Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

How IT Came to Rule the World: TRANSFORMATION OF THE INTERNET

Posted on | October 1, 2010 | No Comments

In the few short years between the Internet’s 25th anniversary in 1994 until the end of millennium, a remarkable transformation took shape. During these six years, the Internet transformed from a very novel but quaint system for sending ASCII email messages, transferring files, and linking homepages into a global system of electronic interchange for communications and commerce. What was initially a system connecting a few university and research institute mainframes soon began to also connect small workstations, personal computers, laptops and mobile wireless devices. People were able to access the Internet not just from campuses but from homes, offices, cars and even while on foot.

The Promise of E-Commerce

What sparked this transition in such a short time? The Internet’s new uses were varied, but it was clear that its potential for global e-commerce was attracting investment capital of staggering proportions. The Clinton Administration followed a set of national policies that supported the development of a “national information infrastructure”, wired schools, and the development of e-commerce. These included a moratorium on taxes, privatization of radio spectrum, the creation of a domain registration administration, and a new pro-competitive policy framework, the Telecommunications Act of 1996.

Global Flows of Cash

Consequently, venture capitalists and the financial markets began to dramatically fund technology and “dot.com” companies. Individual investors also got involved through mutual funds, work-place pension accounts, 401K’s, and new online trading brokerages such as Ameritrade and E*Trade. Capital returning from “Emerging Markets” of Asia and the former USSR during the international financial crises of 1997 and 1998 streamed into the coffers of Internet startups, leading to stark competition in the race to develop the most effective and profitable e-commerce sites. Some called it “The New Economy”.

Companies such as Amazon.com, eBay, RealNetworks, and Yahoo as well as associated “tech” stocks such as Cisco, Dell Computers, and Intel became the darlings of investors. Even America Online, with a somewhat ancillary history, was able to take advantage of the share markets to raise money to buy Netscape and Time-Warner and stake out a considerable presence on the World Wide Web. Billions of dollars poured into the development of new companies for business to consumer (B2C) and business to business (B2B) interchange. With this cash they were able to integrate and use a wide variety of traditional computer, media, and telecommunications such as legacy databases, cable networks, and satellite systems.

The Crash of 2000

By April 2000, this market started to dissipate. A combination of factors including new reporting requirements by the US Securities and Exchange Commission, brought a new discipline to the “dot.coms” and other technology stocks. The SEC required all public companies (except foreign companies and companies with less than $10 million in assets and 500 shareholders) to file periodic reports, registration statements, and other forms electronically through EDGAR, its Electronic Data Gathering, Analysis, and Retrieval system.

The investment bubble collapsed with the preponderance of poor “earnings” reports, but for the most part, the technology and a substantial amount of skilled employees emerged to continue the process of globalizing electronic commerce.

Anthony
Anthony J. Pennings, PhD has been on the NYU faculty since 2001teaching digital media, information systems management, and global political economy. He can be reached at ap70@nyu.edu

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  • About Me

    Professor and Associate Chair at State University of New York (SUNY) Korea. Recently taught at Hannam University in Daejeon, South Korea. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, media economics, and strategic communications.

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