Wirefly’s Top 10 Most-Anticipated Cell Phones

In a major change, the top-two "most anticipated" new mobile devices are made by Motorola. That hasn't happened for quite some time, and will be a huge test of Motorola's decision to rely on Android as its ticket back into the top ranks of manufacturers of "hot" devices.

The launches are equally important for mobile service providers, who have found devices to be primary ways of differentiating their services. We'll have to see, but it is possible, perhaps likely, that a key new feature of the top-two Android devices will be their methods of integrating contact information and status updates across applications. That's an angle on "unified communications" we have not seen so much in the mobile arena.

Here's Wirefly's ranking and commentary.

1. Motorola Droid (Verizon Wireless) - The most anticipated cell phone launch of the season is just days away, but the hype for this the Motorola Droid smartphone has been building for quite some time.  Verizon Wireless has invested heavily in a national “teaser” marketing campaign, while keeping the details about this Android-based device close to the vest.  The Droid is the first commercial phone released with the new Android 2.0 platform, and has been dubbed the “iPhone killer” by many a technology-writer.  Verizon Wireless is stoking the fire with a campaign that touts all the things the Droid does that the iPhone doesn’t – from running multiple apps, to a full slide-out keyboard, to changeable batteries and memory to a 5.0 megapixel camera that takes photos in the dark.

2. Motorola CLIQ MB200 (T-Mobile) - The highly-anticipated Motorola CLIQ is the new king of the T-Mobile Android smartphone lineup, and the first since the original G-1 to have a full slide-out keyboard.    What really makes it buzz-worthy, though, is that it utilizes the new MotoBlur user interface that syncs your social media, contacts, and e-mail in real time, providing instant access to the latest happenings and messages from friends.  (The Cliq is currently available to existing T-Mobile customers, however, new customers will not be able to purchase the device until November 2nd, and therefore, it still garners a spot on our top picks.)

3. Samsung Moment (Sprint) - Sprint’s second Android device, the Samsung Moment, mark’s Samsung’s entry into the Android smartphone market with a full slide-out keyboard and a first-of-its-kind AMOLED touch screen, providing unprecedented brightness that’s also kind to your battery life.

4. LG Chocolate Touch (Verizon Wireless) – The LG Chocolate is an iconic Verizon Wireless phone, and this new touch version should be even sweeter than its predecessors.

5. Samsung Behold II (T-Mobile) – The Behold II is the sequel to the very successful Samsung Behold but with one MAJOR difference - the latest version runs on the Android smartphone operating system.  The Behold II also features a "cube menu" that provides quick access to six multimedia features at the flick of a finger: music, photos, videos, the Web, YouTube, and Amazon MP3.

6. HTC Desire 6200 (Verizon Wireless) – Verizon Wireless is making headlines with the Droid, but is expected to follow quickly with a second Android-powered smartphone dubbed the Desire.  The Desire will not have a keyboard, and will boast HTC’s touch screen “Sense” interface that has won rave reviews on the HTC Hero.  

7. Sprint Palm Pixi (Sprint) – The Sprint Palm Pixi is being touted as a tiny, sleek webOS-based handset that offers many of the same features and functionality as the Pre without the hefty price tag.

8 . BlackBerry Storm 2 (Verizon Wireless) – This next generation of the touch screen BlackBerry Storm looks similar to the original model on the outside, but boasts notable improvements on the inside such as a Wi-Fi radio, sleeker design, and an improved SurePress typing system.

9. BlackBerry Bold 9700 (AT&T & T-Mobile) –This smartphone is an updated version of the high-end Blackberry Bold that hit the market last year.  It is thinner and lighter with a faster Web browser than its predecessor and replaces the original Bold's track ball with an optical track pad.

10. LG Shine 2 (AT&T) – The successor to the immensely popular Shine; but as its name indicates, it promises to be twice as sleek and sexy.

Real-Time Internet Traffic Doubles

Real-time entertainment has almost doubled its share of total Internet traffic from 2008 to 2009, while gaming has increased its share by more than 50 percent, says Sandvine. Real-time entertainment traffic (streaming audio and video, peer-casting, place-shifting, Flash video) now accounts for 26.6 percent of total traffic in 2009, up from 12.6 percent in 2008, according to a new analysis by Sandvine.

As the percentage of real-time video and voice traffic continues to grow, latency issues will become more visible to end users, and will prompt new efforts by Internet access providers to provide better control of quality issues not related directly to bandwidth.

One reason is that video downloads, for example, are declining in favor of real-time streaming. Downloaded content is less susceptible to latency and jitter impairments.

Traffic to and from gaming consoles increased by more than 50 percent per subscriber as well, demonstrating not only the popularity of online gaming, but also the growing use of game consoles as sources of “traditional” entertainment such as movies and TV shows, says Sandvine.

Gaming, especially fast-paced action games, likewise are susceptible to experience impairment caused by latency and jitter.

.The growth of real-time entertainment consumption also is leading to a decline of peer-to-peer traffic. At a global level, P2P file-sharing declined by 25 percent as a share of total traffic, to account for just over 20 percent of total bytes, says Sandvine.

The changes have key implications for ISPs and end users. One way to protect real-time service performance for applications such as voice, video, videoconferencing and gaming is to take extra measures to protect latency performance for such real-time applications. And that is where clumsy new network neutrality rules might be a problem.

Whatever else might be said, user experience can be optimized at times of peak congestion by prioritizing delivery of real-time packets, compared to other types of traffic that are more robust in the face of packet delay. File downloads, email and Web surfing are examples of activities that are robust in the face of congestion.

So it matters greatly whether ISPs can condition end user traffic--especially with user consent--to maintain top priority for streaming video, voice or other real-time applications when networks are congested. Enterprises do this all the time. It would be a shame if consumers were denied the choice to benefit as well.

Broadband Stimulus Delays Continue

It should not come as any surprise--given earlier delays--that the first project awards under the the American Recovery and Reinvestment Act's "broadband stimulus" program will be late. Some might not happen at all, unless they can adequately document that there is no existing provider able to provide service in project areas.

The program is supposed to allocate $7.2 billion to provide broadband services or training to rural and other underserved communities, through the Department of Commerce’s National Telecommunications and Information Administration and the Department of Agriculture’s Rural Utilities Service.

The problem is that the work load required to evaluate and award funds so vastly exceeds the volume of work either agency has handled in the past. The NTIA must now disburse sums that are about 4.7 times greater than normal, while the RUS faces the task of disbursing amounts 192 times larger than normal.

Those would be challenges under the best of circumstances, so it is no surprise that the first awards may not be made until December, about a month later than anticipated. There are other risks, says the Government Accountability Office, including a lack of funding for oversight beyond fiscal year 2010 and a lack of updated performance measures to ensure accountability for NTIA and RUS.

Some awards might never happen. The program rules relating to new services in "unserved" areas forbid projects in areas already served by existing providers. Comcast and other cable providers believe some projects violate just those provisions. Comcast says it will file supporting data Oct. 28, 2009, supporting its contentions.

The National Cable & Telecommunications Association claims funding has been sought in "hundreds" of areas where its members already provide broadband service.

For Lots of People, This Will Be Unified Communications

Impulse Purchases Key for Mobile Marketing Messages

A significant number of American consumers are interested in receiving opt-in marketing messages, according to a new survey by Harris Interactive. It also appears impulse purchases are prime candidates for mobile marketing messages.

The survey of 2,029 mobile phone users, ages 18 and older shows 42 percent of users between the ages of 18 and 34 and 33 percent of those between 35 to 44 are at least somewhat interested in receiving alerts about sales on their cell phones from their favorite establishments.

Men are more interested than women. About 51 percent of men ages 18 to 34, and 34 percent of women of the same age range are at least somewhat interested in receiving opt-in shopping alerts on their cell phones.

Only one percent of cell phone owners currently receive alerts about sales at their favorite establishments on their phones, yet 26 percent would be at least somewhat interested in receiving such alerts, assuming they were permission-based.

Of those interested in receiving alerts, 53 percent would be at least somewhat interested in being notified about restaurant specials around them.

About 43 percent say they would be interested in getting information about movie or event tickets. About 39 percent are interested in getting weather information, while 37 percent indicated interest in information about clearance sales.

Sizable percentages expressed interest in specific products such as pizza, clothes, fast food, electronics, music, happy hour specials or bar and night club offers.

Impulse purchases seem particularly germane. The survey found that about 90 percent of U.S. adults have made an impulse purchase when they were out shopping in a store, based on a sale or special offer going on around where they were.

Nearly a quarter of adults owning cell phones (22 percent) make this type of impulse purchase at least once per week or more often.

Might Verizon Still Get the iPhone?

Given the direct knocks on the Apple iPhone in Verizon's latest "Droid Does" marketing campaign, there has been speculation that Verizon has given up on any plans it might have had for offering the iPhone on the Verizon network.

But Verizon chairman and CEO Ivan G. Seidenberg surprised observers by saying Verizon has not given up hope of offering Apple's iPhone.

"This is a decision that is exclusively in Apple's court," Seidenberg said on Verizon's third quarter 2009 earnings call. "We obviously would be interested in any point in the future they thought it would make sense for them to have us as a partner."

"We have expanded our base of other devices," explained Seidenberg. "So our view is to broaden the base of choice for customers and hopefully along the way, Apple as well as others will decide to jump on the bandwagon."

Although AT&T's exclusive deal to offer the iPhone in the US is thought to be nearing an end, Verizon Wireless, which uses the CDMA air interface, is viewed by some an unlikely candidate to offer the iPhone, which currently is designed to run on GSM networks.

AT&T's iPhone exclusive is seen as a key factor in differing net new subscriber performance in the third quarter. Verizon Wireless added 1.2 million new mobile customers during the quarter to reach 89 million in total, while AT&T had earlier reported growth of two million net new subscribers, to reach 81.6 million total subs.

AT&T said it activated 3.2 million iPhones in the third quarter of 2009, the company's largest quarterly total to date.

T-Mobile USA Launches Unlimited Prepaid Offer

Given the relative strength of prepaid wireless, and a renewed spate of competition in the segment, it might not be too surprising that T-Mobile USA has launched a new unlimited mobile plan available to customers who do not like contracts.

What might have been disruptive is an extension of such plans to all postpaid customers as well, a move that might have sparked yet another round of price cuts in the postpaid business. But it was a move T-Mobile USA chose not to take.

The new plan offers unlimited talk, text and Web surfing for $79.99 a month to customers who do not want to sign up for a long-term contract, which typically lasts two years.

It will also offer a $50 per month unlimited service for non-contract customers that only want access to voice calls, not text messaging or Web access.

By some measures, the new deal represents a 20 percent discount on T-Mobile's standard unlimited monthly fee for contract customers.

Nobody knows what might have happened had T-Mobile USA launched a $50 per month unlimited voice and data service plan for all customers, but an immediate price war is one likely outcome.

As matters stand, that is unlikely to happen. On its third quarter earnings call, Verizon said Verizon Wireless was unlikely to respond to T-Mobile USA's new offer with a similar one of its own.

That is unsurprising given Verizon's general stance on prepaid, which is that it remains a niche tough to square with Verizon's historic focus on higher-end postpaid customers.

Prepaid accounted for 80 percent of U.S. subscriber growth in the first quarter of 2009, though growth has moderated since then.

Sprint subsidiary Boost Mobile launched a $50 monthly plan in January 2009 and has been matched by the other leading prepaid providers.

On Demand TV "Not So Everywhere"

Comcast Cable subscribers will be able to watch popular cable television series such as HBO's "Entourage" and AMC's "Mad Men" on your computer by the end of the year without paying extra — as long as you're a Comcast Corp. subscriber watching at home.

The initiative is a starting point for Comcast, which hopes to eventually offer what some call "TV Everywhere" service: linear video programming on demand, over any broadband network.

Comcast, wanting to make sure the shows will remain off-limits to non-subscribers, apparently still is working on providing access over competing home broadband systems as well as on the go — at work, on laptops and, one day, over cell phones.

Comcast will be the first cable TV operator to unlock online access to a many cable shows and movies, aiming to replicate what's available on television through video on demand.

Comcast subscribers can initially watch shows and movies only on their home computers after being verified by the cable system. And for now, the online viewing will be restricted to those who also get Internet service through Comcast, and not on any broadband connection.

That might be helpful for Comcast consumers watching on-demand fare at home. It will not be so helpful if those customers would prefer to watch on their mobiles or any other broadband connection.

But it is a start.

Net Neutality: What Verizon and Google Can Agree On

Though there are many issues upon which Verizon and Google disagree, both companies say they agree on some elements of network neutrality.

"For starters we both think it's essential that the Internet remains an unrestricted and open platform. where people can access any content (so long as it's legal), as well as the services and applications of their choice," say Lowell McAdam, CEO Verizon Wireless and Eric Schmidt, CEO Google.

That should come as no surprise. Those rules already are part of the Federal Communications Commission "Internet Freedoms" principles.

Both executives say the current debate about network neutrality is about the best way to "protect and promote the openness of the Internet."

Both executives say "it's obvious that users should continue to have the final say about their web experience, from the networks and software they use, to the hardware they plug in to the Internet and the services they access online."

"Second, advanced and open networks are essential to the future development of the Web," McAdam and Schmidt say. "Policies that continue to provide incentives for investment and innovation are a vital part of the debate we are now beginning."

"The FCC's existing wireline broadband principles make clear that users are in charge of all aspects of their Internet experience--from access to apps and content, so we think it makes sense for the
Commission to establish that these existing principles are enforceable, and implement them on a case-by-case basis," McAdam and Schmidt say.

"We're in wild agreement that in this rapidly changing Internet ecosystem, flexibility in government policy is key," they emphasize. "Policymakers sometimes fall prey to the temptation to write overly detailed rules, attempting to predict every possible scenario and address every possible concern," and that
"can have unintended consequences."

Both executives say "broadband network providers should have the flexibility to manage their networks to deal with issues like traffic congestion, spam, "malware" and denial of service attacks, as well as other threats that may emerge in the future, so long as they do it reasonably, consistent with their customers' preferences, and don't unreasonably discriminate in ways that either harm users or are anti-competitive."

"They should also be free to offer managed network services, such as IP television," both men say.

"While Verizon supports openness across its networks, it believes that there is no evidence of a problem today -- especially for wireless -- and no basis for new rules and that regulation in the US could have a detrimental effect globally," they say. "While Google supports light touch regulation, it believes that safeguards are needed to combat the incentives for carriers to pick winners and losers online."

That isn't to say the two firms have identical interests or views. But as we have seen in prior discussions about net neutrality, there is more room for compromise than sometimes seems to be the case. That undoubtedly will be the case this time around, as well.

Mobile Social Networkers Do More of Everything

“Do we have to build a social network on our own or do we have to invest in an existing one?" asks France Telecom CEO Didier Lombard. "We haven’t decided yet.”

The question itself provides a clue to the growing importance social computing and networking holds for mobile service providers. To be sure, we are at the beginning of a convergence between mobile behavior and social application behavior.

On average, only about seven percent of 16- to 24-year-olds already access social networking sites from their mobile phones, says Forrester Research analyst Thomas Husson.

But that is going to change.  In the United Kingdom, up to 40 percent of 16- to 24-year-olds are already using or are interested in accessing social networking sites from their mobile phones, says Husson.

In addition to accessing social network updates, social computing apps include media-sharing, such as viewing and sharing photos or videos taken from their mobile phones or use microblogging services.

Three percent of European mobile phone owners access blogs from their mobile phones, either to view them, comment on them, or publish them; the same percentage read or post customer reviews and ratings, Husson says.

Five percent of all European mobile phone owners upload photos to the Web straight from their mobile phones, while nine percent of 16- to 24-year-old mobile phone owners do so.

But mobile social networking is growing fast. About 65 million people are now actively using Facebook Mobile, for example, more than tripling its audience in eight months.

Handset manufacturers and mobile service providers also are becoming more active in the mobile social networking arena.

Handset manufacturers are actively partnering with social networking sites to integrate access with specific handsets, making social networking as easy as making a call or sending a text message.

Service operators also are forging their own partnerships for many of the same reasons. Consumers who access social networking sites using mobile phones are heavy users of communication services.

Where 34 percent of mobile users say they use text messaging "every day," about 76 percent of mobile social networkers say they do so. Where two percent of mobile users say they access email every day, about 23 percent of mobile social networkers do so.

Where two percent of mobile users say they use mobile instant messaging every day, abour 12 percent of mobile social networkers do so.

So mobile service operators are aggregating social networks, allowing users to get, and make, all their updates from a single operator portal, for example.

"Location" is one reason the mobile social Web is seen as increasingly important. When a user's device knows knows "where you are, where your friends are, and what they are doing," social networking becomes more valuable.

Location is by at the very heart of a mobile phone’s value, and Forrester believes that location as a service will become a core enabler of mobile activities in the future.

Location will progressively become a component of social communications as consumers share their location, geo-tagged photos, and comments, helping them explore places and events that their friends recommend.

New technologies also will facilitate the connection between physical and online worlds. For example, consumers will be able to point their camera phone at a product, read reviews from peers, glance at ratings, look up information, and even find the closest store that sells it.

The key insight is that the mobile phone is not simply an extension of the PC-based Internet. That is why a great percentage of mobile broadband access (to support handset applications) is supplemental to, and not a replacement for, fixed broadband access.

Forrester expects 39 percent of European mobile users to adopt the mobile Internet by 2014. And at least initially, mobile service providers will be among the biggest winners, based on sales of new mobile data plans, Husson argues.

Though service providers worry their text messaging revenues will be cannibalized by social network posts, Husson thinks that is unlikely.

Service providers also are likely to benefit in the form of reduced churn if they are able to create the most compelling user experiences.

Advertising, premium content and payment services also are other likely revenue streams. In the future, wiring money to one's social mobile contacts using a mobile phone could be very convenient, for example.

Aggregation and synchronization of social network and other key address books with location information in real time are likely to become important ways mobile service providers create value.

Kindle Connections Now Go to AT&T

In a business with true scale and scope economies, ownership of a global network can be a key advantage. Consider network support for the Amazon Kindle book readers, which now are sold internationally.

The U.S. version of the Kindle 2 has used the Sprint 3G network. But both international and U.S. versions will henceforth use the AT&T network globally. Existing U.S. Kindle owners will continue to use Sprint, but all new devices will be powered by the AT&T network.

Of course, there are other ebook readers. Barnes & Nobles sells the Nook, Sony sells the Daily Edition and Plastic Logic sells the Que. All of those readers use AT&T's network.

Verizon will provide service for the upcoming iRex e-reader.

The financial impact to Sprint might be a relatively minor issue. Sanford Bernstein analyst Craig Moffett estimates the Kindle will drive one million Kindle users a year to AT&T that Sprint would otherwise have gotten.

Moffett estimates that Sprint makes about $5 for each subscriber addition and $2 per every e-book downloaded onto Kindle over its networks, according to Business Week writer Olga Kharif.

The real issue is whether other upcoming devices and services have enough of a global angle, and enough sales volume, that providers such as Sprint are unable to compete in those new lines of business as well.

How Long Will 40 Gbps, 100 Gbps Networks Last?

The problem with networks is that they do not last as long as they used to, which means they need to be upgraded more frequently, which also means the ability to raise capital to upgrade the networks is a bigger issue than it once was.

Qwest CTO Pieter Poll, for example, notes that Qwest's bandwidth growth now is 45 percent growth compounded annually, or nearly doubling every two years or so. That in itself is not the big problem, though. The issue is that consumers driving most of that new consumption do not expect to pay more for that consumption increase.

"From my perspective, the industry really needs to focus on tracking down cost per bit at the same rate, otherwise you'll have an equation that's just not going to compute," says Poll. Whether on the capital investment or operating cost fronts, adjustments will have to be made, one concludes.

Still, raw bandwidth increases are not insignificant. "If you look at 2008 for us it was unprecedented in terms of the work we did in the backbone," says John Donovan, AT&T CTO. "The capacity we carried in 2008, five years out, will be a rounding error.

Donovan notes that AT&T's 2 Gbps backbone lasted 7 years, the10 Gbps backbone lasted five years, while the 40 gigabit will last three years.

By historical example, one wonders whether 100-Gbps networks might last as little as two years before requring upgrades.

Donovan suggests carriers will have to rethink how they design networks, how routing is done and how content bits get moved around. One suspects there might be more use of regional or local caches, to avoid having so many bits traverse the entire backbone network.

25% of Business Apps to be Created by Amateurs, Gartner Says

By 2014, citizen developers will build at least 25 percent of new business applications, according to Gartner analysts. If that is shocking, consider the amount of Web content now freely contributed to Wikipedia or many of your favorite blogs, microblogging sites and YouTube.

Gartner defines a citizen developer as a user operating outside of the scope of enterprise IT and its governance that creates new business applications for consumption by others either from scratch or by composition.

"Future citizen-developed applications will leverage IT investments below the surface, allowing IT to focus on deeper architectural concerns, while end users focus on wiring together services into business processes and workflows," says Eric Knipp, Gartner senior research analyst.

Better technology has also lowered the bar for becoming a developer, while at the same time, users have become less intimidated by technology, empowering citizen developers to do more than they ever could before, Knipp says. Y

"The bottom line lies in encouraging citizen developers to take on application development projects that free IT resources to work on more complex problems," Knipp says.

"Citizen development skills are suited for creating situational and departmental applications like the ones often created in Excel or Access today," he says.

Will Hulu be a For-Fee Service in 2010?

It looks like much Hulu content, especially network TV fare, will move to "for-fee" status sometime in 2010.  Hulu, owned by News Corp, NBC Universal and Walt Disney Company, is quite popular, attracting more than 300 million views in the month of February 2009, but ad revenues have been disappointing.

 “It’s time to start getting paid for broadcast content online,” says News Corp. Deputy Chairman Chase Carey.

“We’re exchanging analog dollars for digital dimes,” and that simply cannot continue, Carey says. “I think a free model is a very difficult way to capture the value of our content."

"I think what we need to do is deliver that content to consumers in a way where they will appreciate the value,” Carey adds. “Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business.”

Precisely what content will be "behind a pay wall" is not yet clear. Hulu is not likely to charge fees for all content on its site, but what it intends to do is not yet clear.

The planned move illustrates the continuing problem virtually all content providers and distrbutors are having with IP-delivered content: gross revenue in legacy channels is not being matched in digital channels.

Will Net Neutrality Curtail Broadband Investment?

Nobody knows what final shape of proposed new network neutrality rules might take. What already is clear is the debate over the impact of such rules on network investment. Predictably, proponents of strong new rules say carriers are bluffing about the stifling effect new rules might have.

Just as predictably, leading industry executives say that is precisely the danger.

“We’ve invested more than $80 billion over the last five years to build these platforms for growth, and that’s Verizon alone,” says Verizon Chairman Ivan Seidenberg.

Speaking about the transformative role communication and information technologies can, and should have, Seidenberg cautioned that “while this future is imminent, it is not inevitable, and the decisions we make today – as an industry and as a country – will determine whether the benefits of these transformational networks will be felt sooner or much, much later.”

“Our industry has shown that we can work with the government as well as our partners and competitors to achieve mutually desirable goals of more competition, consumer choice and broadband expansion," Seidenberg says. "But we can’t achieve these ends if we interrupt the flow of private capital and delay the cascading productivity impacts of a more networked world."

“Rather than impose rigid rules on a rapidly changing industry, the FCC should focus on creating the conditions for growth,” he says.

Frank Gallaher, Stifel Nicolaus analyst, warned of just that outcome. At least some policy advocates are too sanguine about the impact on investment if harsh new rules are inacted. Likewise, Matt Niehaus, Battery Ventures analyst, warned that telecom investment capital has been declining over the past 10 quarters. The capital flight is caused in large part because of a perception that there is too much competition in telecoms, and therefore further investment is less likely to provide an adequate return on capital investment.

 "It's a perception in Wall Street, there's too much competition, and therefore it's difficult for entities to obtain a great return, " he says.

  "One of the things that worries me, is you can execute very well, and the problem is you may do all those things right, yet it's not clear you will be rewarded on the back end for it," Niehaus says.

But S. Derek Turner, Free Press research director, says carrier investment decisions are driven by a variety of factors, but regulation plays only a minor role.

"In general, firms’ investment decisions are driven primarily by six factors: expectations about demand;
supply costs; competition; interest rates; corporate taxes; and general economic confidence -- making
the overall decision to invest a complex process that is highly dependent on the specific facts of a given
market," says Turner. "It is simply wrong to suggest that network neutrality, or any other regulation, will
automatically deter investment."

Turner argues that "at the end of 2006, AT&T, as a condition of its acquisition of BellSouth, was required by the FCC to operate a neutral network for two years. During this period, while operating under network neutrality rules, AT&T’s overall gross investment increased by $1.8 billion, more than any other ISPs in America."

"In its wireline segment (which was specifically subject to the FCC’s fifth principle of nondiscrimination
in addition to the other four open Internet principles in the agency’s Internet policy statement, AT&T’s
gross capital investment increased by $2.3 billion," says Turner.

As a percentage of wireline revenues, AT&T’s wireline investments grew from 13.5 percent in 2006 to 20.2 percent in 2008, he also argues.

"During the years following the imposition of pro-competitive regulations on incumbent phone
companies as stipulated in the 1996 Telecom Act, investment as a percentage of revenue by these
companies rose from nearly 20 percent before the enactment of the law to a high of 28 percent in
2001," Turner argues. "In the years following the dismantling of these rules, relative investment levels declined to below 17 percent in 2008."

In fairness, the issue is fairly complex. One might argue that AT&T was willing to invest, even under temporary "neutrality" rules, precisely because those rules were temporary. One might argue that some investment was driven by competitive concerns, not necessarily because of high return on invested capital.

Indeed, the fact that investment, as a percentage of revenue, has grown is precisely because returns are lower than before precisely because the returns from broadband services are lower than for voice services.

Also, investment might have declined in 2008 because of the recession, or because such investment is powerfully affected by the general level of competition. In other words, executives might have been investing more than they believed they "should," not to gain revenue or share but simply to hold it. That, in fact, is precisely what executives say privately.

The other imponderable is that current net neutrality rules are fairly benign, and simply allow end users access to all lawful applications. Proposed new rules might go much further, and prohibit development of new services, driving new revenue, at a much more serious level.

To argue that benign rules have had benign impact is one thing. It is quite another thing to extend rules in ways that might actually choke off needed new revenue opportunities, at a time when everybody agrees the current revenues are unsustainable. Forcing wireless companies to follow the same rules that might be applied to wired networks with vastly more bandwidth is one example.