General guidelines for the official launch of the Internet were set out in Decree 166/PM of the Prime Minister (1977) regarding the Organisation of a Network and Implementation, Use and Control of the Internet System. Responsibility for the development of the Internet in Laos was initially shared between the Ministry of Communications, Transport, Post and Construction, the Ministry of Information and Culture and the Science, Technology and Environment Agency (STEA) of the Prime Minister's Office, but this resulted in considerable overlap of responsibilities and by 2000 it had become clear that a single agency was required to implement an overall IT policy for the Lao PDR. Accordingly in that year the Lao National Internet Committee (LANIC) was established under the STEA with responsibilities which included IT monitoring and management, IT research and development, knowledge base capacity development, creation and approval of IT standardisation, IP and copyright, and consultancy and services. In that same year an STEA Information Technology Centre was also established within the STEA to conduct research, development, training and other services in the IT field throughout the country.

At the outset, each of Laos' Internet - internet service providers (ISPs) operated their own Internet gateways, with the result that delays ensued when customers of one Lao ISP wanted to access another Lao ISP’s website, since the connection had to be made internationally. In order to resolve this problem, SIDA funded the Lao National Internet Exchange Project, which was implemented from 2002-2004 as a joint project of LANIC, the National University of Laos (NUOL), local ISPs and the Swedish Royal Institute of Technology, and now interconnects all local ISPs domestically through optical fibres.

Since 2002 two new gateways have been established under the control of LANIC - one via the Thaicom satellite, which is used exclusively for the provision of Internet services to government ministries, and the other via an ETL fibre-optic link, which is used mainly for the provision of Internet services to the provinces but also provides additional bandwidth to government ministries where required.

The number of registered Internet users in Laos has increased from 1,934 in 2000 (when records for the usage of the Internet began) to 5,400 in 2004. It is currently estimated that there are some 15,000 Internet users around the country; most of these access the Internet in Internet cafes. There are at present around 250 Internet cafes in Laos, with 70 of these situated in Vientiane Prefecture.

At the present time in Laos the Internet is used mainly for E-mail and online chat (Voice Over Internet Protocol). The paucity of country data available on the Internet continues to limit its application for educational or research purposes, and the minimal use of credit cards in Laos has thus far precluded its commercial exploitation. Elsewhere in the developing world E-commerce has proven significant for developing countries, and especially economies in transition, by opening up new international markets. However, in Laos the local financial infrastructure is not yet in place to facilitate E-commerce. While an increasing number of Lao companies have websites, they are still unable to perform online trade; E-commerce involves the transfer of funds and in Laos this is only possible if a bank account is opened in a third country which has the necessary financial infrastructure to transfer the funds. A notable exception is the website Asia Handicrafts - the Hand Made in Laos Store, which offers the first not-for-profit web commerce facility to Lao artists and craftspersons.

Since 2003 LANIC has attempted to encourage the development of E-government by providing free Internet access to 16 governmental organisations and academic institutions in Vientiane. It is estimated that 1,000 PCs are now connected to this network, together with 500 PCs in six laboratories of the National University of Laos (NUOL). A survey conducted by LANIC in early 2004 found that 31.7 per cent of the PCs in government offices were connected to the Internet. Moreover 21.7 of government officers accessed the Internet every working day, apparently spending 60 per cent of their time on E-mail, 37 per cent searching for foreign information and just two per cent seeking local information. At the time of writing very few government ministries have their own websites and those which do exist are very basic. Furthermore most government officers still use personal yahoo or hotmail E-mail addresses for their work.

The open-source movement is developing slowly in Laos. An Open Source Laboratory was established in December 2002 within the STEA's Information Technology Centre with the assistance of the Agence intergouvernementale de la Francophonie (AIF). The Lao National Internet Exchange Gateway uses the Linux operating system for running E-mail, Internet services, firewalls and its domain name system server, and Linux is also now used by most local ISPs. Local computer companies are also contributing to the open source movement by providing a free Linux operating system as an option when customers purchase new computers and servers.

Unfortunately Internet development in Laos continues to be hampered by an acute shortage of IT professionals, an underdeveloped infrastructure, high cost of telecommunications and ongoing delay in the adoption of a Lao Unicode standard for use in electronic communications.

The quality of local IT courses is slowly improving but there remains an acute shortage of IT professionals and capacity building in this area is regarded as a priority by LANIC.

The state of the national telephone infrastructure is also a cause for concern – less than half of the districts in the country have fixed telephone services, only larger urban areas in nine provinces are currently covered by mobile cellular signals and less than one per cent of all households currently have a telephone. At the present time the Internet is currently available only in the largest cities, and the cost of connectivity is at present beyond the means of most ordinary people.

Pending the development of a Lao Unicode font, messages in Lao can still only be typed as E-mail attachments, and even then due to the proliferation of different fonts on the market it is uncertain whether or not the recipient will be able to read the message.