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Margit Vanberg, Computer networking in:

Margit Vanberg

Competition and Cooperation Among Internet Service Providers, page 37 - 39

A Network Economic Analysis

1. Edition 2009, ISBN print: 978-3-8329-4163-5, ISBN online: 978-3-8452-1290-6 https://doi.org/10.5771/9783845212906

Series: Freiburger Studien zur Netzökonomie, vol. 14

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37 The short history of the Internet sketched in this section raises several questions regarding the Internet development, questions that are worthwhile to explore more profoundly in order to understand the characteristics of the Internet that shall play a role in the competition policy analysis presented in this thesis: • How did Internet connectivity, the fact that many thousands of independent networks can be reached via one home network, evolve? This question will be taken up in section 3.2 which looks at the development of computer communication and the development of connectivity in more detail. • How did the present hierarchy between ISPs evolve? This aspect of Internet history is looked into in section 3.3. • Where did the common standards for Internet communication come from, and who is responsible for the further advancement of Internet standards? This question is considered in section 3.4, which takes a closer look at the development of the TCP/IP protocol suite and Internet standardization. • Lastly, how did the terms for Internet interconnection evolve? This question is taken up in section 3.5 which deals with Internet interconnection agreements. 3.2 History of computer communication and Internet transport services The foundations for computer networking and ultimately for the Internet were laid by the advent of computers and subsequent research into communication between computers for purposes of remote login and time-sharing. Section 3.2.1 gives a more detailed background on the motives for computer communication. Section 3.2.2 then traces the development of computer networking to the Internet by discussing how connectivity developed from limited interconnectivity in early computer networks to the universal connectivity of the Internet. 3.2.1 Computer networking The first computers were invented in the 1930s and 1940s. Despite their modest processing power, these large machines filled whole rooms and were very expensive. It was therefore common, that they were shared by numerous users, when they first became available for academic applications. In the 1950s, this resource-sharing meant that a user would hand in a program for calculation to an attendant and receive the results after hours or days, depending on how many people were sharing the computer, and on how complex the calculations were that were run. If a program had a “bug” in it, an error or flaw in either the source code or the software design, then it could take many iterations of this very time-consuming process to get good results. The limitations of this type of batch-processing motivated research into enabling closer human-computer interaction, an effort that resulted in so-called time-sharing 38 systems, which were used at various computer science departments in the 1960s (see Naughton, 2000: 73ff.). With time-sharing, several terminals attach to one mainframe computer. The machine cycles between the users that are online and allots its entire processing capacity to one user for a short time interval. Because the machine cycles fast, the user has the impression of having exclusive access to the resource. Time-sharing made first real human-computer interaction possible, because a user could debug and improve programs through a trial-and-error process. Time-sharing systems also furthered the interaction in the community of computer users, since users could help each other with programming by sharing files and memos on the common system. In 1962 the Advanced Research Projects Agency of the U.S. Department of Defense founded an Information Processing Techniques Office (IPTO) with the objective of funding basic seed research in computer sciences. The IPTO placed great emphasis on time-sharing projects in the academic community (see Naughton, 2000: 81). Eventually, the incompatibilities between the different time-sharing systems supported by IPTO at various university sites led IPTO to support research into computer-networking that would allow the researchers at ARPA-supported sites to access computer resources located at other sites from a single terminal (as opposed to the existing terminals, which were configured to provide login to only one specific mainframe computer). ARPA started a project on computer networking in 1966 (Naughton, 2000: 82ff.). The result of this project was the ARPANET. This network consisted of specialized mini-computers, which were interconnected by dial-up telephone lines that acted as intermediaries between their attached computers (hosts) at the ARPA-funded research sites. The responsibility for the compatibility between the hosts and for handling the communication between the intermediary computers was borne by these intermediary-computers, which were under central ARPA control and could thus communicate among one another via a standardized protocol. The communication between host and intermediary was the responsibility of each individual site. By the end of the year 1972 the ARPANET had thirty-seven network nodes (meaning intermediary-computers) (Naughton, 2000: 152). While the ARPANET was the largest networking project supported by ARPA, the agency also invested resources into the development of packet-switched terrestrial radio networks and satellite networks. Because of its experience with multiple packet-switching networks ARPA became interested in the possibility of enabling communication between packet-switching networks of different underlying technologies (Leiner et al., 2003: 4). The ensuing research into a communications protocol that could interconnect multiple networks with differences in technologies and communications protocols resulted in the specification of the TCP/IP protocol. The usefulness of computer communication and the possibility of sharing computer resources via remote login quickly carried the development of computer networks beyond the small community of ARPANET researchers. By the mid 1970s computer networks were being installed by several federal agencies and research communities. The U.S. Department of Energy, for instance, funded the MFENet for 39 research in Magnetic Fusion Energy and the HEPNet for its High Energy Physicists (Leiner et al., 2003: 8). The National Aeronautics and Space Administration (NASA) established SPAN, and the NSF approved a five year grant to finance the CSNET, a network geared towards computer scientists of smaller universities without access to the ARPANET (Jennings et al., 1986: 946). A further network established in the early 1980s for interuniversity communication on the North American East Coast was the BITNET.22 The USENET was developed as a simple store-andforward network for computers using the UNIX operating system.23 In 1988 the NSF built the NSFNET, which connected its five supercomputer sites and offered longdistance data transportation between the attached local and regional networks. There were also advances in computer networking outside of the United States.24 International networks based on packet-switching included the NPL network in the U.K., where pioneering research on packet-switching had taken place. In France, a research network named Cyclades/Cigale was started to test the U.S. and British experiences using packet-switching for computer communication. A common European initiative was the European Informatics Network. ARPA collaborated with researchers abroad, as for instance with the University College of London or the Norwegian Defense Research Establishment, to establish direct links between the ARPANET and international sites via satellite and ground connections (Hauben, 2004: 3ff.). Through these international collaborations, the ongoing work of refining the TCP/IP protocols was always an international process. Many of the features of later protocol versions, for instance, resulted out of discourses taking place at international informatics conferences.25 3.2.2 Developments in network interconnection The early computer networks were at first designed and operated for closed user groups. The networks enabled file-transfer and remote job entry in addition to communication via E-mail for users belonging to, for instance, a university consortium or a government ministry. The use of these networks was tied to a common workenvironment and common projects. Some networks, especially those in the academic 22 Jennings et al. give a detailed overview of the other computer networks existing by the mid- 1980s (Jennings et al., 1986). 23 Naughton calls the USENET the “poor man’s ARPANET” (Naughton, 2000: 169). It was based on the UNIX operating system, which was considered the most powerful operating system for mini-computers at the time. UNIX was distributed with open-source code and at low cost and was therefore very attractive to academic users. On USENET each member-site covered its own costs for dial-up telephone line communication and agreed to forward packets of other users within its own system. 24 See Hauben (2004) for information on the international origins of the Internet. 25 The biennial International Computer Communications Conference, which was started in 1972 in Washington, D.C., is such an institution where collaborative research relevant to the Internet development is initiated and discussed.

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Zusammenfassung

Die Konvergenz der Netztechnologien, die dem Internet, der Telekommunikation und dem Kabelfernsehen zu Grunde liegen, wird die Regulierung dieser Märkte grundlegend verändern. In den sogenannten Next Generation Networks werden auch Sprache und Fernsehinhalte über die IP-Technologie des Internets transportiert. Mit den Methoden der angewandten Mikroökonomie untersucht die vorliegende Arbeit, ob eine ex-ante sektorspezifische Regulierung auf den Märkten für Internetdienste wettbewerbsökonomisch begründet ist. Im Mittelpunkt der Analyse stehen die Größen- und Verbundvorteile, die beim Aufbau von Netzinfrastrukturen entstehen, sowie die Netzexternalitäten, die im Internet eine bedeutende Rolle spielen. Die Autorin kommt zu dem Ergebnis, dass in den Kernmärkten der Internet Service Provider keine monopolistischen Engpassbereiche vorliegen, welche eine sektor-spezifische Regulierung notwendig machen würden. Der funktionsfähige Wettbewerb zwischen den ISP setzt jedoch regulierten, diskriminierungsfreien Zugang zu den verbleibenden monopolistischen Engpassbereichen im vorgelagerten Markt für lokale Netzinfrastruktur voraus. Die Untersuchung zeigt den notwendigen Regulierungsumfang in der Internet-Peripherie auf und vergleicht diesen mit der aktuellen Regulierungspraxis auf den Telekommunikationsmärkten in den Vereinigten Staaten und in Europa. Sie richtet sich sowohl an die Praxis (Netzbetreiber, Regulierer und Kartellämter) als auch an die Wissenschaft.