40 Years After Sparking the Internet, BBN’s Long Search for a Home Ends…At Home

If you had to pick a birthday for the Internet, September 2, 1969—40 years ago today—would be a good candidate. That’s the day a team of researchers at UCLA sent the first computer-to-computer transmissions using the Interface Message Processor (IMP), the grand-daddy of all packet-switching routers and the foundation of the military-university Arpanet, which paved the way, in later decades, for the Internet. The IMP was built at Cambridge, MA-based Bolt, Beranek and Newman, now BBN Technologies. So the timing of yesterday’s announcement that BBN will become part of Massachusetts-based defense giant Raytheon (NYSE: RTN) seems auspicious, since it seems to guarantee that the firm’s long tradition of innovation will continue under local management.

Originally founded by a pair of MIT professors as an acoustic consulting firm, BBN has had a hand in the development of an eclectic range of important digital technologies, including parallel processing, speech recognition, the Logo educational software language, genetic algorithms, satellite communications, and the @ sign in e-mail addresses. But the firm has traveled a twisty path over the last decade and a half.

GTE bought the company in 1997 and, as a condition of its 2000 merger with Bell Atlantic to create Verizon, spun off BBN’s Internet-related assets under the name Genuity. (Genuity’s 2000 IPO produced disappointing returns; the company went bankrupt and was acquired by Colorado-based Level 3 Communications in 2002.) The remaining parts of BBN were pried away from Verizon in a 2004 deal led by two venture firms, Cambridge, MA-based General Catalyst and Palo Alto, CA-based Accel Partners. Partners from the firms took four of BBN’s five board seats.

Since then, the 700-employee company has focused on bringing more products to market, with at least two notable successes: its Boomerang “shooter detection” system, used by U.S. forces in Iraq and Afghanistan to pinpoint the origin of small-arms fire, and EveryZing, a 2005 spinoff (originally known as Podzinger) that uses speech recognition technology developed at BBN to help media companies monetize their audio and video content by creating machine-readable transcripts that can be found by search engines and ad-placement algorithms.

But venture partners aren’t, as a rule, interested in being long-term corporate overseers, so it isn’t a huge surprise to see General Catalyst and Accel handing over their stake in BBN to Raytheon, a $23 billion defense contractor and electronics manufacturer whose history in Massachusetts goes back even farther than BBN’s. The terms of the acquisition, which is expected to close by the end of this year, haven’t been disclosed. But David Fialkow, managing director at General Catalyst, said in a statement that the sale was an “excellent result” for BBN’s investors and employees. BBN president and CEO Robert “Tad” Elmer said being part of Raytheon would act as “a multiplier on our proven ability to deliver advances to the market rapidly and profitably,” and Raytheon executives said the acquisition would strengthen the company’s capabilities in networking, video surveillance, and advanced sensing applications.

MIT physicist Richard Bolt and acoustics expert Leo Beranek founded the company in 1948, and brought in a former student of Bolt’s, an MIT architecture graduate student named Robert Newman, early enough to include him in the corporate moniker. The company’s first contract was for the acoustic design of the General Assembly Hall at the United Nations headquarters in New York. On the strength of that work, the firm went on to design acoustic systems for performance halls and office and apartment buildings, as well as noise-dampening systems for jet engines.

In 1957 BBN hired MIT computer scientist J.C.R. Licklider, who persuaded Beranek to spend $25,000 to buy the company’s first computer, an LGP-30 from typewriter manufacturer Royal. Soon after, BBN bought the very first machine built by Digital Equipment, the PDP-1, for $150,000, and Licklider used it to demonstrate the first time-sharing systems. BBN employees went on to explore the uses of computers for managing medical records and libraries, and wrote some of the earliest programs for pattern recognition and natural language processing. Licklider was the first among a parade of computer luminaries who eventually passed through the company, including John McCarthy (the inventor of the term “artificial intelligence” and the developer of the Lisp programming language), Marvin Minsky (co-founder, with McCarthy, of the MIT Artificial Intelligence Laboratory), Seymour Papert (the developer of Logo and the co-creator, with Minsky, of the idea of artificial neural networks), and John Seely Brown (later director of Xerox PARC).

In their 1998 book Where Wizards Stay Up Late: The Origins of the Internet, writers Katie Hafner and Matthew Lyon called the BBN of the 1950s and 1960s Cambridge’s “third university,” after Harvard and MIT. “BBN became one of the most attractive places to work in the Boston area,” they wrote. “Some people even considered it better than the universities because there was no teaching obligation and no worry over earning tenure. It was a rarefied environment—the cognac of the research business.”

In 1969 a team led by BBN engineer Frank Heart built the first Interface Message Processors, modified Honeywell minicomputers that were delivered to computer science laboratories at UCLA, the Stanford Research Institute, and other locations and became the backbone of the Arpanet. The packet-switching model enabled by the IMPs—in which messages are broken into individually addressed packets that travel separate paths over a network—has become today’s dominant form of data and voice communication.

The world also has BBN to thank (or curse) for e-mail. In 1971 BBN principal scientist Ray Tomlinson combined several programs for sending, receiving, and copying files across machines on the Arpanet into the first working e-mail system; he chose the @ sign, a little-used key on the teletype machines of the day, to separate addressees’ login names from the names of their host machines.

BBN went on to be involved in numerous technological milestones, including packet-switched satellite communications, acoustic analysis of the Watergate and Kennedy assassination tapes, and the development of the Transmission Control Protocol, which handles the breakdown and reassembly of data packets and became one of the technical foundations for the Internet. The Internet domain name bbn.com was the second ever registered, in 1985. Yet while BBN won a series of hefty defense research contracts to investigate areas like speech recognition, it went through a series of financial ups and downs in the 1970s and 1980s, and was largely unprofitable. In the early 1990s, under CEO George Conrades, it evolved into one of the first national Internet service providers, focusing first on corporate and university customers and then on consumers; in 1995-1997 its BBN Planet division signed agreements with America Online to provide more than 400,000 telephone modems to AOL’s customers.

But the company was still operating at a loss in 1997, when Stamford, CT-based GTE purchased it in an effort to compete with AT&T and MCI for the center of the then-exploding Internet market. BBN Planet was merged with GTE’s fiber networking division, but was spun out again in 2000 under the Genuity brand when it turned out that FCC regulations meant GTE would have to shed some of its long-distance networking operations before it could merge with Bell Atlantic. The forced spinoff led to a market flop for Genuity, whose technology was eventually absorbed by Level 3. BBN’s non-Internet operations, which remained as part of Verizon, languished for several years, until Accel and General Catalyst acquired them in 2004.

General Catalyst’s Fialkow and his counterparts at Accel said at the time that they saw an opportunity to help BBN monetize many of the communications technologies it had been gestating for years. The company set up a new “Delta Division” to look for commercialization opportunities. One of the first pieces of intellectual property to be peeled off was the speech-to-text technology originally developed for the Department of Defense, which became the core platform at Podzinger, later renamed EveryZing. The spinoff started off as a podcast search service, but has evolved into a provider of broad search and indexing technology that helps media companies like NBC Universal earn more revenues from their digital audio and video properties.

Internally, BBN has focused on specific products such as Avoke, a software suite that uses speech recognition to help companies manage large call centers, and Boomerang, a multi-microphone system mounted on military vehicles that uses signal processing software to determine the range and elevation from which nearby snipers are firing. The company also continues to work on advanced research and development for the defense community, with strengths in areas such as quantum cryptography and ad hoc wireless networking. But despite the establishment of the Delta Division nearly five years ago, BBN hasn’t been a source of numerous new commercial products, and may have been in search of a deep-pocketed parent organization like Raytheon in order to continue its operations.

Raytheon is one of the few existing Massachusetts technology organizations whose roots are even deeper than BBN’s. It was launched in Cambridge in 1922 by one-time MIT roommates Vannevar Bush and Laurence Marshall, to commercialize a “gaseous rectifier” invented by the third co-founder, scientist Charles Smith; the device made it possible to run household radios on alternating current rather than batteries. The company went on to produce transformers, auto parts, and vacuum tubes, and grew into a defense giant during World War II, when it won a contract to mass-produce magnetrons, the microwave-generating tubes at the heart of radar technology. Soon after the war, it employed magnetrons as the core of the first microwave oven, called the Radarange. In recent decades, Raytheon has been most famous as the manufacturer of the controversial Patriot surface-to-air missile system.

In a statement yesterday, Raytheon chairman and CEO William Swanson said BBN’s rich history of innovation makes it a “natural fit” with Raytheon. “We expect all of our businesses to benefit from the application of BBN’s research and development expertise and technologies across our product lines and programs,” Swanson said. Given the two firms’ common origins at MIT and the military’s ongoing need for better networking and computing technology, Raytheon indeed seems to be a logical—and perhaps, finally, a long-term—home for BBN.

Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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4 responses to “40 Years After Sparking the Internet, BBN’s Long Search for a Home Ends…At Home”

  1. Tom Summit says:

    Great article Wade. I really enjoy stories about Boston tech legacy companies and their contributions to the marketplace.

    xBBN employees also contributed to startups like Wellfleet and VideoServer.

    My wish list for future articles: Apollo, Wellfleet, Powersoft, Symbolics(first .com domain).

  2. I may be nit-picking, but debt-loaded Genuity was actually not acquired by Level 3 Communications as stated in the beginning of the article. For $137 million, Level 3 only acquired the assets and operations of Genuity, after which Genuity Inc. was allowed to die peacefully.

    Former Genuity employee