The Internet: Is It a Replicable Technological and Social Phenomenon for Central and Eastern Europe and the Commonwealth of Independent States?

Christian E. Stalberg
(Originally published in Telematics and Informatics, Vol. 11, No. 1, Winter 1994)

Abstract - The Internet is more than just interconnectivity between computers across geopolitical boundaries. The Internet is also a means of exchanging ideas to augment human endeavor. This paper explores conditions for, and possible benefits of, the evolution of the Internet in Central and Eastern Europe and the Commonwealth of Independent States.

A Brief History of the Internet

The beginnings of the Internet go back to 1969 when the U.S. Department of Defense funded the Advanced Research Projects Agency to develop a technology that would provide reliable communications even as these facilities were destroyed during war. A network topology and communications protocol suite (IP or "Internet Protocol") emerged from early experiments carried out on a 4 node experimental network (ARPAnet). The technology proved to be both versatile and robust, able to connect computers of different manufacture and even different operating systems. Rapid proliferation of IP software occurred in response to market forces, not waiting for the International Standards Organization development of the Open Systems Interconnect. In the early 80's Ethernet LANs and workstations became popular. Many of the workstations came with Berkeley UNIX which included IP. The result of this was that organizations began to build their own networks. ARPAnet grew as defense researchers networked their organizations. Over time other non-military research and educational uses of the network evolved and they came to be loosely referred to as the "Internet". In the late '80s one of the new networks, called NSFnet, funded by the National Science Foundation, a U.S. government agency, created 5 supercomputing centers with the condition that they be available for any type of scholarly research. Before this only computer scientists and U.S. government employees and contractors could use the Internet. NSF then built regional networks which connected neighboring colleges and universities to each supercomputer center. Initially the Internet used 56 Kbps circuits between sites. Their capacity was exceeded and higher speed lines (T1 & T3) were installed beginning in 1987. Today most research institutions in the U.S., including 4 year schools, are connected to the Internet. In the mid '80s other networks (e.g. corporate), some non-IP, connected to the Internet via "gateways" principally for e-mail. In recent years the Internet has experienced exponential growth. Estimates vary widely for the number of Internet "users" at any given point in time. There are different types of connectivity which can be realized with the Internet, ranging from leased lines and dial-up to e-mail "gateways". Both public and private (corporate) networks are included. One estimate states that the Internet now connects to approximately 50 countries, 10,000 networks and 1.5 million host computers. Estimates of the total number of users able to exchange e-mail with the Internet range from 20 - 30 million worldwide.

The Internet has no centralized authority. Governance of the Internet is handled by the Internet Society, a voluntary organization. The Society's Internet Architecture Board is responsible for technical management and direction of the Internet, e.g. assigning unique 32 bit addresses to each host computer on the Internet. The Society also has the Internet Engineering Task Force, a vehicle for users to express concerns, form working groups to study issues such as standards, and provide reports to the Internet Architecture Board. Funding for the Internet is composite. The National Science Foundation funds NSFnet one of the major backbones of the Internet. Shared cost agreements are worked out between host sites for interconnections. Management of the network backbone (NSFnet) is handled by ANS (Advanced Network & Services) a collaboration between MERIT, IBM and MCI.

Utility of the Internet

The Internet is both a technological and social phenomenon which has proven to be extremely utilitarian having withstood the test of time and, more importantly, rapid technological change. The Internet Protocol, which largely ignores differences between computer manufacture, has proven itself to be both versatile and reliable. IP has been incorporated into literally thousands of computer and telecommunications products and services, facilitating connectivity across the industry. The Internet has a number of information transport mechanisms available, including electronic mail, file transfer, news groups (computer conferencing), log-in and use of applications on remote host computers, and a variety of information browsing, archiving and retrieval tools. The amount of information accessible over the Internet is voluminous and is growing rapidly. As of Fall 1991, archived files available on the Internet provide pointers to around 1 million files at 900 sites totaling over 70 Gbytes of information with 5-10 new sites added each week. As of July 1991 it was estimated that the Internet provided access to over 270 library catalogs, 120 of which were outside of the U.S.

Uses for the Internet are as varied as the imagination and span government, business and academia. For example, in the United States the Southeast Manufacturing Network (SemNet) links manufacturers with technical experts in colleges and universities across a dozen southeastern states. Participants include Digital Equipment Corporation, International Business Machines, General Motors, 17 institutions of higher learning, and over 370 South Carolina manufacturers. Benefits to SemNet participants include: linking small and medium sized companies to a larger nexus of suppliers and fabricators; allows economies of scope and scale to be introduced by linking the collective abilities of separate entities; and suppliers enjoy the equivalent of just-in-time manufacturing.

The United States government currently uses the Internet. The White House and many U.S. government agencies now have access to the Internet, including the Department of Energy, the National Aeronautics and Space Administration, the Smithsonian Institution, the Department of Agriculture, and the Government Printing Office. These agencies are making their information holdings accessible to Internet users, including: Federal Bulletin Board BBSs, National Library of Medicine database, and the Library of Congress card catalog. The Department of Defense uses the Internet for electronic bid solicitation and proposal submittals. The Department posts parts requirements as one or more files containing requirement specifications. Potential suppliers then download the specifications, develop proposals and submit them electronically. Members of the U.S. congress are even starting to use the Internet to communicate with their constituents.

At one level the Internet represents the desire of people to communicate with one another and exchange ideas. At yet another level people discovered that information was power and that access to information gave strategic advantage in an increasingly competitive world. The ability of computers and telecommunications to transcend time and space limitations have introduced an element of "virtuality" to our world. In the telecommunications arena one encounters use of the word "virtual" almost daily, e.g. virtual enterprise, virtual corporation, etc. (sic). What does it mean? One definition of virtual is "existing or resulting in essence or effect though not in actual fact, form, or name." The Internet is reshaping organizations and modifying traditional behavior patterns. It's easier to get answers to questions via the Internet, communicating around bureaucratic bottlenecks. Finding partners and establishing collaborative ventures has never been easier. The international communications capability of the Internet is facilitating collaboration between nations on common issues such as global warming, resource scarcities and other problems which transcend national or regional boundaries.

Conditions Which Fostered Internet Growth in the U.S.

A number of factors can be pointed to as contributing to the rapid and unexpected growth of the Internet in the United States. The desire of academicians, engineers and scientists to share information drove institutions to connect to the Internet to facilitate collaboration and help foster research initiatives. While this was taking place telecomputing was slowly making entry into the mass consumer market. By the early 1980s there was a large installed base of personal computers and the desire to do more with personal computers than just word processing began to emerge. Following personal computers, modems then became a mass market commodity item, with accompanying price reductions. On-line services began to offer PC users access to a range of information services, including databases, stock market quotes, newswire services, and others. Bandwidths grew on both public and private network backbones to handle the increases in traffic. In addition to the corporate and business community, non-governmental and non-profit organizations began to build networks to share information and build coalitions and constituencies for achieving shared objectives. Many of these networks took the form of Bulletin Board Systems (BBS), personal computers set-up as communication hosts into which people connected their PCs via remote dial-up connection. These activities familiarized computer users outside of the scientific and research community with the possibilities of data communications. As networks grew and multiplied, interconnectivity became desirable and the Internet became the medium of choice.

One crucial element, without which the Internet would not be anything resembling what it is today, is the almost universal access to the telephony system. With penetration rates above the 80th percentile, nearly everyone who desires to telecompute can do so, assuming they have the necessary hardware and software.

Conditions Relative to Internet Development in Central and Eastern Europe and the Commonwealth of Independent States

With the collapse of the Soviet state, the nations of CEE and CIS face tremendous challenges, including liberalization, marketization, and capitalization. While foreign investment is badly needed for the privatization of state-owned enterprises, domestic difficulties can create obstacles, ranging from unclear privatization strategies and legal and institutional conditions, to bureaucratic barriers and deficiencies of infrastructure, and most notably for purposes of this discussion, communications. Direct exchange line penetration of the telephony networks as of mid-1992 is at 8% for the nations of Poland, Hungary and Romania. The Czech Republic has 16.6% penetration and Bulgaria 18%. Yugoslavia reportedly has 14% penetration but it is estimated that war damage in Croatia has destroyed 25% of the PT&T's telecommunications infrastructure, totaling some 410 million dollars (U.S.). Moscow has 45 lines per 100 people and it is reported that this is 5 times more than Russia's third largest city Gorki.

Cost estimates for modernizing and expanding telephony networks in CEE and the CIS on a par with those in the western world total in the tens of billions of dollars (U.S.). It is reported that multilateral lending institutions such as the World Bank are shying away from lending funds for telecommunications infrastructure development. These institutions feel that the rapid rate of return for telecommunication investments makes other financing options readily available. Nevertheless, CEE and the CIS are investing in telecommunications infrastructure. For example, in 1991 the Hungarian Telecommunications Company (HTC) began a 5 year project to install 1.5 million new lines, increasing its total number of lines to 2.4 million, going from 9 lines per 100 people to 27 lines per 100. Russia is investing $500 million in telecommunications infrastructure development. Intertelecom, the Russian national carrier (formerly Sovtelecom), is the sole Russian entity spearheading international telecommunications development. Intertelecom's master plan, Vzamavyazanoy Syetee Suyazee or VSS (Integrated National Network), will have fiber optic undersea feeder lines and land extensions in north-west and south-west Russia and the Russian far east. A microwave trunk will link Moscow to Khabarovsk crossing the Urals and Siberia. The Trans-Soviet Fibre Optic Communication Line (TCL) will carry eight 155 Mbps circuits a distance of 7500 kilometers between Moscow and Khabarovsk. TCL will carry traffic between Europe and the Pacific Rim and is viewed as an important new source of capital. Eastern Russia will be linked to Korea and Japan. VSS does not address local or regional line needs. These will be handled by joint ventures (for regional development) and municipal telephone companies (for local development).

Privatization of state-owned telecommunications infrastructure and tariff restructuring is taking place throughout the region. For example, HTC was split off from the post office in 1990 and private investors can now hold a minority of shares in service providers. The EC has recently established a formal timetable for dismantling PT&T monopolies for voice services, has proposed the deregulation of the satellite industry, and is considering the eventual dismantling of PT&T infrastructure monopolies.

Even with low telephone penetration rates, there are already a number of telecomputing networks in CEE and the CIS. The Inter-University Network of Poland (ICN), based at the Computer Science Centre of the University of Warsaw, connects universities at Cracow, Gdansk, Gilwice, Lodz, Pozan, Torun and Wroclaw. A number of former Soviet research institutions are networked over an RSCS academic network and an X.25 network. Internet e-mail is available in Moscow from various commercial vendors, a few of which are joint U.S. - Russian ventures. The Slovak Academic Network (SANET) links together several cities in Slovakia and HUNGARNET is the Hungarian Academic Network.

Conditions similar to those which combined to foster the Internet in the U.S. can be identified in Central and Eastern Europe and the Commonwealth of Independent States. Growing market economies in Central Europe are driving technology dissemination through PC dealers, system integrators, and third-party software developers. Sales of PCs in Central Europe have almost doubled each year since 1990. A recent study suggests that growth in telecommunications results from the diffusion of computers and the increasing reliance on data communications in all sectors of the economy (Sullivan, 1991). Probably one of the biggest barriers to Internet development in CEE and the CIS is the condition of the telecommunications infrastructure. However, wireless can provide alternate circuit outing to avoid problems with the local loop. For example, Direct Net Telecommunications Ltd. and its Russian partner Business Sviaz recently began dedicated digital service between Moscow and New Jersey via the Intersputnik satellite. In order to circumvent problems inherent in the Moscow telephone system, spread-spectrum 900 mHz digital wireless modems are being used to provide service within a 30 mile radius in the city at speeds up to 256 KBPS. Cellular telephony in the major metropolitan areas is becoming popular because it allows bypassing problems in the ground-based local loop. Cellular modems may be an option foe enabling data communications in these environments. On the regional and international level, discussion is underway about the possibility of creating an organization comparable to the European Space Agency to facilitate satellite development among members of the Commonwealth of Independent States.

Pan-European networking offers great promise to Eastern countries which stand to benefit from increasing Internet activities in Western Europe. Such activities include:

The necessary institutional and organizational structures for building the Internet are forming. The above activities would suggest that a Pan-European view is being adopted which includes nations in Central and Eastern Europe.

Possible Benefits of the Internet to Central and Eastern Europe and the Commonwealth of Independent States

Numerous studies (Hardy, 1980; Cronin, 1993) have established the relationship between telecommunications investment and economic growth. As an economy grows, more telecommunications infrastructure is required, increasing telecommunications investment. In CEE, most Western capital flows into large state-owned enterprises. Smaller-scale industries, service and retail sectors of the economy are much less capital intensive, and yet they do not receive the attention of Western investors. In Hungary, for example, 47% of all joint ventures established in 1990 were in the trade sector. However, that sector only received 19% of all invested foreign capital. In some countries, evidence suggests that investment in microenterprises has done more for the development of consumer markets and overall economies as a whole than investment in a relatively small number of large-scale enterprises involving multinationals. If one applies this evidence to the telecommunications arena, the relatively small-scale, decentralized form of the Internet might have a greater effect on economic development in CEE and the CIS than large investment in state-owned telecommunications infrastructure.

Many scientific and technological fields in the former Soviet Union are losing talented people as they look for work abroad. Under the former system, these individuals were sustained through funding and planning mechanisms catering to a captive audience. Today, however, scientists and engineers must learn to function within a highly uncertain and competitive global economy. Various forms of sustenance to stem "brain drain," such as greater access to information, is a critical need. The Internet is well suited to providing this type of assistance in its unique ability to link thousands of experts in a variety of disciplines worldwide.

The Internet can contribute to much needed east-west technology transfer. An increasing number of companies are making product and service information available via the Internet. Trend is to connect these BBS to the Internet. For example, Sun Microsystems Corporation, a manufacturer of computer workstations, has made information on its products and services accessible via the Internet. Education in CEE and the CIS can benefit much as it has in the U.S. and Europe. Distance education can maximize limited resources and distribute quality education throughout the region, particularly in the CIS with its large geographical area and remote population centers. The First International Conference on Distance Education in Russia is planned for July, 1994 in Moscow.

Conclusion

Most, if not all, of the ingredients necessary for the Internet phenomenon to take root in CEE and the CIS can be identified. Investments are being made in the requisite telecommunications infrastructure, both at the local as well as national and international level. Organizationally, institutions are emerging which can perform the necessary planning and coordinating functions to ensure interconnectivity. The diffusion of computers together with the desire to telecompute will help drive the expansion and modernization of the telephony networks. Entrepreneurs will continue to make use of wireless technologies even while state-owned enterprises continue their efforts at privatization, tariff reform, and standards setting. Technology transfer, education, trade, and other essentials for participation in a competitive global market economy will be enhanced by, and drive the development of, the Internet.

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