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.
Although demand-side entities are generally more likely to direct their research investments toward more fundamental and long-time-horizon opportunities, a major economic impediment to doing so is so-called free-riding. Since the goal of a demand-side entity is typically not to gain proprietary advantage, but to make innovative solutions available through the totality of its suppliers, demand-side investments in research usually benefit everybody, that is, all suppliers and other demand-side entities. Thus, companies or entities failing to invest in research can still benefit from the investments of others, and there is a temptation to gain a free ride on those investments—and a disincentive to invest in results that become largely a public good.
The decline in attention to long-term research is quite evident when looking at the history of Bell Labs, the institution that for decades was most closely associated with long-term telecommunications research. Long-term research supported advances in areas such as switching, transmission, and services, and shorter-term research was aimed at operating and improving existing technologies and systems. Although most of the system building and systems engineering and integration were done by developers and system architects, researchers were traditionally heavily involved in the process since they were the ones who had created the fundamental technology on which the new systems were based.
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