The Lost Economy

Technology:

New Study Confirms Significant Economic and Consumer Benefits of 5G Hinge on Streamlined Infrastructure Policy

October 30, 2017

Deployment of next-generation or “5G” networks in the United States is expected to generate $533 billion in U.S. gross domestic product (GDP) and $1.2 trillion in long-run consumer benefits according to a new analysis released today by the American Consumer Institute (ACI).

The data serves as the inaugural report for the new “Lost EconomyTM” series, an independent research program sponsored by ACI that identifies regulations and policies that impede private enterprise, delay investment and deter market entry, thereby impacting national and state economic output and jobs.

“This new analysis confirms that, under the right regulatory and policy frameworks, there will be a spur in next-generation network infrastructure investment, resulting in economic growth, job creation and increased consumer welfare,” said Steve Pociask, President and CEO of ACI.

The analysis, “The Economic and Consumer Benefits from 5G Broadband Service Investment,” confirms that explosions in U.S. wireless subscriber connections (400 million in 2016) and data traffic are driving increased consumer demands for faster and more robust wireless networks. Separate studies cited in the ACI analysis also confirm 5G technology could produce $1.8 trillion in savings over seven years, while self-driving cars and connected devices for health applications could produce annual economic benefits of $447 billion and $305 billion, respectively.

However, the ACI report observes multiple impediments that remain ahead of successfully upgrading the nation’s wireless infrastructure in all 50 states, 3,000 counties and 20,000 incorporated places, including recognition of timely approvals of applications and permits from state and local governments.

“Many states have already begun modernizing their rules to encourage 5G investment. Those states will likely be the first to experience the benefits talked about in this report. Those who are behind could see less investment and not get all the benefits, which is not in the public’s interest,” added Pociask.

To view the full analysis, click here

 

Intellectual Property and technology

A hallmark of advanced economies is their creation of high value intellectual property, such as technical designs, drugs, art, books and digital entertainment.  In the US, intellectual property can be registered and placed under certain protections such as a patent, trademark, copyright, marketing plan, trade secrets or some combination of these. Copyright is a protection provided to the authors of “original works of authorship,” including literary, dramatic, musical, artistic and certain other intellectual works.

The cost of creating intellectual property can be very high. For this reason, the purpose of patents is to provide temporary and exclusive rights that afford investors, creators and inventors the opportunity to market and sell the products, repay debts and earn a profit – all before allowing competitors to copy the innovation.

Developing a newly patented prescription drug averages $2.6 billion in costs, and the approval processes can take between 2.5 years and 6.5 years. Therefore, when patents or copyrights are used without the owner’s consent, the damages can be very harmful to inventors and investors.

The consequences of counterfeiting and pirating can be costly, but deadly too. One case that illustrates this problem is that of a liver transplant patient in New York who was being treated for anemia with injections.  After eight weeks, the patient was not responding to treatment and doctors discovered that the medicine used was counterfeit.  Over 11.5 million counterfeit Pfizer products were seized in 2004, resulting in the arrest of 364 people.  A particularly serious case involved counterfeit versions of Avastin, a cancer fighting medication.  Avastin’s producer Roche notified doctors in February 2012 of a counterfeit-version of Avastin that contained salt and starch but no active ingredient.  The bottom line — counterfeits can kill.

Knockoff designer handbags are a too-common example of theft of copyright that harms the value of famous brand names.  Unauthorized copying and sale of copyrighted movies, software and music cause massive losses of revenue (and jobs) within the entertainment and tech industry. When software, music and films are pirated, there are real economic costs borne by tech manufacturers and, more generally, innovators.  These economic costs are incurred in terms of lost production, revenues and jobs.  The government loses too, when it comes to tax revenues.

The danger posed by patent thefts is not always so obvious. In 2016, Chinese hackers are estimated to have stolen $360 billion in intellectual property from the US.  Chinese hackers have also stolen the designs for advanced Patriot Missile systems and other defense systems.  Bolts found in military helicopters were also found to be inferior knockoffs.  China is not the only bad actor.

In summary, counterfeits and pirated goods have real consequences on consumers and their lives.  These consequences also undermine economic investment, lead to job losses and raise industry and government costs, which ultimately harms taxpayers and consumers.  These costs represent a part of the Lost EconomyTM.

View our most recent study titled, “The Economic & Consumer Benefits from 5G – If State and Local Governments Streamline Costly Red Tape,” here.