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In the early 1970s, DARPA began discussions about divesting operational responsibility for the ARPANET, as their mission was research and not operating a network. They wanted to maintain a networking research effort but sell off the network itself to a private contractor. However, many large communications companies were skeptical of the technology. AT&T declined the offer to take over the ARPANET, stating that the packet technology was incompatible with their network. However, smaller specialized commercial carriers saw the potential of computer networking and options such as selling the network to BBN or forming a new company called Packet Communications Incorporated were explored.

In 1973, BBN recruited Lawrence Roberts, one of the key figures in the creation of the ARPANET, to run a new subsidiary called TELENET, which would market a private packet-switching service. Thus, the ARPANET was temporarily transferred to the Defense Communications Agency (DCA). However, finding a successor for Roberts at DARPA’s Information Processing Techniques Office proved difficult, until Robert Taylor contacted J.C.R. Licklider, who had been instrumental in the early development of the ARPANET. Licklider agreed to return and took over as the director of the ARPA Information Processing Techniques Office in 1974.

During this time, tensions arose between BBN and other institutions involved in the ARPANET. BBN refused to release the IMP source code, which was developed using federal funds, causing concerns about intellectual property rights. Eventually, BBN agreed to provide the code for a nominal fee. In 1975, the ARPANET was transferred to the Defense Communications Agency, which took over network management. BBN retained the contract for network operations. The transition to the new management resulted in increased bureaucracy and tension.

Meanwhile, Vinton Cerf continued working on the development of the TCP/IP protocols. In 1975, Yogen Dalal finalized the Transmission-Control Protocol into a set of specifications, which were implemented concurrently at BBN, Stanford, and University College London. Cerf was offered a position as a DARPA program manager and, after initially declining, accepted the role in 1976. As a program manager, Cerf was given responsibility for the packet radio, packet satellite, and research programs. He continued refining the TCP specification and in 1977, along with Bob Kahn and others, demonstrated the first three-network system with packet radio, ARPANET, and SATNET.

In 1978, Cerf, Jon Postel, and Danny Cohen developed the idea of splitting the Transmission-Control Protocol into two separate protocols: TCP and IP. TCP would be responsible for breaking up messages into datagrams and reassembling them, while IP would handle routing individual datagrams. The separate protocols allowed for the creation of fast and inexpensive gateways, which facilitated the growth of internetworking. By 1978, TCP had officially become TCP/IP.

In parallel to the development of the ARPANET, Bob Metcalfe at Xerox PARC was working on the invention of Ethernet, a local-area network that connected computers in the same room or building. Metcalfe’s Ethernet was inspired by the ALOHA network and used a collision detection system to prevent data packets from colliding. He, along with other researchers at Xerox PARC, built the first working Ethernet system in 1973. Metcalfe named the system Ethernet, after the hypothetical luminiferous medium that was once thought to exist to explain how light moves through empty space.

Overall, this period in the 1970s saw the transition of the ARPANET from DARPA to private contractors and the development of key protocols like TCP/IP and Ethernet that laid the foundation for modern computer networking.

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