From http://techpresident.com/news/22670/where-did-internet-really-come comes this bit of history which looks completely right from everything I have learnt from the people involved, and it’s short and to the point:
“During the early and mid 1960s – about a half a century ago – computers were physically very big. Only big companies, universities and governments had computers, storing them in special air-conditioned rooms. And they were expensive. On IBM’s flagship mainframe computer, the IBM 7094, the memory unit – what you would now call the RAM – held one megabit, i.e. about 128KB, and cost about one million dollars in the early 1960s. That’s about five million dollars in today’s terms. Each computer was also the center of its own universe. There were a few experiments and special projects to connect computers together, but nothing common or easy.
Here’s how the government changed all of that. In 1958, the Defense Advanced Research Projects Agency (DARPA) was created in response to the Russians putting up Sputnik, the first satellite. American officials were chagrined that the Russians had beaten them into space, and wanted to make sure it stayed ahead in research in the future. One portion of DARPA was the Information Processing Techniques Office (IPTO), which funded research at major universities around the U.S. focusing on the frontiers of computer science in that period – man-computer interaction, artificial intelligence, large-scale computers, advanced graphics, all much of what became today’s common technology.
By the mid-1960s IPTO was funding a few dozen projects at UCLA, MIT, Harvard, Carnegie-Mellon, Stanford and similar universities and research laboratories. An important aspect of these efforts is that each one was unique. The researchers were free to choose what equipment to use and how to run their projects, so there wasn’t any uniformity across these projects.
From their central vantage point in DARPA, key people could see the value of connecting these laboratories together. The directors of DARPA during the 1965 to 1975 time period, Charles Herzfeld, Eb Rechtin and Steve Lukasik , all understood the pressing need within the U.S. military to have technology for connecting and utilizing the ever more complex computer systems the military was building. IPTO’s first three directors, JCR Licklider, Ivan Sutherland, and Bob Taylor, all initiated efforts to connect computers together.”