Commercialization of the Internet: The Interaction of Public Policy and Private Choices or Why Introducing the Market Worked So Well

Why did commercialization of the Internet go so well? This paper examines events in the Internet access market as a window on this broad question. The study emphasizes four themes. First, commercializing Internet access did not give rise to many of the anticipated technical and operational challenges. Entrepreneurs quickly learned that the Internet access business was commercially feasible. Second, Internet access was malleable as a technology and as an economic unit. Third, privatization fostered attempts to adapt the technology in new uses, new locations, new market settings, new applications and in conjunction with other lines of business. These went beyond what anyone would have forecast by examining the uses for the technology prior to 1992. Fourth, and not trivially, the NSF was lucky in one specific sense. The Internet access industry commercialized at a propitious moment, at the same time as the growth of an enormous new technological opportunity the World Wide Web. As it turned out, the web thrived under market oriented, decentralized, and independent decision making. The paper draws lessons for policies governing the commercialization of other government managed technologies and for the Internet access market moving forward.