INTRODUCTION: THE NEED FOR A HISTORICAL ANALYSIS
The US Internet emerged more or less sui generis amidst the technological advances that sparked a revolution in the field of communications. In contrast to the old conception of the communication infrastructure as a regulated natural monopoly, these rapid advances allowed for its unbundling and modularization (OTA, 1990, pp.
50-51), thereby giving rise to a radically new paradigm, one that called for deregulation and greater market competition (Noam, 1988, 1995; Stone, 1991; Drake, 1995; Geller, 1995). And just as in the case of the Internet itself, each new phase of its development, and the policy puzzles each posed, arose de novo (Abbate, 1994; Blumenthal and Clark, 2001; Clark et al., 2002). Hence, from a historical perspective, we cannot speak of an ‘economics of the Internet’ per se. To the contrary, our understanding of the history of Internet economics has coevolved with each phase of the Internet’s development, together with each policy framework that has been associated with it (Abbate, 1994; Bailey and McKnight, 1995; Tapscott, 1996; Beinhocker, 2006; Benkler, 2006).As a result, although the technological architecture of the Internet has remained much the same in terms of its modularity, openness, and generativity, each phase of the Internet’s evolution can be differentiated based on aspects such as its political economy, the economic motivations and incentives fostering its development, and the socioeconomic organization of the Internet space. The development of the Internet must also be analyzed with respect to how each episode relates to past and future periods. As Paul Pierson (2004, p. 20) argues, only by linking historical events can we address the ‘causal power of temporal connections among events’, including path dependency, critical junctures, sequencing, and unintended consequences.
Even then, to make theoretical statements based on historical material, a single, linear narrative will not do.
To capture the complexity of the Internet’s evolution and interactions among players, technologies and events over time requires a comparative methodology (Braudel, 1980, p. 67). Although comparative history is wide ranging, its core concern is causal analysis using systematic contextual comparisons (Mahoney and Rueschemeyer, 2003, p. 7). Skocpol and Somers (1980, p. 179) identify three different approaches. The first, macro-causal analysis, resembles multivariate hypothesis testing. A second, parallel demonstration of theory, identifies similarities across cases that support a particular theoretical proposition. The third approach, the contrast of contexts, challenges general theories by identifying features associated with each case, and by examining how these features differentially impact socio-economic processes (Skocpol and529
Somers, 1980). Given the dynamic evolution of the Internet, it is this latter approach that will be employed in this historical analysis.
To address the problem of historical specificity, as well as to allow for the incorporation of social and political forces in the analysis, the economy is defined in accordance with Karl Polanyi’s ‘substantive’ definition. Polanyi defines the economy as an empirically instituted process by which individuals engage with each other and their environments to meet their material needs (Polanyi, 2011, p. 4). Conceived as such, the economy can be organized in a variety of ways. So defined, the economy is embedded and enmeshed not solely in what we typically think of as economic institutions, but also in society at large (Braudel, 1980; Granovetter, 1985). This definition is especially useful for studying the Internet’s economic history insofar as market relations have governed interactions only during certain periods and aspects of the Internet’s development.
For the purpose of comparison, this chapter frames four historical periods in the context of organizational fields (Powell and DiMaggio, 1991; Schwartz, 1997; Fligstein, 2001; Fligstein and McAdam, 2012). The following section describes organization fields and their modi operandi. Section 26.3 examines the period of AT&T’s rise and fall. Section 26.4 lays out the history of the ARPANET era and the emergence of TCP/IP. Section 26.5 describes the National Science Foundation’s role as the ‘midwife’ of the Internet, followed by a section characterizing the emergence of the Internet marketplace. The final section compares and contrasts the four historical periods. It divides the Internet’s history into four distinct periods: AT&T - the unified telephone regime; the ARPANET era and the emergence of TCP/IP; NSF - the midwife of the Internet; and to market to market - history in the making. To frame these periods, it draws on the literature on organizational fields (Powell and DiMaggio, 1991; Schwartz, 1997; Fligstein, 2001; Fligstein and McAdam, 2012).
26.2