participants in the telecommunications

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All of the participants in the telecommunications value chain could, in principle, invest in research, but the nature of those investments would likely differ because of varying motivations and incentives.

All of the participants in the telecommunications value chain could, in principle, invest in research, but the nature of those investments would likely differ because of varying motivations and incentives. Traditionally, investments in research by end users (the demand side)15 seeking to improve the technologies available from providers and vendors (the supply side) have been the primary source of fundamental and long-time-horizon results that are much more likely to enter the public domain, making them available to all and increasing their impact. Open access to such results is particularly important for telecommunications, given that the value of a communications network grows with the number of its users, with more widely adopted and standardized technologies bringing greater benefits to all users.

As a result of the structural changes in the telecommunications industry, the source of funds for investing in research has shifted from the demand side—telephone customers who paid for Bell System research via a tax on telephony usage—to the vendors of equipment, software, and chips, although the U.S. military (through DARPA, the Army, the Navy, and the Air Force) continues to be a major source of investment in telecommunications research. Currently, end-user organizations and commercial intermediaries are investing very little in research (an exception is ATT, which has maintained a vestige of Bell Labs but has cut that back substantially, due to dramatic reductions in traditional telecommunications revenues over the past 3 years, from a support level of close to $140 million in 2001 to a support level of below $60 million in 2004).

Today, for commercial technologies, most of the investment is made by supply-side equipment vendors and semiconductor and software companies. Service providers and equipment vendors primarily support research leading to near-term incremental additions to their own products and services, and are likely to keep the results of their short-term research programs proprietary in the interest of gaining competitive advantage.

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