In this research, we use the telecommunications industry to examine the relationship between government intervention and innovation, and reach the perhaps not-surprising conclusion that government actions can have a tremendous impacton the market for innovation. However, we believe the relationship is not as clear-cut as is generally perceived. We believe that there is a more elaborate, complex, and predictable interplay between these two forces and in this paper attempt to present our theory that explains this understated connection. Policymakers' general lack of understanding of innovation has led to somewhat of a paradox, where decades of policies directed at creating economic welfare have fostered environments that have actually stifled the most dynamic type of innovation capable of delivering the same goal, disruption. Based on the insight that the true underlying drivers of innovation are motivation and ability, we have created a new framework that policymakers can use to craft policies to encourage and facilitate the process of innovation. After deriving the theory and explaining how it can be applied, we focus our lenses on important legislative and regulatory events to demonstrate its power. By providing policymakers with tools to enable them to better understand how innovation works within the industry they oversee, we believe significant economic gains will follow. Our tools todescribe the forces of innovation and the interplay between innovation and regulation should: aid policymakers as they seek to craft successful pro-innovation legislation and regulation; allow firms to better navigate the regulatory waters within which they sail; and buttress investor confidence by increasing certainty over what are sustainable versus temporal opportunities.