PSINet, formerly Performance Systems International, was an American internet service provider based in Ashburn, Virginia. As one of the first commercial Internet service providers (ISPs), it was involved in the commercialization of the Internet until the company's bankruptcy in 2001 during the dot-com bubble and subsequent acquisition by Cogent Communications in 2002. It was founded on December 5, 1989, and began offering services, including limited for-profit access to the Internet, on January 1, 1990, becoming one of the first companies to sell Internet connectivity.
History
Founding PSINet was founded in 1989 by Martin L. Schoffstall and William L. Schrader, who initially funded the company through personal loans, including using credit cards and by selling the family car. It was initially known as Performance Systems International. In very late 1989, the company acquired NYSERNet assets and established an ongoing outsourcing contract with NYSERNet. NYSERNet, a non-profit research and education network serving New York State, had created one of the first regional Internet networks under Schrader's and Richard Mandelbaum's leadership and technical leadership from Schoffstall, Mark Fedor, and others. This acquisition gave PSINet commercial access to what would come to be known as the Internet.
Commercialization Before 1990, the Internet had been largely funded by government agencies including DARPA (the original and still existing at that time, ARPANET), the National Science Foundation (NSF) for NSFNET, various U.S. federal agency networks such as the Department of Energy and NASA, and with grants to various regional networks including NYSERNet. Many of the stake-holders of the Internet of the 1980s were military, industrial, or academic researchers who were largely satisfied with the then current model of usage and governance. However, appropriate commercial usage policies were debated on such mailing lists as com-priv (commercialization and privatization of the Internet), within semi-public forums such as the Internet Engineering Task Force (IETF), and included an investigation by the NSF's Inspector General staff. This included an intense debate on the "settlement model" of the Internet which was worldwide and both public and private in scope. The NSF's appropriations act authorized NSF to "foster and support the development and use of computer and other scientific and engineering methods and technologies, primarily for research and education in the sciences and engineering." This allowed NSF to support NSFNET and related networking initiatives, but only to the extent that that support was "primarily for research and education in the sciences and engineering." And this in turn was taken to mean that use of NSFNET for commercial purposes was not allowed. At the time the National Science Foundation (NSF) believed in a settlement model based on usage, with payments or contributions based on how much data was sent or received, mirroring the public X.25 networks at that time. Such a settlement policy would allow research and education and commercial traffic to share a common network infrastructure without using NSF funds to support the commercial use. NSF in fact entered into an agreement with the non-profit Advanced Network and Services to allow commercial traffic through a for-profit subsidiary, ANS CO+RE (commercial plus research), subject to the conditions (i) that the NSFNET Backbone Service was not diminished; (ii) that ANS CO+RE recovered at least the average cost of the commercial traffic traversing the network; and (iii) that any excess revenues recovered above the cost of carrying the commercial traffic would be placed into an infrastructure pool to be distributed by an allocation committee broadly representative of the networking community to enhance and extend national and regional networking infrastructure and support. PSINet through Schrader, Schoffstall, Rick Adams of UUNET, Mitch Kapor, and others waged an intense policy battle that the Internet needed a fixed access payment strategy to ensure that the ultimate utility of the Internet become available to all.
Initial public offering PSINet eventually took venture capital investment from Matrix Partners, Sigma Partners, and Amerindo as a private entity to grow the company throughout the US and then outside of the country. On May 1, 1995, the initial public offering listed its shares on the NASDAQ stock exchange under symbol PSIX.
… excerpt ends here. Continue reading the full article.
