tional Telecommunications and Information Administration’s (NTIA’s) research and engineering branch, the Institute for Telecommunications Sciences, which is noted, for example, for its work on radio propagation. NIST has a long track record of working with industry on problems of interest to industry and a long tradition of research on IT and telecommunications problems. NTIA’s mission centers around telecommunications, and it has a research program, albeit much smaller and narrower than the activities recommended here.

TOWARD INCREASED INDUSTRY SUPPORT FOR TELECOMMUNICATIONS RESEARCH

Research that seeks fundamental breakthroughs in communications services and applications or seeks to define new service architectures and transition strategies may not necessarily benefit any one company exclusively, but companies that have made more strategic or rapid research investments stand to benefit as new capabilities are developed and deployed in the industry. The committee believes that the U.S. telecommunications industry should certainly increase its support for more fundamental, cooperative, breakthrough research—although the committee also understands that the issues involved in doing so are complex. For example, a primary obstacle to overcome is “free-riding” (a concept described in more detail in Chapter 2), whereby any one company can benefit from the freely available results of research even while failing to contribute to it. A solution might be the use of mechanisms for sharing resources and responsibility for research across the industry, as an alternative to conducting proprietary research within each carrier. Another way to encourage service provider participation is for government to provide matching funds or other incentives such as R&D tax credits.

One avenue for increasing industry support for fundamental research would be participation in joint, cooperative research activities organized by ATRA and funded jointly by industry and government whereby industry could pool funds, spread risk, and share beneficial results through cooperative efforts between industry and academia. Another option is cooperative resource sharing. An example is a shared-responsibility research program conducted not long ago by the regional Bell operating companies through Bellcore, which they owned jointly. However, as the companies began to compete with one another, they divested Bellcore. In contrast, the proposed ATRA would not be subject to the same pressures because it would be led by the federal government rather than a board made up of competing firms.

An organization such as Bellcore can provide a forum for research and development work that spans multiple service providers and addresses issues offering little potential for companies to distinguish themselves individually and thus little incentive to invest; for certain activities, significant savings from centralization and economies of scale and scope; and opportunities for conducting end-to-end interoperability testing across equipment manufactured by different vendors that otherwise would entail an investment in equipment too expensive for individual research groups.

Examples from other industries of creative cooperation show that, provided care is taken in the type of research conducted (e.g., keeping the time horizons long and focusing on major architectural advances), the outcomes can be mutually beneficial to the industry as a whole while not harming the chance to compete vigorously in current or nearer-term business opportunities. Examples of simultaneous cooperation and competition (“co-opetition”) can be found



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