Is government really a better technology incubator than the private sector?

Wired has an article about a newly-launched commercial satellite, with the highest resolution of any commercial satellite: 41 cm (the lower the number, the better quality the image). Unfortunately, though, these images won't be available to Google (the exclusive commercial customer), or to anyone except government agencies. Dating back to the Cold War days, the federal government has prevented companies from offering commercial satellite imagery at anything near useful resolutions. However, as far as I can tell, it lifted some of these restrictions at some point "in the 1990's." According to the original Wired article, this seems to have ignited a great leap forward in commercial satellite imagery:

But only in recent years the technology became available to the public and businesses while concurrently making dramatic strides in coverage and resolution. For example, when Google Earth launched in 2004, its imagery was low-res and spotty. But by March 2006, a third of the world population could get a bird's-eye view of their own homes in high resolution.

But like I said, don't count on getting the 43 cm resolution that's available to government agencies – Google only gets pictures at resolutions of 50 or above. While this 7 cm differential isn't too big, it'll get bigger in a few years when the company is supposed to launch a satellite that can take pictures at a resolution of 25 cm, which of course will only be available to the government. And though I couldn't find any figures from recent years (as it's still a classified national security matter), it seems that as far back as the late '90s, the private Federation of American Scientists estimated the US government's resolution capacity to be 10 cm, and even better if they dip the satellite down closer to earth.

And this isn't the only case where government technical expertise runs laps ahead of the private sector. The Wired article quotes a backer of the project noting that hi-res satellite imagery is part of this longer tradition, "[j]ust like the internet, just like GPS, just like telecom." And indeed, this has become a popular meme these days: in the second presidential debate, Obama claimed that one of the reasons that the government needs to intervene in the green energy market is that government intervention has in the past has produced the beginnings of the most profound technological developments of the century. But why? Well, in the case of wartime inventions (which is what Obama references), a lot of it can be attributed to a crowding-out effect: as we still see today, government jobs often pay more than the private sector for technology jobs, and thus their presence will dampen entrepreneurship in the private sector.

But also, the government can do something even more pernicious: outright ban private sector development of a certain technology. This is what clearly happened in the case of hi-res satellite imagery, and which also happened in the same way with GPS. GPS was outright banned for public consumption in the US until the early '80s, and even then, was only available at the relatively useless accuracy of 400 feet. It wasn't until 2000 when Clinton (seemingly unilaterally?) ended the signal degradation and allowed the civilian GPS market to flourish, though it's unclear if today the military has better capability because they invest more in it, or because they restrict/degrade the civilian signal.

And the last category that the satellite company representative mentions – "telecom" – has had similar restrictions on its adoption. As Tim Wu explains in a NYT op-ed, wireless adoption (the next exciting frontier in telecommunications) is hampered by government policies which restrict access to the bandwidth over which wireless signals of all kind are carried:

After physical wires, the other major way to move information is through the airwaves, a natural resource with enormous potential. But that potential is untapped because of a false scarcity created by bad government policy.

Our current approach is a command and control system dating from the 1920s. The federal government dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev.

Many “owners” of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation’s airwaves are empty.

The solution is to relax the overregulation of the airwaves and allow use of the wasted spaces. Anyone, so long as he or she complies with a few basic rules to avoid interference, could try to build a better Wi-Fi and become a broadband billionaire. These wireless entrepreneurs could one day liberate us from wires, cables and rising prices.

Just something to think about when someone tries to tell you that only the government can make the investment necessary for innovative technologies like satellites, computers, or the internet. The private market, either due to outright restrictions or the siphoning away of talent by the federal government, is often not given the chance.