How the Internet Works

Because the Internet is a network of networks, it’s not surprising that many organizations are already hooking into the information highway, sometimes without even realizing it.
For these people - oscilloscope designers at Hewlett-Packard, assembly line workers at Xerox, undergraduate students at Harvard, Ph.D. candidates at Stanford and MIT, and many branches of the government—the connection to the Internet is free; they don’t have to pay a monthly fee or any connect charges to access the wealth of resources and information on the network.
“Free” is really a misnomer, however; the Internet certainly doesn’t operate at no cost. Just like the interstate highway system and any other aspect of the national infrastructure, somebody—in this case, the government, universities, telecommunications companies, and other businesses—had to ante up the money to build the Internet’s network of roadways and somebody—namely, the users—has to pay for its upkeep.
Who pays for the Internet? The answer is threefold:
The government. The federal government started it all when the Defense Department Advanced Research Projects Agency created the original ARPAnet. The National Science Foundation backbone (NSFnet) followed in the early 1970s, linking the ARPAnet with academic researchers. Today the NSF continues to subsidize the Internet to the tune of $11,500,000 a year. In the cards, however, is a gradual phase-out of this support from the government, leaving private sector communications companies to take over maintenance of the information superhighway.
Commercial providers. The second important source of funding for Internet maintenance and development are the various commercial Internet access providers. Because the government originally banned commercial traffic on NSFnet, a group of companies seeking to use the growing network for commercial purposes formed a loose co-operative venture called the Commercial Internet Exchange (CIX). The goal of the CIX is to build and maintain its own parallel backbone network wherein commercial traffic could appear without violation of the NSF network usage policies. Today, in return for paying CFX a flat fee of $10,000 a year, Internet connectivity “resellers” can buy unlimited Internet access, which they can then resell by the hour or on a flat-fee basis to individuals and businesses.
Individuals. In the early days, the list would have stopped here, but today the Internet encompasses more than 25,000 different networks, connecting over 20,000,000 users, and individual-user connectivity fees are becoming an important source of Internet revenue. Most individuals, businesses, and other users pay monthly fees or per-hour charges for Internet service. Prices vary depending on the speed and capacity of the Internet link: People who access the Internet through a simple dialup connection pay as little as $20 a month—or less. Internet service providers and larger corporations might pay $1,000 a month or more for a complete network-to-network bridge, a personal on-ramp as it were.
Most of the well-known commercial networks—CompuServe, GEnie, AppleLink — charge users a base monthly fee plus connect time charges and, often, additional charges for those users that access specialized databases, discussion forums, and other features.
If you’re used to that environment, you’ll be delighted to know that the standard policy for Internet service providers is a monthly access fee with no hidden or supplemental charges. No additional payment is required if you happen to receive more than, say, 20 e-mail messages in a month. Instead, Internet pricing is based on the speed, power, and capability of your connection. Generally speaking, the higher the speed of the connection, the more you have to pay.