computer need an IP stack?

L 5723: I very much enjoy the description of IBM’s Internet immersion. I was at the periphery and with the information here many of the details now make more sense now.

L 5929:

I am still curious about what it means that institution X connects to institution Y. It once meant that you called the telco and leased a line. Some of these carriers actually dug ditches, I think.

L 6613: I was and am somewhat of an expert in system architecture. I have never heard a clear explanation of what is meant by “bolting IE to the operating system”. I have heard several people who thought they understood what it meant but who were unable to describe any of the relevant technical details. For instance, did IE run in privileged mode? How, specifically, did it make the resulting system better in even one small detail?

L 6890: In chapter 12 Greenstein psychoanalyses the Internet bubble. It is an interesting dissection. Greenstein characterizes the bubble as short term mentality.

L 7118:

The test of this claim is whether this ‘senior management’ invested themselves in these evanescent firms.

L 7381 (around about): The subject is Internet Exceptionalism. Internet is special but not quite as special as many thought. Internet was an extreme case of invention (or evolution) expanding into the ‘adjacent possible’ to make way for new invention or evolution.

L 7590: Greenstein recounts Google’s origins. I must comment here on the success of Google’s search engine. When Google began I was using Alta Vista and was satisfied with it. I heard of Google and tried it. I do not recall deciding to switch. Soon I realized that I had not used Alta Vista for a while. Reward centers in my brain had been pleased with Google’s results and managed a switch without consulting me. The psychology here is that reenforcement was occurring while I was enjoying the material Google had found. My awareness was directed toward that and not the quality of the search.

Greenstein notes the disinterest shown by search organizations in the their demo. It is hard to evaluate objectively, but easy subjectively.

L 7731: I am pleased to learn of the strategic importance of 2nd price auctions. Agorics pushed them in other contexts somewhat earlier.

L 7868: Greenstein explains the virtuous cycle leading Google to provide good ‘organic’ search results, (to attract future visits) at least for query subjects vaguely related to something one might buy. I find Google very good indeed even at obscure mathematical questions etc.

L 8554: As Greenstein summarizes he describes well the attributes of Internet that differed from those of Tymnet. I mention some of those differences here.

Greenstein speaks of a diverse explosion of investment and technical effort to enable commercial internet. I think that Tymnet was largely responsible for making people realize that there was at least a core market for such digital communications and that the phone company was not serving that market. The Internet promised a venue to make money serving that market. Tymnet provided no such opportunity.

I am having troubling internalizing the valid distinction that Greenstein makes between open and closed systems. I think out loud here. I worked for IBM for a while. In the middle 60’s I think that very few in IBM could have imagined a scene where a person sat at a desk before a display with patches of screen space produced by different institutions. There were then terminals. The IBMer would have asked, “Who built the terminal?”, (hopefully IBM), “Who wrote the code to put characters on the screen?”, (hopefully IBM or a programmer employed by IBM’s customer). How is it possibly that two institutions shared one screen? It would take a few hours of explaining. A lot of water has flown under the bridge.

IBM’s proprietary bent is related to AOL’s walled garden. In each case the priority is in making a sale, not in serving a need. In the above scenario, AOL would strive to supply all of the windows.