Chapter 35: The Internet: Economics
Fabrice Rochelandet The Internet has emerged as a new worldwide medium for communications, social networking, dissemination of informational goods and electronic commerce. The ‘network of networks’ is, in fact, a set of basic standards and interconnected networks enabling remote computers and mobile devices to interoperate universally as ‘clients’ and ‘servers’. It constitutes the latest step of a technological revolution starting in the USA with the military and academic network ARPAnet (1969–74), followed by the development of the inter-universities’ NSFnet (1981–86) and finally resulting in the creation of the worldwide Internet hypertextual application: the Web (1989–95). In contrast to private networks, information flows are not oriented by a central authority (the network organizer who designs standards and protocols) on the basis of circuit-switched end-to-end services. Instead, the Internet is made up of decentralized, universal and unspecialized open networks that use connectionless packet-switching communications technology and interoperate through ‘Transmission Control Protocol over Internet Protocol’ (TCP/IP) languages. These common protocols are combined with various applications that process information exchanges and thereby allow the interconnection of heterogeneous computers through private and public networks. Accordingly, the use of the Internet infrastructure amounts to consuming numerous complementary goods from the terminal to the backbone wires through common standards. The regulation and standardization of the Internet prove to be a decentralized process too. Three main organizations provide standards and basic services enabling the Internet to run: the Internet Corporation for Assigned Names and Numbers (ICANN) in charge of Internet Protocol (IP) address space allocation;...
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