The Contest to Wire the World

In the 1990s a number of systems were competing to become the world’s dominant digital network. On one side were a number of well established commercial online networks, including AOL, Compuserve, MSN and Prodigy. On the other side was the open source internet. The internet was just as old as the online networks, but it was mainly used by the academic community. Off to one side was a technology called videotext. The French had used it to create a national online network called Minitel, but it had failed in other countries.

Compuserve and the other online services were run as businesses and offered many of the services we now find on the internet; including email, file transfer, document publishing, discussion groups and e-commerce. The internet was more shambolic. Nobody owned it and e-commerce was banned from some of its main arteries. Nobody gave it much of a chance against the hard headed businessmen that ran the commercial services.

At this time a small number of people realized three important things.

1. Network activity was going to increase.

2. One network was going to become dominant, and, because of network effects, would soon drive the other networks out of business.

3. Whoever owned the winner was going to make a lot of money.

Bill Gates thought that Microsoft’s control of the desktop would enable it to make his MicroSoft Network [MSN] the winner. If he had been right we would now be publishing web pages in .doc format [Microsoft’s proprietary format] instead of HTML [open source format. Probably even Bill did not appreciate just how rich that dominance would have made him.

Why did the disorganized leaderless internet win over the commercial systems? Why did capitalism loose and open source win?

Money was one reason. The commercial online systems found it very hard to raise the enormous sums of money needed to meet increasing network loads. The commercial systems actually owned their hardware infrastructure and had to invest in its growth. In contrast the internet was just a collection of protocols which allowed data to be exchanged between different networks. The internet did not own any cable and did not need to raise any capital to expand. The responsibility for infrastructure investment was delegated to the various separately owned networks which made up the internet.

E-commerce was another reason. If you set up an e-commerce site on Compuserve etc there was bureaucracy and there were fees. If you set up shop on the internet it was all free and easy.

Some of the commercial systems were badly managed. Others were messed about by their parent companies. The internet wasn’t managed by anyone at all and the wisdom of the crowds beat the foolishness of the boardroom.

The final reason why the internet won was porn. Porn was the internet’s killer application. The commercial online systems were prim and proper. No naughty bits for them. On the internet naughty bits abounded and the punters flocked to install TCP/IP.

Two final points. The internet is not the first time the world has been wired. In my opinion, it is not [so far] the most significant network. Maybe it will be in time, but for the moment the telegraph network brought about far more significant changes in the worlds business, social and political affairs.

Minitel never went anywhere but France. Most people do not know that the French created the worlds first wired society. It had e-commerce, online banking, train reservations and porn. It was very successful, but just in France.

It’s a pity that Americans do not know more history. The first dot.com boom might not have ended so disastrously if the Minitel experience had been studied and lessons learned. The e-commerce firms on Minitel had already found what worked and what didn’t, but nobody learned from their experiences.

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