10 Government Ideas To Spur Innovation

5. Increase spectrum for wireless communications. As part of the national broadband plan laid out by the FCC in March, the agency aims to free up 500 MHz of unused or underused spectrum now controlled by broadcasters and auction it off for broadband wireless. Broadcasters that volunteer to give up spectrum would get a share of the proceeds.

Problem is, the FCC is still waiting for Congress to OK the plan. At the Consumer Electronics Show in Las Vegas earlier this month, FCC chairman Julius Genachowski sounded impatient, telling an audience: "My message today is simple. We need to get it done now and we need to get it done right. Few areas hold more promise for creating jobs than mobile."

Job creation aside, this is an important telecom capacity issue. As InformationWeek contributor Peter Rysavy noted in a recent column, improvements to broadband technologies such as LTE will let carriers squeeze more capacity out of their spectrum, "but that is a decade-long effort due to immense complexity and dependence on standards that haven't even been finished yet. Right now, we absolutely must have more spectrum. Without it, the industry will stall. Tiered pricing is not really a solution."

6. Increase access to data to spur innovation. It's among the broadest and most vague of the Obama administration's goals. A success story cited in the report is the launch of the data.gov website, a massive collection ground for datasets in areas as diverse as healthcare, energy, weather, law, and military gravesites. For example, developers have already used Bureau of Transportation statistics on data.gov to build an application that finds the flights between two airports that are on time most often and checks how late a particular flight is on average.

7. Coordinate federal support for manufacturing. Here, the Obama administration is playing a favorite, manufacturing, which represented only 11.2% of U.S. GDP in 2009 and 9.1% of U.S. employment. The best case the report makes for paying special attention to the manufacturing sector is the fact that hourly compensation in that sector "is, on average, 22% higher than that in the services sector." The report also asserts that manufacturing "provides the bulk of U.S. exports, contributes substantially to U.S. R&D, and protects national security."

8. Strengthen efforts to foster regional entrepreneurship "clusters." The example the report highlights, NorTech, run by Rebecca O. Bagley, one of the 15 innovation advisory board members the Commerce Department consulted for its report, is a nonprofit economic development organization serving 21 counties in Northeast Ohio. Focused on "advanced energy" and "flexible electronics" and funded with public and private money, NorTech aims to attract new members "by promoting Northeast Ohio's technology story" and pool funding for R&D and revenue opportunities.

Such clusters sound dynamic enough, but they're often more show than substance. As Vivek Wadhwa, a former tech entrepreneur and now an academic affiliated with several universities, wrote in a Bloomberg BusinessWeek column]: "Many of the cluster-development projects that have been started around the world since the 1980s have either failed or are on life support, including Tsukubu, Japan's science city, and Egypt's 'Silicon Pyramid.' Because they typically die a slow death, you don't hear about the failures on the front pages of newspapers."

9. Promote America's exports and improve access to foreign markets. The administration emphasizes the free trade agreements it's promoting with Panama, Colombia, and South Korea--all valuable efforts. It also emphasizes that U.S. businesses must have "fair and open access to foreign markets," a no-brainer, of course, as long as it's not a precursor to protectionism and trade retaliation.

10. Ensure that the conditions exist in which private enterprise can thrive. This is the most broad and vague of the report's innovation policy principles. It proposes reforming the corporate tax system, for example, but it never gets around to making a recommendation, acknowledging that U.S. companies are subject to the second highest tax base in the world (behind Japan) but also noting that U.S. companies exploit myriad tax loopholes that contribute to market "inefficiencies." The report also calls for reform of the intellectual property system so that it "continues to function in a way that encourages growth." But as the recent SOPA (Stop Online Piracy Act) kerfuffle shows, one group's IP protection measure is another's clampdown on free speech. Both the tax and IP protection issues are political landmines.

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