European Affairs

Perspectives: BEST INVESTMENTS BY GOVERNMENT—EVER     Print Email

michael r. nelson

In the first Presidential debate former governor Romney raised the issue of government investment in technology when he criticized the Obama administration for putting "$90 billion into green jobs" and went on to say the government usually “picks losers.”

The truth is many of the best investments governments in the U.S. and Europe have ever made have been in technology, particularly information technologies.  But to judge the benefits it is essential to look at the long-term, to look at the broad impacts of the technologies fostered by government funding, and to recognize that not all technology investments are the same.

While both the US and European governments have an uneven history when it comes to supporting specific high-tech companies, they have done a much better job when it comes to supporting the development of fundamental technologies before they have demonstrated clear commercial value.  Indeed in a recent Bloomberg Government article I documented that United States investments in the core technologies of the Internet and in early deployments of Internet technology are probably the best investment the US government has made since the Louisiana Purchase more than two hundred years ago.

Likewise, the European Union high-energy physics research grants that supported Tim Berners-Lee when he was developing the World Wide Web at the CERN particle accelerator have had a similarly extraordinary return on investment, as did the National Science Foundation grants to the National Center for Supercomputing Applications at the University of Illinois, where Marc Andreessen and others created Mosaic, the first graphical Web browser.  The Web and the Mosaic browser, which popularized it, drove the explosive growth of the Internet during the 1990s and enabled the development of e-commerce, which is forecast to reach more than $1 trillion worldwide by the end of this year.

What investment secrets and guidelines can we learn from these examples?

First, governments need to be willing to take risks on technologies that may not seem to have obvious or immediate application.  When the first US Defense Department grants for the development of packet-switched networks (such as the Internet) were made in the late 1960s and 1970s, no one was thinking about a global, all-purpose, commercial network like today’s Internet.  These grants were to fund radical new approaches to networking that might prove useful for radio communication on the battlefield or for specialized research networks.

A second lesson learned is that research agencies should not try to tightly control the innovation they fund.  Serendipity is a common theme in all of the examples mentioned above; researchers need to be allowed to pursue unexpected new avenues of research.  When he was developing the World Wide Web, Tim Berners-Lee was supposed to be finding a better way for high-energy physicists to share their data and scientific papers.  He did that--but when researchers in other disciplines discovered his invention could help them, too, Berners-Lee was allowed to develop his new technology into a general-purpose tool. Likewise, Marc Andreesen was funded to help the Illinois supercomputer center develop new tools and applications for the most powerful computers of the day.  Instead, he created software that could run on any personal computer--and was not told that that was not his job.

Third, is that government research projects which create open source software or provide licenses under very flexible terms will have a much greater chance of spurring further innovation, inspiring new start-ups, unleashing private sector investment, and generating new jobs.

The core technology of the Internet Protocol and the World Wide Web were freely available and implemented in software that any engineer could use, adapt, improve, and build upon.  The software for Mosaic was licensed to both Netscape and Microsoft for a modest sum.  It is fair to say that if either Tim Berners-Lee or Marc Andreesen had worked for Apple or another company famous for aggressively defending their patents, the World Wide Web would not have spread so explosively and the number of creative new uses of Web technologies would have grown much more slowly.

A fourth lesson to be learned is that a promising technology has a much better chance of becoming a "game changer" if a community of engineers develops to create the standards and procedures for making the technology in real world situations.  Robert Kahn and Vint Cerf are not called the "fathers of the Internet" simply for their engineering work on the Internet Protocol in the 1970s.  They also were co-founders of the Internet Engineering Task Force, which for more than 25 years has brought together the world best Internet engineers to improve and expand the power of the Internet.  Likewise, after Tim Berners-Lee left CERN, he created the World Wide Web Consortium to provide the standards and technological framework to ensure the Web's continued improvement and to promote its use.

A fifth reason that the Internet and the Web become so successful is because governments embraced these technologies and put them to work.  They were "early adopters."  When the Internet was still in its early stages (in the 1980s) the US Defense Department decided to use the Internet Protocol for its unclassified .MIL network--rather than adopting one of the many commercial, proprietary networking standards being promoted by companies like IBM, DEC, and Apple.  That implied endorsement of a non-commercial, academic, open-source technology convinced other agencies that the Internet was "industrial strength", which, in turn, convinced several IT companies they needed to pay attention to and invest in the Internet.

The fact that agencies were ready to use Internet technologies is an example of another reason the return on investment on funding for Internet research have been so spectacularly high: governments were funding the development of technologies they needed and could use--almost immediately.  Having an early customer, who is well-funded, is key for any start-up.  The US government was ahead of the private sector in deploying the Internet and in using the Web, which helped demonstrate the power of both technologies. The launch of the White House Web site in 1994 under the Clinton Administration not only convinced other Federal agencies and governors throughout the country that the Web could be a valuable tool for delivering government services, it also spurred governments and companies around the world to experiment with Web pages.

As the United States and the nations of the European Union attempt to reduce government spending and cut their huge deficits, there will be pressure to cut research programs--particularly ones that do not have immediate or obvious pay-offs.  But governments (and citizens) need to realize that a well-chosen portfolio of investments in research is essential for the development of the next generation of start-up companies.

The key is making the right choices.  The reason the Internet became such a central part of people’s lives is because it’s a “generative technology,” a term used by Jonathan Zittrain, a professor of law and computer science at Harvard University, to describe technologies that almost anyone can adopt and adapt.  The personal computer, GPS -- even duct tape -- are all examples of generative technologies.  What makes them work are open standards, which mean any company can use them to invent new products and services that work with other companies’ innovations to create a competitive marketplace.

To understand why generative technologies are important, consider the French government’s investment 30 years ago in a national data network.  Working with France Telecom, the government created the Minitel, a computer network French citizens could use to do everything from checking the yellow pages to signing up for online dating.  But, unlike the Internet, the Minitel was not an open, generative technology; it was controlled by France Telecom.  And as a result, earlier this year, France Telecom unplugged the system, which has been in a long decline.

Today, the US and the EU have two generative technology investment opportunities that promise perhaps even more economic growth than the Internet and the Web.

The first is cloud computing, which provides cheaper, more flexible computing power and storage in data centers worldwide.  Consumer applications of the cloud include Apple's iTunes, Netflix, and Microsoft's Hotmail. Advances in cloud technology--for individuals and businesses-- will enable thousands of new applications.

Second is the “cloud of things,” which will combine cloud computing with sensors in trillions of appliances and inexpensive devices that will collect a flood of new data and video.  Companies and governments can use the "Big Data" from these ubiquitous sensors to improve just about everything we do, from quickly rerouting traffic from clogged highways to monitoring the health of patients and synchronizing every many function in our homes.

Both the National Science Foundation and the European Union’s Framework Programme 7 have made Cloud computing and sensor technologies a high priority.  Indeed, over the last six years, the Framework Programme has invested more in information and communication technologies than in any other area.  These efforts will not only spur the development of new technologies and applications, they will also fund the education of students and researchers who apply these technologies in the private sector and in government.  And, if properly implemented, government programs can bring together leaders in the field to help develop standards, just as the US government supported development of early Internet standards.

But governments have to do much just invest in research; they have to be ready to apply the results.  Doing so will be much easier and more productive if they ensure that the resulting breakthrough technologies are not tied up in restrictive patent agreements.  Instead, by promoting open standards and open source software, they can ensure the widest possible applications of the new innovations they fund.  That's what the successes of the Internet and the World Wide Web have taught us.

Michael Nelson is also Adjunct Professor of Internet Studies at Georgetown and serves on the Board of Advisors for the European Institute.