The advantages of reducing the size and power requirements of electronics have always been recognized and improvements in it have been ongoing since the first devices.
After all, the transistor was invented by AT&T, not the government.
Whenever anyone had two computers, the first thing they'd invent next is a digital protocol to connect them.
Besides, a digital protocol is not the result of "massive government led taxpayer funded investment".
In fact, Morse was supported by Congress to build a demonstration of his telegraph system (https://en.wikipedia.org/wiki/Samuel_Morse):
> Morse made his last trip to Washington, D.C., in December 1842, stringing "wires between two committee rooms in the Capitol, and sent messages back and forth" to demonstrate his telegraph system.[19] Congress appropriated $30,000 (equal to $833,250 today) in 1843 for construction of an experimental 38-mile (61 km) telegraph line between Washington, D.C., and Baltimore along the right-of-way of the Baltimore and Ohio Railroad.[20] An impressive demonstration occurred on May 1, 1844, when news of the Whig Party's nomination of Henry Clay for U.S. president was telegraphed from the party's convention in Baltimore to the Capitol Building in Washington.[20]
The next line was funded when Morse partnered with Amos Kendall forming the Magnetic Telegraph Company. It built lines from New York to Philadelphia, Boston and Buffalo. Receipts for the first for days on the NY to Philadelphia run was $100. And the telegraph was off and running.
2 years later there was 2,000 miles if wire, and another two years added another 10,000 miles.
The government line proved to be irrelevant, not crucial.
See "The Victorian Internet" by Tom Standage
Remember, it was Morse that invented digital telecommunications, and AT&T invented the transistor.