Marketing Insiders Club

A Brief History of The Internet and How It Made eCommerce Possible

By David Vallieres

I think everyone should know how the Internet really made ecommerce possible, so here’s my research on the topic. If nothing else, it’s interesting reading!

How did commerce begin on the Internet? Has it always occurred? Why has it grown so fast?

The answers should help keep the Internet in perspective to other forms of commerce that have been with us for many centuries.

Commerce didn’t occurred on the Internet until after April, 1995 when the government sold network blocks of ARPANet (the network that was the basis for the Internet) to MCI, the telecommunications company.

Pre-1995, the Internet (or the inter-networking of computers) was funded mainly by U.S. military sources and consisted of a number of individual computers connected by leased lines and using a packet-switching scheme. In 1995 the infrastructure of the Internet was sold to the private telecommunications company, MCI. Prior to that, believe it or not, blatant advertising and any form of commerce was forbidden due to use restrictions imposed on the system by the government.

That meant that commerce could not take place. The Inter-net at that time was a system used for academic research and military strategic use and early users carry this history with them. Even today many of those early users are opposed to the Internet’s commercial capabilities.

How The Internet Made eCommerce Possible

The Internet is not a business, it is not a government project (although it did start out that way) and it is not controlled by any one entity. The Internet is actually a “networking” of computers, running on many different platforms, all over the world. It is, in its most basic sense, a communications tool and, more recently a digital goods delivery tool. The term “Internet” was developed to describe this “inter-networking of computers” to the world.

The Very Beginning of The Internet

The first phase of this inter-networking as a model was designed by the US Army during the 1960’s and 1970’s as a means of protecting the United State’s defense capability and for researchers in different parts of the country to log on to remote computers for data sharing purposes.

The designers reasoned that if telecommunications were not centralized during a nuclear attack it would be possible to continue communications with key command posts by re-routing the communications channels through a network of stations.

Stations or centers were located throughout the United States primarily at higher educational facilities subsidized by the U.S. Department of Defense.

The second phase of the Internet came in the mid-1980’s when the National Science Foundation (NSF) began providing funding to doctoral granting universities to link their faculty and researchers to a national network of supercomputers. For most of its history up to that point the Internet was subsidized by government programs and departments for the purpose of national defense and university based or government sponsored research.

Government support of the network infrastructure became an issue when “outside users” began connecting to the small but growing Internet. Because most of the Internet at that time was subsidized by the government and the NSF business activity was not allowed.

The Acceptable Use Policy for the Internet at the time stated:
“NSFNET Backbone services are provided to support open research and education in and among U.S. research and instructional institutions, plus research arms of for-profit firms when engaged in open scholarly communication and research. Use for other purposes is not acceptable.” (National Science Foundation, 1992)

There was no blatant commercial activity on the Internet, period. A major change in the Internet took place however, when the first fully commercial Internet connections became available.

The Commercial Internet Exchange (CIX) was established to provide unrestricted access to the Internet for the business community. The three founding members included Performance Systems International (PSI), which operated PSInet, General Atomics, which operated CERFnet, and UUNET Technologies, which operated AlterNet.

Due to the NSF’s Acceptable Use Policy the founding members (and the network providers that signed up for CIX services) signed an agreement to restrict commercial traffic to those segments of the Internet operated and subsidized outside of the federal government.

The Beginning of eCommerce

Since the majority of the Internet infrastructure was heavily subsidized by the US government through the National Science Foundation (NSF) commercial activity remained low. But, in April of 1995, the infrastructure maintained by the NSF was taken over by MCI, the long distance company.

Now that the infrastructure was in private hands, commercial activity became possible.

Another factor that has contributed to the increase in commercial activity and the viability of commercial activity on the Internet was the technological advances made in making secure transactions over the Internet a possibility.

This new and highly significant advance in Internet commerce allowed payment for goods and services to be done completely over the Internet in a secure manner. Amazing!

A third factor increasing the commercial viability of the Internet was the development of the World Wide Web (WWW) and “browsers” capable of displaying the Internet in a graphical user interface (GUI). This development has increased the usage of the Internet by average business users in much the same way that personal computers became very popular with consumers after the release of Microsoft WindowsTM.

Ease of use and GUI interfaces helped shape the Internet as we see it today.

Electronic commerce (EC) over the Internet provides business with the ability to create new markets for old products or create customized products for new and existing markets. This presents a great opportunity for content developers, owners and publishers.

Thanks to these historic developments we now enjoy one of the most incredible communication, social networking tools and money making opportunities ever created in the history of man.

Let’s be thankful it’s here and use it to make a fortune!

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For a more detailed history of the Internet, by those who made the history, including Barry M. Leiner, Vinton G. Cerf, David D. Clark, Robert E. Kahn, Leonard Kleinrock, Daniel C. Lynch, Jon Postel, Lawrence G. Roberts, Stephen Wolff visit: http://www.isoc.org/internet/history/