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Up through the release of 4.3BSD-Tahoe, all recipients of BSD had to first get an AT&T source license. That was because the BSD systems were never released by Berkeley in a binary-only format; the distributions always contained the complete source to every part of the system. The history of the Unix system and the BSD system in particular had shown the power of making the source available to the users. Instead of passively using the system, they actively worked to fix bugs, improve performance and functionality, and even add completely new features.
With the increasing cost of the AT&T source licenses, vendors that wanted to build standalone TCP/IP-based networking products for the PC market using the BSD code found the per-binary costs prohibitive. So, they requested that Berkeley break out the networking code and utilities and provide them under licensing terms that did not require an AT&T source license. The TCP/IP networking code clearly did not exist in 32/V and thus had been developed entirely by Berkeley and its contributors. The BSD originated networking code and supporting utilities were released in June 1989 as Networking Release 1, the first freely-redistributable code from Berkeley.
The licensing terms were liberal. A licensee could release the code modified or unmodified in source or binary form with no accounting or royalties to Berkeley. The only requirements were that the copyright notices in the source file be left intact and that products that incorporated the code indicate in their documentation that the product contained code from the University of California and its contributors. Although Berkeley charged a $1,000 fee to get a tape, anyone was free to get a copy from anyone who already had received it. Indeed, several large sites put it up for anonymous ftp shortly after it was released. Given that it was so easily available, the CSRG was pleased that several hundred organizations purchased copies, since their fees helped fund further development.