In its second-quarter earnings call this morning, AT&T highlighted the awesome growth of its wireless business, which surged 14.8 percent to $11 billion and accounted for roughly a third of its $30.9 billion in revenue for the period. The company also said that the 3G iPhone was selling twice as fast as the first one, which given the price cut, isn’t too surprising.

Equally unsurprising was the 10 percent rise in the number of smartphone subscribers over the second quarter of 2007 (AT&T is the sole carrier of the iPhone in the U.S.). And those users are surfing the web, pushing AT&T’s data revenue up 52 percent from the same period a year ago, to $2.5 billion. After adding 1.3 million wireless subscribers during the quarter, AT&T is still the largest cell phone carrier with 72.9 million subscribers. However, Verizon said yesterday it had added 1.5 million subscribers, so the iPhone exclusivity can only do so much.

The tethered world was a little less rosy, however. AT&T did add 170,000 new U-verse subscribers, bringing that total to 549,000; it also reiterated its goal of having a million subscribers by year-end. But triple-play services were down and broadband growth is slowing. Subscribers to voice, data and TV fell to 48.4 million from 49.5 million at the end of the second quarter of 2007. And AT&T’s total broadband connections now number 14.7 million, up 1.4 million over the same quarter last year but a mere 46,000 higher than the first quarter of the year.

The first time I heard about Neil Tagare was back in the go-go ’90s, when he was the man behind the international fiber network FLAG Telecom. FLAG went public in 2000, but by then Tagare was already onto his next big idea: building a $1.5 billion global network that would carry Internet traffic from most of the major nations over a giant fiber backbone.

It was called Project Oxygen, and it not only received a ton of media coverage but backing from the likes of Lucent Technologies and Bechtel. But it also suffered from vision overload, and as the broadband bubble burst, Tagare, like many big telecom industry names, faded from the scene. Still, we’ve kept in touch, occasionally exchanging emails and notes. Last week, he let me know about the launch of his new startup, BuySellBandwidth.com, through which carriers around the globe are able to buy, sell and swap capacity.

You’re probably saying to yourself, “Haven’t I heard of this before?” Indeed, even Enron tried to start a bandwidth platform. But BuySellBandwidth.com is more akin to private exchanges or ECNs on the stock market, where membership is by invitation only. The way it works, as Tagare explains, is:

With current cables being able to deliver Terabits of bandwidth, most of which remain unused for years, you can swap capacity with other carriers or cables, either eliminating or significantly decreasing the need for additional Capex investment. You control and decide who to swap with and all the terms and conditions. You can even swap fiberoptic cable capacity with satellite circuits, Wi-Max or 3G spectrum.

Yes, he’s talking about swapping bandwidth, the very thing that a few years back got a lot of broadbandits into trouble — even landing some of them in jail. “Swapping got a bad rap in 2000 because of the illegal accounting transactions certain carriers like Global Crossing were involved in,” Tagare acknowledged. But he went on to say that, “In light of the current economic climate, swapping represents the most economical way to acquire new capacity, especially considering the fact that most fiber cables have plenty of spare capacity.”

Tagare said he first started to think about BuySellBandwidth.com earlier this year, when five cables were simultaneously cut in the Middle East. “I wanted to give the ability to every carrier in the world to have a reliable mesh network similar to what I was trying to do in Project Oxygen,” he explained. By the same token, he knew that raising billions of dollars wasn’t going to be possible this time around, so he started to think small. And out of that thinking came BuySellBandwidth.com.

“The problem with consortium cables is the use of huge notional capacities to warehouse capacity until the big boys want to use it,” he wrote on his blog recently. “Instead, why not allow this warehoused capacity to be swapped with warehoused capacities of other cables? This will create massive efficiencies and remove bottlenecks which are exasperated by the long lead times to build cables.”

And Tagare isn’t the only one seeing the need for such a service. Hamadoun Touré, secretary general of the International Telecommunications Union, told the International Herald Tribune last month that it was his dream to see someone build a system that would allow people to trade capacity. As the IHT reported:

Touré said he had recently discussed the idea with telecommunications companies at an annual meeting organized by Intelsat, which operates communications satellites for use by media and telecommunications companies and governments. At these gatherings, network operators already trade capacity through bilateral agreements, without the structure of an exchange, when, for instance, a European operator puts in place an arrangement to deal with an anticipated spike in traffic to China or India.

So far a dozen carriers — including PCCW, KPN, PLDT, Globe Telecom, Cable & Wireless, Reach and Tata Communications — have signed up with Tagare’s exchange, which at this point is free. Bandwidth brokers, by comparison, currently perform this service at 10 to 15 percent of the sale price. “Over time I will charge a small membership fee,” Tagare told me. He’s hoping each transaction will be worth millions of dollars.

Tagare believes the private exchange will allow anyone to come in and get the pre-orders needed to get a cable or infrastructure project off the ground. Tagare himself is pursuing two cables and two data centers using the exchange: The cables include SingIndia, a submarine cable that would run from India to Singapore, and DostIndia, which would run from India to the Persian Gulf; the proposed data centers are known as NetVaastu1, in Mumbai, India, and NetVaastu2 in Chennai, India.

“Once the pre-sales are in place, which is what I’m trying to do now, funding will come,” he explained. “I have sounded out a few of them and I have enough interest to put a deal together once I have an anchor tenant in place.” Such interest is likely attributable to Tagare’s many years in the telecom business, or to the fact that Dr. Yasuhiko Niiro, ex-president of KDD Submarine Cable Systems, is the chief engineer of the proposed cable product.

While I think Tagare might be able to raise funds once the pre-sales are in place, I think he’s being optimistic about the ability of others to do the same. That being said, however, a global exchange platform for bandwidth seems like a good idea whose time has finally come.

This was originally published on BusinessWeek.com.

Israeli chip startup Animon, which is pushing a form of whole-home, uncompressed wireless HD, has teamed up with Sony, Samsung, Sharp, Hitachi and Motorola to create the WHDI special interest group. Animon already has products out on the market to offer wireless HD using the same 5 GHz spectrum used by Wi-Fi. But the SIG should give both the company and its technology a boost as it fights off rival wireless HD standards and attempts to make delivering content from PCs to TVs easier. To read more about the technology and how it could cause problems for ISPs, check out our coverage on NewTeeVee.

Comcast sure is bearing the brunt of the anger being levied against broadband providers these days. Earlier this year it was hauled before the FCC over allegations that it was blocking peer-to-peer traffic. During the subsequent hearing the FCC made clear that it, too, was unimpressed with Comcast’s so-called network management efforts because it felt that customers were not adequately informed about them. Further, as the agency acknowledged, “managing” P2P traffic could result in competitive video content being blocked. However, unlike other ISPs, who have admitted to blocking P2P, Comcast denies it.

And still does. I chatted with Comcast CTO Tony Werner on Friday and got a copy of the company’s most recent FCC filing, submitted yesterday, and in both cases Comcast maintains that it does not intentionally block P2P traffic and that 90 percent of P2P upload traffic isn’t managed at all. And by the end of this year, as Om has detailed, Comcast plans to shift the way it manages its network to slow down those using unreasonable amounts of bandwidth.

While the traffic management issue appears to be what’s drawing the ire of the FCC (and a meeting to decide on an enforcement order on Aug. 1), FreePress has also knocked the cable provider for upgrading modems rather than the cable company’s core network. Werner begged to differ, saying modem upgrades were for speed and that Comcast upgrades its network for capacity on a regular basis. As he explained it, once an area node that serves a group of customers reaches a roughly 70 percent saturation point (measured by traffic at the node staying at about 70 percent of the capacity for one hour a day for five consecutive days), that node is split to make the service area smaller. Werner estimates Comcast splits about 10 percent of its nodes each year as part of regular network upgrades.

Comcast is changing the settings on some of its modems to offer services such as its PowerBoost product, designed to offer bursts of speed at the beginning of the download. This will boost load times of web sites and sending emails, which requires delivering a concentrated group of bit and bytes, but will do little for streaming video, voice calls or other services that require a continual stream of data. Splitting nodes, and upgrades to the underlying cable, increase capacity while products such as PowerBoost handle speed increases.

Comcast is making a concerted effort to refute the P2P blocking allegations and detail its network management practices. Perhaps when it reports its latest quarterly results on July 30, we’ll see if this attention is a result of increased churn or declining subscriber numbers (although last quarter that certainly wasn’t the case).

Time Warner Cable and AT&T are busy trying to force their vision of the metered Internet onto consumers, taking small but vital steps towards a time when all data is going to be metered in methods no different than current utilities. Of course, they (and other incumbents) will continue to dress up their desires in legal mumbo jumbo that no human can actually understand.

Yesterday, according to a Reuters news report, AT&T Senior VP Robert Quinn got in front of U.S. regulators and said that the company would offer “non-overlapping tiers of broadband service, rather than its current offerings which go ‘up to’ varying speeds of data transmission.” He went on to add that, “When we provide broadband services based on speed, we will do so in discrete tiers that are disclosed to our end-user customers.”

Translation: We are going to segment and meter the broadband service.

Our buddy, Karl Bode of DSL Reports, is tracking Time Warner Cable’s tiered Internet shenanigans and yesterday he reported that the company was using some cheap tricks in their marketing in Texas to make current customers buy into overages and bandwidth caps. They are doing so by offering a 12-month discount bundle for their triple-play services, except this so-called deal comes with this rider:

Road Runner Standard package provides 7Mbps service and includes an Internet usage consumption allowance of 20GB per month. Although the initial 20GB plan is price locked, Internet usage above the consumption allowance is not and will be billed at $1 per GB per month.

Now that is dirty rotten trick, especially since that information is buried inside the fine print. Given that they can’t tell this to consumers with a straight face, TWC’s sleight of hand is distasteful at best.

Related Stories:

* Why Metered Broadband Is Bad for Microsoft, Google & Us.
* Bandwidth Barons Want More Money for Fewer Bytes
* Why Tiered Broadband Is the Enemy of Innovation.

Photo courtesy of Svadilfari via Flickr

Without a radio, your cell phone is a small computer that can’t show web pages, check email or even make phone calls. In a sense it’s BrickBreaker playing brick. While it may come as a surprise to learn that it’s radios that do the heavy lifting to keep us connected to GPS satellites, cellular networks, nearby Wi-Fi and in some cases network television, so it is with laptops as well, especially those aiming to be Netbooks or cloud PCs.

In fact there are too many radios, especially on high-end devices. And it’s only going to get worse in coming years as 4G networks using LTE or WiMAX proliferate. Sure WiMAX will begin as a data card inserted into a laptop much like my beloved 3G modem, but in time it will find itself in handheld devices including mobile phones (or so vendors tell me). Meanwhile current 3G and 2G networks will still have to be supported because carriers roll out new networks slowly. Add in radios for other wireless devices, and problems start to emerge.

That’s why chip vendors, from established players like Broadcom and NXP to startups like Wavesat and Altair, are hoping to put multiple radios onto one chip. And many of them are turning to software to do it. NXP, for example, has created a software-defined modem that can toggle among LTE, HSPA, UMTS, EDGE, GPRS and GSM networks.

Carsten Schimanke, marketing manager for business line cellular systems with NXP, says that company’s decision to build multiple modems onto one chip was an attempt to do three things: to make it easier for carriers to support old and new networks; to make it possible for a phone to operate on multiple networks around the world; and to make it easier for handset makers to use one type of network for certain applications, such as offloading voice onto a 2G network while data goes over a faster 3.5G network.

Outside of the cell phone market, there’s an emerging class of Internet-connected devices, such as the Dash Express and the Kindle from Amazon, that also can take advantage of multiple radios on a chip. Raj Singh, CEO and president of Wavesat, a startup company pushing a chip that combines Wi-Fi and WiMAX (and next year will add LTE), points out that these devices need connectivity everywhere in order for them to work. For example in places where a cell network is unavailable but a Wi-Fi network is, such as inside an office building, an Internet-connected device could use that signal.

Obviously the world is moving to ubiquitous broadband with consumer-oriented products, but once the radios are small enough and cheap enough to work anywhere, the different layers of wireless broadband networks could be used in everything — from getting more real-time traffic information to controlling a city’s watering schedule. No single network covers the world, a country or in many cases even a metropolitan area, so multiple radios on one chip might be the future of the chip industry.

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As the debate rages over who can access the white spaces between licensed digital television spectrum, the Federal Communications Commission itself has emerged as a hot ticket. Everyone from the NFL to Lollapalooza is clamoring to have its events be used as a staging ground by the agency for the testing of devices aimed at utilizing portions of the DTV spectrum for wireless Internet access. The FCC has said it will test interference of the white space devices in 10 geographic locations or buildings in the DC area; it’s looking for other venues as well.

At issue is the ability of these proposed white space devices to operate in the spectrum, which will become available after the conversion to digital TV signals next year. Companies such as Google, Motorola, Microsoft and Intel all would like to see that spectrum used for wireless broadband access. However users of wireless microphones — everyone from recording stars to preachers at megachurches — are against that plan as they’re worried about interference on their wireless mics. The National Association of Broadcasters is opposing the efforts as well, arguing that such devices could interfere with the transmission of DTV channels.

The FCC is expected to make a decision about them later this year. Depending on the summer concert lineup, it may want to hold off doing its field tests until Madonna’s latest tour starts in October or until Led Zeppelin reunites — might as well enjoy the music along the way.

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Even if I wanted to, I couldn’t write a more necessary (and sarcastic) article about U.S. ISPs’ efforts to craft a nationwide broadband policy than the one over at DSL Reports. AT&T, Verizon, Comcast and others have signed onto a plan being pushed by nonprofit group Connected Nation to measure broadband penetration that’s aimed at increasing broadband usage. However, as DSL Reports makes clear, the package is hardly something to cheer about.

As alleged by another not-for-profit organization, Public Knowledge, Connected Nation’s mapping abilities are questionable and much of the group’s efforts go toward selling consumers the services of the larger incumbent carriers. Connected Nation’s ties to AT&T (through BellSouth) set off alarms a few years ago, much the way the embrace of its policies by the ISPs do today. These are the same ISPs currently trying out some very unfriendly consumer tactics, such as tiered broadband and traffic blocking, which makes Connected Nation look like the fox guarding the hen house.

Essentially the ISPs want Connected Nation to take public money and create a map of the U.S. that shows which communities have broadband, and which ones don’t. They want this even though they could just as easily ask the ISPs for that data (after all, some of them have given up a lot more when asked) themselves.

The FCC has let the inmates run the asylum and dictate broadband policy for a long time. Perhaps as broadband becomes more necessary to our entertainment and work, consumers will recognize that these issues are not abstract ones, but rules that affect our ability to get streaming HD content, high-quality medical care in rural areas and other such services that have broader repercussions on our daily lives.

The launch of the iPhone 3G can be summed up in one word, and it starts with a “c.” Instead I will go with comedy of errors. Activation delays, long lines, online issues, application roll-out issues — it has been a train wreck that makes Brittany Britney Spears’ saga seem like a quaint Victorian-era romance novel. Today is a perfect example.

Earlier today, fellow bloggers, big and small, got into a tizzy when someone got hold of a document saying that AT&T Wi-Fi for iPhone users had arrived. Hallelujah, for who doesn’t want free Wi-Fi to connect their iPhones and iTouch players? Unfortunately, everyone got too excited over nothing - the Wi-Fi is still not available, and the “document” was a mistake. Here is an email from one of their spokespeople in response to my question about the veracity of the news:

We have not made any announcement regarding free Wi-Fi and iPhone. The webpage was posted in error and is being removed. Wi-Fi is a real differentiator for AT&T and it is our intention to make it available to as many customers as possible, but we have no announcement at this time.

Funnily enough, this is not the first time we have seen the rumors break out about AT&T Wi-Fi on the iPhone. Then there was a brief release that quickly got abused, thanks to some system flaws. It’s like the boy who cried wolf. Someday the network will be live, and we won’t even care.

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Two weeks before the Federal Communication Commission meets to decide whether or not to issue an enforcement order against Comcast for throttling peer-to-peer traffic, not-for-profit group Free Press has accused the ISP of throttling P2P traffic not only when the network is congested, but whenever that traffic reaches a predefined level. Sort of like a golf club that allows a certain number of women in to keep the activists at bay, but no one beyond that number, even if the links are empty.

Free Press also said Comcast’s most recent network upgrades were a sham, with the cable company upgrading modems, but nothing in the core network. The interest group filed its statements with the FCC in response to filings Comcast made defending itself against the enforcement action. As Comcast spokeswoman Sena Fitzmaurice noted to me, the company has consistently admitted that it “manages traffic” (although it denies blocking it altogether). She also said that the ISP has a threshold beyond which it manages P2P traffic, but that 90 percent of the P2P traffic is unaffected by that management.

She added that on a particular node, 80 percent of managed traffic goes through in less than a minute. Of the portion that takes longer, she said, some of it may get dropped “for a reason unrelated to our management.” As for allegations related to the network upgrades, Fitzmaurice pointed out that the service is advertising network speeds rather than capacity. Free Press notes this later in its filing, but still thinks it’s a misleading practice. After all, what’s the point of having a fast car on a congested highway?

This sort of he-said, she-said back and forth between Comcast and the public interest group illustrate why it’s so important for the FCC to set up some clear rules regarding how an ISP manages its network. When things get this shady, it’s time to set some policies down in black and white.

Here’s a horror scenario for everyone on the content side of the Internet: A consumer comes to a web site to download a movie, work presentation, software update or photos, and just before they commit to the download they pause and wonder: Am I over my usage quota this month? How much will downloading this new HD movie from Netflix on my Xbox cost me?

We’ve all been there before — with cell phones, about a decade ago. Usage-based pricing tiers started out with very limited minutes and lots of overage charges. Competition in the market by innovative operators drove plans fairly quickly to a point where only exorbitant usage resulted in overage charges (and now there are flat-rate plans for those consumers, too).

Unfortunately, the usage-based pricing plans (starting at 5 gigabytes) being considered by AT&T, Time Warner and others will force us all to wonder about the size of our connectivity bill on a monthly basis. Further, the lack of last-mile (the infrastructure that connects the consumer to their Internet service provider) competition will not result in these plans changing in the near future. Today, true competition on the Internet last mile requires new copper or fiber to each consumer — a very costly proposition. Cellular competition, on the other hand, required a less costly (on a relative scale) deployment of cellular towers.

While it is true that the consumer can elect who provides services over their last mile, most of us have very limited choices. As an example, a friend of mine recently moved into a building in downtown San Francisco that had exactly one last-mile provider: AT&T. The 700Mhz wireless spectrum provided a hope for an alternative consumer last-mile option, but that dream quickly faded.

Competition and an aggressive last-mile build have resulted in reasonable usage-based pricing models in Japan. OCN, the carrier operated by NTT Communications, is planning for unlimited download bandwidth usage and a 30-gigabyte limit on daily upload usage capacity. By my estimates, that will be more than adequate for all but the largest consumers of Internet bandwidth and does not invoke any horror scenarios for the large content owners.

In fact, large content owners may help us all avoid usage-based pricing horror scenarios. They spend hundreds of thousands of dollars every month (assume $10/month/Mbps using 95th percentile on 10Gbps of traffic) with the same Internet service providers buying connectivity to their networks because they want to be connected directly to the consumers via the last mile.

If the Internet service providers start billing on usage-based pricing, it’s inevitable that large content owners will look for new ways to reach the consumer. It seems unlikely that they’ll be willing to pay the service provider for access to their last mile if at the same time the consumer is being motivated not to access their content. Why would Microsoft and Netflix pay Time Warner for connectivity to their cable Internet infrastructure consumers if those same consumers are being billed on usage and worry about their usage quotas before downloading HD movies onto their Xbox?

Like other large businesses, Internet service providers are looking for ways to extract more value from their customers. As a venture capitalist, I understand and appreciate that perspective. Usage-based pricing, however, at least as currently envisioned by the service providers, will not only change consumer behavior but will work against some of their larger customers.

Yesterday afternoon, Intel’s CEO Paul Otellini seemed a little hazy on the future home for Intel’s Atom processor during the chip maker’s quarterly earnings call — a fact I don’t find all that surprising since the netbooks or mobile Internet devices the chips are designed for exist only in a marketer’s imagination and failed product implementations.

Otellini was excited about Atom, calling demand for the chip” robust,” but analysts pressed Otellini about Atom’s end market and whether the chip would cannibalize Intel’s low-end Celeron processor. The Celeron ranges from speeds of 2.13 GHz to 3.6 GHz, and is faster than Atom’s 1.8 GHz or 1.6 GHz. Otellini’s responses were less than a ringing endorsement of the chip. “[Atom] is less than a third of the performance of our Centrino (high-end mobile processor),” said Otellini. “You’re dealing with something that most of us wouldn’t use.”

Wait a second. Just weeks ago before the Computex trade show in June, Otellini told the Financial Times he anticipated a $40 billion market opportunity for Atom chips over the next few years. If most of us aren’t using these low-end chips, then who is? Otellini envisions the Atom chip for small computers in emerging markets that happen to have IP-based voice, but in late 2009 Intel will launch an Atom chip for smartphones. In emerging countries, a lot of computing is already carried out on cell phones, begging the question of where Intel’s demand for Atom is coming from. Will those products actually succeed?

As for cannibalization, Otellini said, “We do not see [Atom] replacing Celeron. If you look at the netbook products being built around Atom, they’re all lower-priced, lower features, smaller screen size notebooks aimed at first-time buyers or the second, third or fourth machine in a household. We don’t see any cannibalization.”

So Atom chips are designed for slow web access on cheap, portable machines that will act as the backup computer in my home. Wait, I have one of those already. It’s called a smartphone and plenty of companies already make processors for that market.

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Updated at the bottom: Unless you’re using Enron math, BT’s new plan to connect 10 million homes — roughly 40 percent of the United Kingdom — with fiber networks at a cost of £1.5 billion doesn’t quite add up. At today’s conversion rate, that’s about $3 billion — or $300 to wire up each of these proposed 10 million homes.

BT hopes this will help it stave off competition from rivals who have started to use their new backbones and the latest technology to eat into its broadband business. Cable operator Virgin, for example, plans to use DOCSIS 3.0 to compete with BT. The incumbent has been reticent about upscaling its infrastructure over concerns that it would spend billions and then be forced to share with upstarts, the way it does now. By comparison, the new plan is closely tied to regulatory concessions and includes some sort of investment protection from Ofcom, the British regulator.

The Guardian writes:

Under the current regulatory regime, BT must allow rival service providers to use its network on the same terms as its own retail arm. There would be a huge outcry if that “equivalence” was lost, following the battles between BT, its rivals and the regulators at the start of this decade when Broadband Britain was just an ambition.

Nevertheless, BT’s announcement is full of more holes than a wheel of Swiss cheese. Lets look at the deal from a distance: 10 million homes for $3 billion. In comparison, Verizon is spending about $22 billion to fiber up some 18 million homes. That’s a cost improvement of 9x, which means BT’s plan just doesn’t make sense, even if you take into account that somehow it will get massive sops from Chinese equipment maker Huawei.

BT plans to sell 100-meg connections to homes it will connect with fiber (FTTP) using mostly G-PON technologies. Other homes, which will be connected to special cabinets on the curb (which are, in turn, connected to the Internet using fiber), will get a top speed of 40 Mbps. So in a sense, the plan is a blend of broadband strategies being used by Verizon (all fiber) and AT&T (combination of fiber and copper.)

Having followed this business for some time, I know that neither of their strategies are cheap. Verizon spends close to $1,400 per connected home (assuming that everyone is going to sign up for the service). AT&T’s numbers are also higher than $300 per home.

According to my sources, it costs just north of $500 to get the network ready to offer households super broadband, or what is generically known in the industry as homes passed. This doesn’t include laying fiber to the home, its associated labor costs and the on-the-premise gear. All that costs between $750 and $1,000. The on-the-premise ONTs cost between $150 and $200 alone.

Given that the network is scheduled to be rolled out in 2012, let’s assume that by then, prices decline by half — but the numbers still don’t add up. It could be that this $300-per-home-for-fiber is on top of the previously announced spending on BT’s broadband buildout as part of the 21CN. But even taking that into account, I’m not ready to buy BT’s splashy announcement. I would like to know from BT the exact breakdown of the cost structure of their network.

BT’s new CEO, Ian Livingston, whom I had a chance to meet back in 2006, is a sales maven, given his background with a high-street retailer and an upstart ISP. Some say he’s so good he could sell ice to Eskimos. Of course.

Update: My good pal, Dave Burstein, who writes the influential newsletter DSL Prime, wrote in to point out why the news is spin. “There is nothing in the announcement that wasn’t discussed by Christopher Bland with Andrew Parker a year ago,” he wrote. Dave tracks the industry closely, so I’m not surprised he found the “spin” in the news. He also pointed out that by 2012, less than 1 million will be on fiber, and mostly new fiber.

And Andrew Odlyzko, the authority on broadband and networks, in an email to me noted that the incremental 100 million pounds in capital expenditure increase for this promised network upgrade is a mere 3 percent, and even that is contingent on regulatory relief from Ofcom.

Q: Is this investment dependent on Ofcom creating a new regulatory framework?

A: Yes. The right regulatory environment is vital for anyone seeking to invest. The funds required are extremely large and companies need confidence that risk-taking can be appropriately rewarded.

Image courtesy of BT plc.

On the Internet, you can never be too fast or carry too much data, which is why Sprint is crowing about its plan to convert its core network to deliver data at 40 Gbps using the 40 Gigabit Ethernet technologies. The carrier will use Cisco and Ciena gear to deliver 40 Gig E Gbps over its existing fiber network worldwide. To help put the speeds in context, a 40 Gig E backbone will be able to carry 3.2 terabits of data per second. That’s a lot of cloud services or HD video via iTunes, but Internet consumers are demanding it. And with the speed which new services, including video and 3G wireless, are growing, we need the speed.

Sprint has long been eager to experiment with new technologies, building out the first fiber network back in the 80s and 90s. In 1999 –well before convergence was all the rage — it launched a converged voice and data service built on a packet-based network dubbed “ION.” However, those experiments have not always translated directly into dollars. Sprint spent more than $2 billion on ION before killing it three years after its launch.

More recently, Sprint has bet on WiMAX, but its beleaguered Xohm network has been plagued by delays. Sprint has had to turn to rival Clearwire in order to bring the 4G service nationwide. So I applaud Sprint for investing in 40 GigE faster broadband and only hope it can find some return.

(We will update the story after talking to Cisco and Sprint.)

Comcast has been accused of blocking traffic several times in its history and may have even admitted to more than the straight up P2P blocking we all knew about. But late yesterday, Comcast finally got it’s comeuppance. Sort of. Kevin Martin, chairman of the Federal Communications Commission and close personal friend to the cable competitors, the telecom industry, could take no more.

So this morning he’s circulating an enforcement order that says that Comcast blocked network traffic and that such traffic blocking needs to stop. The enforcement order was prompted by a complaint from the non-profit group, Free Press, and the Commission will vote on the order at an open meeting on Aug. 1. The order would require Comcast to stop blocking traffic, provide the FCC details on how and how often traffic blocking was used and give consumers detailed information on how Comcast plans to manage its network in the future.

We actually already know how Comcast plans to manage its network because Comcast CTO Tony Werner told Om how bandwdith hogs would experience slowdowns. In an emailed statement, Comcast spokeswoman Sena Fitzmaurice denied the traffic blocking.

“The carefully limited measures that Comcast takes to manage traffic on its broadband network are a reasonable part of Comcast’s strategy to ensure a high-quality, reliable Internet experience for all Comcast High-Speed Internet customers and are used by many other ISPs around the world.”

At issue here is the definition of “reasonable network management,” a phrase the FCC introduced in a 2005 policy statement to ensure broadband networks were kept open and accessible to consumers. ISPs could apply “reasonable network management” to keep traffic flowing, but Fitzmaurice said the the FCC never defined what reasonable network management practices entailed. So perhaps blocking certain forms of traffic counts? My guess is that network traffic blocking is like porn. You know it when you see it, and Martin finally chose to see it.

Update: The Open Internet Coalition and member Public Knowledge are glad Martin is taking a stand, and said in a statement, “We hope the rest of the Commission backs the Chairman’s order. It is critical for the FCC to send a strong signal to other telephone and cable companies that this kind of blocking is unacceptable, and that this behavior will be taken to task when discovered.”

MySpace launched a social networking experience designed for the iPhone (available free at the App Store) today that will take advantage of the touch interface. As part of the launch, they sent out a fact sheet detailing some mobile stats that I found pretty compelling, notably that of MySpace’s 115 million members, up to 5 million are expected to use the mobile site by the end of the year, with 3.1 million using it now. And most of those users come through MySpace’s mobile web site rather than through an on-deck, carrier-supplied link.

This highlights two trends for mobile: One, the waning influence of carriers and the subsequent need for an on-deck application; and two, the rise of social networking on mobile phones. The first has been well established with successful applications such as Opera Mini and other downloadable web browsers, as well as the choice by many mobile application developers to deliver their services through a browser rather than a client on the phone. Carriers aren’t giving up their influence, but expect to see the more forward-thinking among them doing deals to buy apps makers, which will make their influence less obvious, but leave a revenue stream intact.

The second trend is something I’ve previously doubted, but now realize I was simply too old and not social enough to believe. The number of existing MySpace users, however, convinced me (even though Opera already released tallies that showed MySpace.com as the most-visited mobile site in the U.S. and Facebook as No. 5). And the numbers are backed up by data that iSuppli released earlier this week that concluded, “Though there have not been any successful implementations of wireless social networking to date, the widespread adoption of mobile Internet devices like the iPhone will spur an entirely new generation of wireless social networking businesses and business models starting in 2009.”

As consumers embrace location-based services, a social element will naturally come into play. The use of open APIs at many social networks makes using the mobile phone as your social network easier and allows for services like the new social phone book from Zyb. Plus, social networking via mobile makes more sense once the interface gets easier. After all, you’re often away from the computer for hours and when in front of one, likely are focused on work or completing a task. But the mobile is a fun device, on which taking a few seconds to update your status or answer a quick email can easily be worked into daily activities. The phone will continue to keep folks connected.

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