US On The Wrong Side Of The Technology Gap?

By several measures, the US appears to be less “connected” than many other countries.

APRIL 4, 2006

Think of Benjamin Franklin flying a kite in a storm to prove his theory of electricity, Alexander Graham Bell’s telephone, Thomas Edison’s invention of the light bulb and the Wright brothers’ first flight at Kitty Hawk.

Since the dawn of the industrial revolution, American scientists, engineers and entrepreneurs have been at the forefront of technology. They have led the world in the creation of new products, services and industries.

Is this all coming to an end?

A new report from Economic Strategy Institute highlights weaknesses America’s high-tech economy.

Since 2002 the US has imported more high-tech goods and services than it has exported. Falling revenues are forcing many US telecom and technology companies to cut back on R&D spending or outsource research abroad.

One clear consequence is seen in broadband deployment. Limited investment is slowing deployment of high-speed networks in the US, according to the Economic Strategy Institute. In just six years, the US has plummeted from first in global broadband penetration rates to fourteenth.

“Even as the United States has stumbled, the rest of the world has leapt ahead. East Asia has focused on investment in telecommunications networks and is becoming a high-tech powerhouse; South Korea now leads the world in broadband penetration rates and e-commerce turnover,” said Mr. Clyde Prestowitz, author of the report. “Unless we act now, the United States will find it increasingly hard to recover.”

In another measure of technology development, mobile phone penetration, the US has fallen to ninth in the world. 61% of the US population has a mobile phone, according to the International Telecommunications Union (ITU). Several Asian and European countries have rates approaching (and even exceeding) 100%.

In the press conference to announce the release of the report, Craig Barrett, Chairman of Intel, said, “The United States needs a world class telecommunications infrastructure that supports commerce and economic development as it competes in the global marketplace. Unfortunately, America’s leadership in this area is in jeopardy.”

Senator Max Baucus, the most senior member of the Senate Finance Committee, echoed that sentiment, saying “A second-rate communications infrastructure will slow American innovation, and so will unwise regulations and unnecessary costs. Since innovation is at the heart of America’s economic competitiveness, we need to pave the way with sound telecom law.”

The senator later announced that he plans to introduce comprehensive legislation this year aimed at improving US competitiveness.

For more information on these subjects, consult the eMarketer reports, North American Wireless Trends, Asia-Pacific Wireless and Broadband: Demographic and Usage Trends.

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