[aborsy]

The internet includes many components: semiconductors/electronics/chips, hardware, fiber optics, communication systems, networking, wireless, software, etc. There is a lot of work that must be done in different parts of this stack for this system to work.

Yet, the private sector focuses mostly on the software part, or services. I have rarely seen a start up on improving optical fiber or electronic chips. The public sector builds the infrastructure, often following decades of investment and work. People working on infrastructure either work for the government for pennies or, if they haven’t yet lost their jobs to outsourcing to developing countries, have difficulty finding employment. The profit goes to consumer companies focused on software or services; worse, these companies claim credit for the whole Internet.

Obviously CapEx will be large for a company with a product on infrastructure; there are monopolies; customers will be large operators, etc. Still, are there resources to better understand this issue? It always seemed to me a scam.

Also, will the situation change for “hardware”startups/companies?

[txcwpalpha]

> The public sector builds the infrastructure, often following decades of investment and work.

It does? I don't think I follow. In your list of components, every single one of those is, at least in the US, largely or almost entirely handled by private companies.

The big semiconductor companies are private. I actually don't think there are any notable public entities that make their own chips. Hardware companies (I'm assuming you're talking about things like motherboards, routers, switches, etc) are private. Fiber optics/communications/networks are laid almost entirely by private telecom companies (and there's actually a big push to take this away from private companies and make ISPs be government entities). The article that you're commenting on is all about a private entity investing money into laying fiber and improving the protocols that communicate over it.

>I have rarely seen a start up on improving optical fiber or electronic chips.

There are a lot of SMBs working on chip design. I'm less familiar with fiber, but a quick google shows at least a couple, all private.

[aborsy]

Oh no!

Consider high speed optical communication. The invention of transistor, laser, optical fiber, optical amplifiers, modulators, communication and information theory, DSP, and many other important technologies, was funded by taxpayers for a long time. You may say, some of it happened in old bell labs, but bell labs was a state-subsidized monopoly, rather an exception, and even things like information theory were really developed at MIT and other public research labs (Shannon had an office at Bell Labs for some time but had limited contact there).

Consider machine learning. From 1940s to 2010, neural networks were funded by governments grants, and developed at universities. The governments even funded building practical applications out of deep neural networks, for example, in the area of speech recognition, unsuccessfully. The periods are now called AI winters. It’s really in the past 15 years that the subject has become practical and companies are building products based on it. FANG is capturing the profits of this decades-long research and development.

Today there are millions of graduate students and postdocs and professors at universities performing risky research and experiments. A lot of it doesn’t pan out. The public bears the risk. Once an idea begins to work, it’s handed over to private sector for further development and bringing the work to market.

Most of the research papers published at conferences and journals, Nobel prizes, Fields Medalists etc come out of universities, not startups or FANG.

Yes, Google installed fiber cables (perhaps even bought it from Corning or the like, and also contracted out the installment). But that’s not infrastructure R&D.

I think there is no denying that basic long term research is done by and large in public sector. Private sector is still focused on short term product research.

[ApolloFortyNine]

>Yet, the private sector focuses mostly on the software part, or services. I have rarely seen a start up on improving optical fiber or electronic chips. The public sector builds the infrastructure, often following decades of investment and work. People working on infrastructure either work for the government for pennies or, if they haven’t yet lost their jobs to outsourcing to developing countries, have difficulty finding employment.

Citation desperately needed. How you got "the government pays for our internet infrastructure" out of an article about Google paying for a new Subsea cable, I do not know.

I implore you to do a tracert right now to hackernews, and lookup who operates the ips of every router it hits in between. Chances are incredibly good not a single hop is on a government network. (true for the U.S at least)

[nl]

I'm a huge supporter of publicly funded research. I think the things that have come out of DARPA, NASA, the NSF and other US funding bodies are incredibly important.

Having said that, what you've said is basically wrong.

> I have rarely seen a start up on improving optical fiber or electronic chips.

Unless you are trying to be pedantic by saying it has to be a startup rather than a private company this is completely wrong.

TSMC, Intel, Samsung and IBM do most of the work improving electronic chips manufacturing processes.

I'm not very familiar with optical fiber work, but I know NTT in Japan does a lot of R&D in the area.

[aborsy]

Right, those are examples, but what’s the proportion of hardware and software companies in US (big companies or startups)?

How much of VC funding goes to companies focused on services or software vs hardware or infrastructure?They actually write down their areas of focus on their websites. I don’t see many of them stating they fund companies developing better chips, optical amplifiers, fibers or other pieces of infrastructure. It’s mostly services, software, apps, consumer applications, and similar.

And to my point, how much do you make if you are a hardware engineer at Intel (a large hardware company), vs a software engineer at say Google (a large software company) with similar years of experience?

[nl]

VCs don’t invest in chip manufacturing improvements because improvements are incremental so there's no return. But the point remains: it's private investment.

They do invest in new chips. There's a bunch of "AI" chips funded by VC which are focused on the outside returns available by improving training performance. These are all funded by private investment.

[eddieroger]

The barrier to entry for a software company is nearly non-existent these days, where it's still really high for hardware. I can learn how to code, write an app, market and sell it all from a computer I can buy from Target or Walmart. Hardware is significantly harder to learn, then I'd have to source components, and scale beyond a prototype takes a significant amount of money. Scaling software is done with a button. You see more software made in the private sector because it's so much easier to do.

[glaucon]

> The public sector builds the infrastructure

It's a little off your point but there was an amusing book published a few years ago which went through twelve, from memory, technologies on which the iPhone was totally dependent and which had all been developed out of the public purse.

Can't remember what it was called so if anyone recognises it I'd be interested to hear.

[imranq]

There is this book by Mariana Mazzucato: The Entrepreneurial State: debunking public vs. private sector myths

I haven't read it, but from the TOC, it looks like these are the technologies that are "invented" by public sector that the iPhone (and other smartphones) rely on:

* Giant magnetoresistance (GMR), SPINTRONICS programme and hard disk drives

* Solid-state chemistry and silicon-based semiconductor devices

* From capacitive sensing to click-wheels

* From click-wheels to multi-touch screens

* Internet and HTTP/HTML

* GPS and SIRI

* Battery, display and other technologies

ref: https://cms.marianamazzucato.com/wp-content/uploads/2021/04/...

Summary HBR article: https://hbr.org/2013/03/taxpayers-helped-apple-but-app

[aksss]

A lot of the subsea fiber is laid down by and funded by private organizations. I’ve worked with a couple that intentionally avoid any public dollars to avoid the hassle and delays that come attached to that money.

[catmanjan]

Tragedy of the commons, its the same reason there are big car companies but not big road companies.

[noahtallen]

But there are big telecom companies and big chip companies, etc.

[gimme_treefiddy]

How much of it is government lockout/red tape?

[astrange]

Road companies seem like a natural monopoly so that doesn’t really apply.