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Privatization of the Internet 1

The Privatization of the Internet’s Backbone Network
Rajiv C. Shah & Jay P. Kesan

Rajiv C. Shah Adjunct Assistant Professor University of Illinois at Chicago Jay P. Kesan (Corresponding Author) Professor College of Law University of Illinois at Urbana-Champaign 504 E. Pennsylvania Champaign, IL 61820 T (217) 333-7887 Thismaterial is based upon work supported by the National Science Foundation under Grant No. ITR-0081426 & IIS- 0429217. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation.

Privatization of the Internet 2 Abstract Scholars have neglected the privatization of theInternet's backbone network, despite the obvious significance of the U.S. Government turning control over a powerful new communication technology to the private sector. This paper describes the transition from a government sponsored backbone network to multiple commercially owned backbone networks. We also analyze the implications of the privatization upon the Internet’s governance, competition, andperformance.

Privatization of the Internet 3 The Privatization of the Internet’s Backbone Network Histories of the Internet abound (Abbate, 1999; Hauben & Hauben, 1997; Kahn & Cerf, 1999; Moschovitis, Poole, Schuyler, & Senft, 1999; Naughton, 2000; Reid, 1997; Salus, 1995; Schiller, 1999; Segaller, 1998), yet a comprehensive account of the privatization of the Internet’s backbone network doesnot exist. When it comes to describing the transition of control from the government to the private sector, the descriptions suddenly shift to the passive tense. It becomes unclear who the actors were and what actions they took to privatize the backbone network. The lack of coverage from the mainstream press led Project Censored to place the privatization of the Internet backbone in their top tenlist for 1995 (Jensen, 1997). This article provides the history of the privatization of the backbone network. This is valuable because the privatization has not been scrutinized by either academics or the press. We also believe the privatization has a significance for communication scholars for several additional reasons. First, it represents the transfer of a significant communication technology tothe private sector. As a result, the private sector inherited a technology that was created with billions of public dollars (Lytel, 1998; MacKie-Mason & Varian, 1994). The transfer also meant a shift from government control to private control over network resources. Unlike other communication technologies, the privatization of the backbone left little regulatory requirements. As we later pointout, private backbone networks are not subject to “must carry” regulations or nondiscriminatory standards for the traffic over their networks. Second, an historical understanding of the privatization provides key insights into contemporary issues, such as the performance of the Internet, competition in the backbone industry, and the governance of the Internet. Finally, this is not the onlyprivatization involving the Internet. The government is now transitioning the Domain Name System (DNS) and the Internet Protocol (IP) address system,

Privatization of the Internet 4 both key components of the Internet, to private control. Therefore, any lessons learned from the privatization of the backbone network may aid these other Internet privatizations. The privatization of the backbone networkinvolved reshaping the National Science Foundation Network (NSFNET) into what is known today as the Internet. This process affected both the content across the NSFNET as well as the control of the underlying infrastructure. The actual privatization consisted of government shifting from the practice of contracting out a government-subsidized backbone to allowing the market to provide backbone...
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