Morse used the seed money well. New York and Boston were online by 1845, and licensees spread throughout the U.S. and Canada. Private operators began merging to facilitate message interchange, beginning on a grand scale with the formation of the Mississippi Valley Printing Telegraph Company in 1851, which, in 1856, was renamed the Western Union Telegraph Company. As with the Internet, the government started the ball rolling, and rapid capitalization and growth followed in the private sector.
Governments also provided funding and leadership for computing technology from Babbage to the ENIAC and most of the experimental computers that followed. 1 When it was time to begin commercial development, government orders underwrote machines from innovative startups like Engineering Research Associates and well-established companies like IBM.
IBM's first commercial computer, the 701, was initially called the "Defense Calculator." Marketing research for the 701 consisted of visits to 22 government agencies [4], and at least 18 of the 19 701s were involved in defense work [14]. As seen in Table 1, many early computing advances were made by government-funded R&D, initially purchased by the government, or both.
The government also bootstrapped computer communication with Whirlwind, an Office of Naval Research computer that processed telemetry data in real time at MIT. Whirlwind demonstrated the feasibility of real-time data communication over analog telephone lines, and led to important engineering developments like core memory.
After the Whirlwind R&D, the government turned to procurement with the Semi-Automatic Ground Environment (SAGE) system, designed to defend the U.S. against manned bomber attacks. Whirlwind's successor, the XD-1, was the prototype for the IBM AN/FSQ-7 and AN/FSQ-8 (Army-Navy Fixed Special eQuipment) computers that were used in SAGE. SAGE was the first computer network, growing finally to link Q-7s and Q-8s in 26 centers. SAGE cost estimates range from $4-$12 billion, with $8 billion a common estimate. It included 56 IBM computers at $30 million each, 25,000 telephone lines, and training and employing roughly 3,000 programmers at the System Development Corporation (SDC) a RAND spin-off that developed the SAGE software and installed the system [3, 7].

ARPA

SAGE was a special-purpose network, but general purpose networking got rolling with ARPA's leadership and funding. The goals of ARPA's "Resource Sharing Computer Network" project were to develop the technology for and demonstrate the feasibility of a computer network while improving communication and collaboration between research centers with grants from ARPA's Information Processing Techniques Office (IPTO).2 Early papers on the ARPANET (e.g., [20, 25] ), speak of file transfer and remote login as concrete goals, allowing users to share programs, data, and powerful hardware from a distance. But the vision went beyond these technical facilities. The vision grew out of the collaborative communities that formed around the early time-sharing systems.
While most computing in the 1950s was done in batch mode, anyone who had done interactive computing knew it was far superior, but expensive. The case for interactive computing was stated by MIT's J. C. R. Licklider in an influential article on man-machine symbiosis [16]. As the first IPTO director (from 1962-1964), Licklider set about implementing his vision with funding for early time-sharing systems-affordable interactive computing. ARPA funded six of the first 12 general-purpose, timesharing systems, including two influential systems, CTSS at MIT and the AN/FSQ-32 at SDC [7].
It was clear these systems could be used from a distance, and more importantly, that they fostered collaborative user communities. (I used the Q-32 for my dissertation, and can personally testify to the excellence of the development environment and the spirit of sharing and collaboration it fostered among users). Licklider outlined his vision of computers as communication and collaboration-support devices in another widely read article [ 17], and laid the groundwork for the funding of the ARPANET by his successors at IPTO, Ivan Sutherland, Robert Taylor and Larry Roberts. (In addition to MIT and SDC, Licklider funded Doug Engelbart's pioneering work on interactive and collaborative computing at the Stanford Research Institute (SRI), see [22].)
It was not clear at the start that packet-switching was the way to go, but studies by Donald Davies at England's National Physical Labs, Paul Baran at RAND, and Leonard Kleinrock at MIT were encouraging. In 1965 a link was tested between SDC and MIT [20], and preliminary design and "selling" to IPTO research sites was done during the next few years. In 1968, bids were solicited and awards made, and work started in 1969 [11].
Several organizations shared in the ARPANET award. Bolt, Beranek and Newman (BBN), where Licklider had also worked, won for system design and integration, and they subcontracted the communication computers to Honeywell. UCLA did network measurement and SRI ran the network information center. AT&T and others provided communication links, and Network Analysis Corporation designed the topology. This was a joint industry-university-government project, with IPTO remaining active in oversight and management.

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