Ethernet is demonstrated by networking Xerox PARC’s new Alto computers.BBN recruits Larry Roberts to direct a new venture, called Telenet, which is the first public packet-switched service. Roberts’ departure creates a crisis in the DARPA IPTO office.
DARPA has fulfilled its initial mission. Discussions about divesting DARPA of operational responsibility for the network are held. Because it is DARPA-funded, BBN has no exclusive right to the source code for the IMPs. Telenet and other new networking enterprises want BBN to release the source code. BBN argues that it is always changing the code and that it has recently undergone a complete rewrite at the hands of John McQuillan. Their approach makes Roberts’ task of finding a new director for IPTO difficult. J.C.R. Licklider agrees to return to IPTO from MIT on a temporary basis.
In addition to DARPA, The National Science Foundation (NSF) is actively supporting computing and networking at almost 120 universities. The largest NSF installation is at the National Center for Atmospheric Research (NCAR) in Boulder, Colorado. There, scientists use a home-built ‘remote job entry’ system to connect to NCAR’s CDC 7600 from major universities.Bob Kahn and Vint Cerf publish "A Protocol for Packet Network Interconnection"" in the May 1974 issue of IEEE Transactions on Communications Technology. Shortly thereafter, DARPA funds three contracts to develop and implement the Kahn-Cerf TCP protocol described in their paper, one at Stanford (Cerf and his students), one at BBN (Ray Tomlinson), and one at University College London (directed by Peter Kirstein and his students).
Daily traffic on the ARPANET exceeds 3 million packets.