Broadband: Keeping America Competitive
Dr. Robert Atkinson
President, Information Technology and Innovation Foundation
I had the pleasure of hosting a Center Stage Roundtable Forum on Competitiveness and Innovation at the 2008 Democratic Convention. The event featured CEOs and leaders from six influential American biopharmaceutical and technology companies, as well as key Democratic Members of Congress. The forum included conversations on the critical role of government investment in fostering business innovation and the most effective legislative and regulatory means of spurring innovation in the private sector. Speakers also discussed the need for adequate protections for intellectual property, maintaining a strong and qualified research and development workforce, and spurring innovation, including IT innovation throughout the economy.
This was by no means the only such forum at the convention on technology and innovation. And the presidential candidates for both parties have laid out technology policy agendas. (see ITIF web site for a forthcoming side-by-side campaign tech policy comparison.) What we are seeing and hearing in Denver at the Democratic National Convention is no exception. We’ll hear many of the same issues debated next month in the Twin Cities when the Republicans gather. As someone who spends much of his time working on innovation and technology policy issues, I am gratified by the heightened focus on innovation policy issues and particularly broadband policy. Innovation, including the diffusion of information technology throughout the economy, is the key to boosting productivity, which in turn is at the heart of increasing living standards for all Americans
Broadband telecommunications is a key component of our nation’s technology infrastructure. The principal objective of U.S. broadband policy — which enjoys rare bipartisan support — is that broadband should be universally accessible to all Americans. Achieving this national objective will require policies that encourage diverse, vigorous investment in the nation’s broadband networks, and innovative public-private partnerships and concerted efforts to spur investments in under-served areas.
As our nation’s two main political parties meet to debate the challenges we face, it is essential that forward-looking U.S. innovation policies carefully consider the potential positive impact on the growth and innovation that robust broadband investment today is making possible throughout our economy, in education, health care, the environment, public safety and many other areas. Indeed, as ITIF will document in a forthcoming report on “Digital Quality of Life” IT in general and broadband in particular is now a major driving force in real improvements in people’s lives and society as a whole.
But IT and broadband are also economic engines. This is because information technology-related sectors, powered by broadband, will remain the fastest-growing areas of our economy during the next decade. The converging broadband sectors of telecom, media and information technology lead U.S. GDP growth, adding nearly $900 billion annually.
Indeed, information technology is now the key technology driving the economy, not just in the IT industry itself — which continues to see high-wage job growth — but also in the use of IT in virtually all sectors to boost productivity, quality, and innovation. In an article published in the Fall 2007 Economic Development Journal titled “Measuring Up,” I pointed to the historic transformation that occurred in the 1990s “when semiconductors, computers, software, and telecommunications became cheap enough, fast enough, and networked enough to become so ubiquitous as to power a surge in productivity growth.” That’s why virtually of the increase in productivity since 1995 has been attributable to IT and telecommunications.
Today’s economy is driven by innovation — the development and adoption of new products, processes, and business models. Nations, states, regions, firms, and even individuals compete on their ability to accumulate, aggregate, and apply their assets in ways that create value in new ways for increasingly diverse customers all over the world. For example, as R&D is the key fuel of the engine of New Economy growth, it is not surprising that business-funded R&D has almost doubled from 1.19 percent of GDP in 1980 to 2.02 percent in 2002.
Investment in broadband technology is similarly spurred on by private sector investment. More than 90 percent of the U.S. communications infrastructure is maintained via private capital. In 2007, the nation’s 1,360 facilities-based broadband service providers invested approximately $60 billion in modern communications networks. The Yankee Group estimates that through 2011 annual capital spending will be in the high $60 billion to $70 billion range.
Yet, fundamental changes have created an economy where the United States is being forced to compete on the basis of innovation, and more complex, capital, and knowledge-based production. Increasingly, the entire nature of technology research and broadband deployment — are changing dramatically.
A report published last month by the Information Technology and Innovation Foundation showed that approximately two-thirds of the award-winning U.S. innovations involve some kind of inter-organizational collaboration — a situation that reflects the more collaborative nature of the innovation process and the greater role in private sector innovation by government agencies, federal laboratories, and research universities. The report, titled “Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1970-2006”, noted that “for better or worse, the U.S. innovation system today is much more collaborative than it was several decades ago and the federal government is playing a much more supportive and important role in innovation.”
This points to the need for smart public-private partnerships in a whole host of innovation policy related areas, including broadband. For example, groups like Connected Nation, focus on integrated solutions, ranging from government broadband loans to consumer education efforts to promote more widespread demand and use of this vital resource. The state-based Connect Kentucky public-private partnership has helped raised broadband availability throughout the state from 60 percent to 94 percent — connecting 542,000 households. The number of college graduates who remain in state to pursue careers has nearly doubled and more than 18,400 IT jobs have been created in the state. These initiatives point to the fact that the U.S. innovation system has become much more collaborative in nature. Federal policy needs to reflect this fact.
America remains today the most competitive nation on earth. Maintaining robust investment in broadband infrastructure will be a critical factor in our nation’s ability to maintain its leading edge in today’s sophisticated global economy. To enable ongoing American innovation and growth broadband speed, capacity and innovation must continually improve at a substantial pace.
Keeping our nation competitive and connecting all Americans to broadband’s many opportunities requires an innovation policy that recognizes not just the important role of private investment and market based approaches, but also the critical importance of public-private initiatives.
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