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Week of 26 March 2004 · Vol. VII, No. 25

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Technology commercialization a heroic cause, according to visiting industry expert

By David J. Craig

George Gilder (left) and Robert Ronstadt, BU's vice president of technology commercialization and director of the Technology Commercialization Institute. Photo by Vernon Doucette


George Gilder (left) and Robert Ronstadt, BU's vice president of technology commercialization and director of the Technology Commercialization Institute. Photo by Vernon Doucette

Ideas are the most valuable commodities in today's economy. At least that's what many proponents of information technology posit. But according to George Gilder, the aphorism badly needs an upgrade.

“Science is not merely ideas,” said the publisher and editor of the influential newsletter the Gilder Technology Report, in a March 17 lecture at BU. “It also is the embodiment of ideas in machines, and the commercialization of those machines in the economy. That entire chain of creativity must be intact in order for new ideas to flourish and for the economy to advance.”

That chain has been weakened in the United States in recent years, Gilder said, by cumbersome government regulations that stifle innovation in the telecommunications industry. The resulting “crisis of commercialization,” he said, has allowed other nations to jump ahead of the United States in the wide deployment of broadband, or high-speed networks that simultaneously accommodate television, telephone, and Internet signals.

Gilder delivered the first annual lecture sponsored by BU's Technology Commercialization Institute, which was created last fall to educate students and faculty about how to turn their groundbreaking research into commercially viable products, and to coordinate and expand the University's various entrepreneurship efforts. Gilder also was inaugurated as a fellow of the institute. He is the author of several books, including Wealth and Poverty (1981), which argues that entrepreneurship is intrinsically altruistic.

In introducing Gilder, BU President ad interim Aram Chobanian called him a “true visionary” and praised his devotion to social issues as well as to science and business. “As an independent researcher and thinker, for three decades Gilder has focused on many important issues in society and has written extensively on the causes and effects of poverty and wealth, economic forecasting, and entrepreneurship in high-technology fields,” Chobanian said. “He is admirably equipped to advise the institute on issues of commercialization.”

Gilder, who came to prominence in the early 1980s as an architect of supply-side economics, acknowledged in his lecture that the regional Bell companies, such as Verizon and SBC Communications, monopolize high-speed DSL, or digital subscriber lines, for delivering the Internet to homes and businesses. But he argued that U.S. government regulations designed to create competition in broadband delivery are so ambiguous and ever-shifting that they discourage investments that could lead to altogether new types of broadband technologies. (Many industry observers have charged that government regulations keep the Bells from investing in new technologies and improving their infrastructure.)

The industry is regulated “in 50 states in 50 ways,” Gilder said, and “there are 10,000 lawyers in Washington who litigate every new law and regulation that's issued. The result is a total paralysis in American telecom.”

The lack of a stable regulatory structure, he said, slowed the deployment of broadband networks in the late 1990s and helped cause the burst of the Internet bubble. Some economists say the dot-com boom was fueled by overly optimistic predictions, by Gilder and others, about how quickly American homes and businesses would attain broadband connections.

“This failure in the United States still is ascribed in Washington, D.C., to some mysterious lack of demand for broadband,” said Gilder. And yet, in other nations, he pointed out, broadband access is much more prevalent. In South Korea, for instance, 75 percent of homes and businesses have a high-speed Internet connection that carries information four times faster, on average, than the typical cable modem connections used in the United States.

“Wireless bandwidth in [South] Korea now is greater than our wire-line bandwidth,” Gilder said. “And about a third of the nation's GDP is transacted over the Internet, compared to about 2 percent of our GDP in the United States. . . . How could it be that [South] Korea, Italy, and Japan are eclipsing us dramatically in technologies that we conceived and invented and deployed and propagated over the last 20 years? It shows how critical it is to understand the dynamics of the commercialization of technology, and that you have to have a system in place that accommodates the process. Unfortunately, the United States has a system that obstructs the deployment of broadband.”

In that environment, Gilder said, not only do new technologies not make it to market, but fewer innovative ideas get developed. “Technology commercialization is absolutely fundamental not only to economic growth, but also to creativity and the progress of ideas themselves,” he said. “New ideas do not flourish without their mechanical embodiment. . . . I believe that this is the key goal of an institute devoted to the commercialization of technology — to keep intact and robust and vital the entire chain where ideas are embodied in technology” so that they do not “become mere fashions that change with the times. It is a heroic cause to which you can devote yourselves . . . because in improving commercialization, you also revitalize the ideas that animate it.”


26 March 2004
Boston University
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