The health of the U.S. telecommunications sector

  • The Internet, which realized a new communications paradigm, introduced a new, highly flexible network architecture and protocols, and ultimately enabled myriad new applications and services;
    Radio-frequency communications technologies for cellular systems and wireless local area networks, which have enabled modern mobile voice and data communications;
    Optical networks, which have revolutionized communications by providing extraordinary communications bandwidths at very low unit cost; and
    Voice over IP (VoIP), which provides voice communications with enhanced flexibility and efficiency and has provided opportunities for innovation in applications beyond those provided by the public switched network.

    Nations such as China, Japan, Korea, and member states of the European Union have identified telecommunications as a strategic area for economic development and have launched a variety of initiatives to enhance academic, industry, and joint industry-academic research in accord with vigorously promulgated national visions. Equipment vendors in a number of countries (such as China) now compete strongly with U.S. firms and have been very successful in emerging markets. Some nations’ active support for their domestic industries has extended beyond investment in research to include measures for protection of domestic telecommunications industries, thus placing further stress on the U.S. telecommunications industry.
    The health of the U.S. telecommunications sector depends on maintaining leadership in innovation.

    Telecommunications products and services generally become commoditized over time as multiple firms acquire the know-how to supply similar, competing products, and such competition has benefits in terms of lower prices for goods and services. To maintain leadership—or even a strong position—in telecommunications in the face of pressures from lower costs overseas for labor and other essentials thus requires that U.S. firms constantly focus on achieving high-value innovation as a foundation for developing non-commodity products and services. Research leadership in telecommunications by U.S. academic research institutions and government and industry labs has historically given the nation an advantage in terms of access to new technologies and the highest-caliber engineering talent.

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