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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.

According to AT&T, Time Warner and others, usage-based pricing is coming to your Internet connection. While the reasons for this change in pricing model are varied, both in terms of technology and politics, it’s clear that consumers used to an “all-you-can-eat” buffet of streaming video, photo-sharing and podcasts are headed for a lean diet of Web 1.0 and email. Unless, of course, you want to pay a lot more for your Internet connectivity.

How much more? While the service providers have not announced their pricing plans, it seems clear that usage-based pricing will be based on the number of bytes you send and/or receive from the Internet on a monthly basis. Time Warner has suggested that usage-based pricing will be tier-based, with tiers at 5, 10, 20 and 40 gigabytes and overage charges applied for bytes that exceed them.

To put those numbers in perspective, here in the Bay Area I subscribe to AT&T DSL for $24.99 per month. I can download at 1.5 megabits per second and upload at 512 kilobits per second, which means I am bit-rate limited to downloading 500.2 gigabytes per month, or about 20 gigabytes per dollar. That same $24.99 per month also allows me to upload 165.9 gigabytes per month, or about 6.6 gigabytes per dollar. But to keep the pricing simple, let’s assume that I’m currently paying 5 cents per gigabyte sent or received. Granted, I may not consume all of these gigabytes every month, but in theory, I could.

I think it’s safe to assume that the service providers will price their usage-based tiers at amounts comparable to today’s monthly fees. They’ll want to lure in customers to the lowest price tier and then gouge them with overage fees. So let’s assume that the lowest priced usage-based tier, 5 gigabytes, costs $10 per month. That equates to an increase in my current fee of 40 times, to $2 per gigabyte. The highest tier, 40 gigabytes, will undoubtedly cost the same or more per gigabyte. If we assume that this tier will be priced at the same cost per gigabyte, then that equates to $80 per month. And again, that’s without overage fees, which will undoubtedly be as hefty as the surcharges on cell-phone plans.

As a rough reference, 5 gigabytes is the equivalent of doing one of these activities over the course of a month:

• downloading about 1,000 songs from iTunes (assuming about 5 megabytes per song)
• downloading five full-length movies from iTunes (assuming a two-hour movie)
• watching about 500 minutes of YouTube video (a quick test I just ran shows that a 2.5-minute video is a 5-megabyte download)
• sharing about 2,500 two-megabyte pictures (as normally produced by today’s typical 8-megapixel camera)

These references are estimates and do not account for other ways we typically use bandwidth during a month, among them file backup and recovery; VPN connections to the office; IP video conferencing; downloading Microsoft software upgrades and patches; use of cloud computing sites such as Google Docs and Amazon’s EC2; and so forth.

Of course, service providers will argue that in reality I do not consume 500.2 gigabytes of data each month, that my effective cost per gigabyte is higher than 5 cents and closer to the usage-based prices. And if I’m only browsing the web, doing email with small attachments and downloading the occasional picture, then my usage should fit in the 5-gigabyte usage tier and my monthly bill could actually go down. But that’s not the point — the point is that the unit economics of the Internet have changed and consumers are going to increasingly pay more for each byte of data delivered to them.

Why have the unit economics of the Internet changed so dramatically? “We built a road that was well-suited for bikes and cars and spent the money to build and maintain that more or less properly,” was the way one service provider executive explained it to me. “Now we have folks landing planes on the road, tearing it to shreds and making it unusable for others. So we need to spend lots more to maintain the road for bikes, cars and planes.”

Infrastructure technology like terabit routers, 60-gigabit backbone connections and multimegabit broadband connections do exist to support bikes, cars and planes — but the service providers have failed to spend the money from your Internet connection fees to invest in that infrastructure. Instead they have spent it supporting their bloated organizations and devising new pricing models to extract more money from consumers for less service delivery.

And therein lies the rub: The Internet has evolved and has enabled new applications such as peer-to-peer and video streaming that are increasingly being used by the consumer. Unfortunately, the infrastructure evolution of service providers like AT&T and Time Warner are working at a significantly slower pace. And that slower evolution costs them money, because their infrastructure cannot handle the new Internet applications, so instead of building efficient organizations that can evolve and deploy infrastructure faster they are looking for more money from the consumer in the form of usage-based pricing.

One day soon, when you get your Internet connection bill and it is much larger than you expected, don’t blame Hulu or Microsoft for offering you funny videos or a new security patch, blame your service provider for not evolving with the Internet.

Cisco Systems, the San Jose, Calif.-based company that makes a living selling plumbing for the Internet (amongst other things), has come out with a prediction: Traffic on the world’s networks will increase (annually) 46 percent from 2007 to 2012, nearly doubling every two years. As a result, there will be an annual bandwidth demand of approximately 522 exabytes2, or more than half a zettabyte.

If these kinds of predictions remind you of the wild-and-wooly claims made by folks like MCI and WorldCom in the early days of Internet 1.0, relax –- these numbers aren’t that bad. And I would normally douse them with the cold water of skepticism, except that my dear friend, Andrew Odlyzko, who was the first one to spot the con in WorldCon’s traffic bunkum and has been tracking the growth of Internet traffic, says he expects, overall, an annual growth rate of some 50 percent to 60 percent.

That’s why I’m happy to take Cisco’s study and its newly announced Visual Networking Index (VNI) seriously. Cisco’s data is actually important to note, especially in the light of the recent tiered/metered broadband moves by U.S. carriers and their demagogy about bandwidth consumption.

Anyway, some interesting findings from Cisco include:

• Global IP traffic will reach 44 exabytes per month in 2012, compared to less than seven per month in 2007. In 2002, global IP traffic was five exabytes, which means that the volume of IP traffic in 2012 will be 100 times as large.
• Monthly global IP traffic in December 2012 will be 11 exabytes higher than in December 2011, a single-year increase that will exceed the amount by which traffic has increased in the eight years since 2000.
• Mobile data traffic will roughly double each year from 2008 through 2012. U.S. will surpass Japan in mobile traffic in 2009. (I guess thanks to the iPhone.)
• In 2012, Internet video traffic alone will be 400 times the traffic carried by the U.S. Internet backbone in 2000. Representative of this trend, Internet video has jumped to 22 percent of the global consumer Internet traffic in 2007 from 12 percent in 2006. Video-on-demand, IPTV, peer-to-peer (P2P) video, and Internet video are forecast to account for nearly 90 percent of all consumer IP traffic in 2012.

My own observation with regards to all these developments is the continuous contribution of new economies -– China, Brazil, Russia, India, Eastern Europe and the new Nordic nations. A growing number of subscribers and their usage of broadband and mobile broadband is slowly pushing up the demand for bandwidth, which has lead to a huge spurt in the traffic on regional and international backbones. New fiber construction to support the growth in traffic also bolsters Cisco’s claims.

China has already passed the U.S. as the world’s largest broadband and mobile market. India is getting there. VeriSign, a Mountain View, Calif.-based company that’s a major player in business domain names, notes that India now has about 41 million Internet users, making it the eight-largest Internet country. Cisco notes that Internet traffic is growing fastest in Latin America, followed by Western Europe and the Asia-Pacific region, and says that’s likely to be the case through 2012. It kind of makes sense — after years and years of U.S. domination, Internet traffic is beginning to act in a more global fashion.

Let’s be honest: When it comes to the networked home, most analysts, press and consumers mainly think Wi-Fi. This is for good reason, of course, as Wi-Fi has been phenomenally successful as a consumer technology. It’s ubiquitous in laptops and portable gaming devices, is fast becoming so in portable media players and mobile phones, and new devices like TVs and set-top boxes are seen as the next big growth markets for this technology.

However, while many view Wi-Fi as a jack-of-all-trades technology that can be shoehorned into virtually any use case, at ABI we see things a little differently. While we continue to forecast a bright future for Wi-Fi, we view the home network as a multilayered one made up of individual sub-networks that are defined by their own specific use cases and applications, some of which may not involve Wi-Fi at all.

We ultimately see five types of networks in the home:

1. The consumer network for data and entertainment. Mainly Wi-Fi, with a mix of Ethernet and HomePlug as well. Where Linksys, Netgear and gateway vendors such as 2Wire dominate.

2. Whole-home backbone. This is the network being driven by IPTV deployments and, in the near future, cable. MoCA, HomePlug AV and HomePNA 3.1 have seen strong traction here.

3. High-speed, in-room video networks. Technology such as the new WirelessHD 60 GHz standard is specifically designed for this use case as it sends uncompressed video over high-speed wireless links to a TV.

4. Home automation and control. Low-cost, lower-speed networks for command and control of home systems and as part of the home entertainment stack through integration into universal remotes.

5. Personal area networks. Has been, and still largely is, defined by Bluetooth.

Of course, many of these networks use either the same underlying technologies or an offshoot of similar ones. UWB, for example, is being positioned as a solution for high-speed Bluetooth, as well as being used for whole-home backbone networks. Pulse~Link, in particular, has been pushing its UWB technology for a number of applications (and networks), seeing it as a candidate for UWB over coax as well as for high-speed, in-room video networks.

One of the most exciting and active areas for development today is the whole-home backbone. MoCA is being integrated into FiOS set-top boxes, while HomePlug AV (and to a lesser extent, UPA) powerline technology has been used for IPTV deployments in Europe and Asia.

But it is the in-room, high-speed video network that is both the newest and likely the one that will get much of the attention in coming years. And while some vendors may see Wi-Fi as a potential option here, the bandwidth needed for uncompressed HD video ranges from 3 to 5 Gbps. This is out of reach for Wi-Fi and where other technologies, such as the 60 GHz, UWB or proprietary implementations in 5GHz, are better suited.

We certainly expect that vendors such a Broadcom will continue to push Wi-Fi for applications such as whole-home video distribution. However, ABI Research believes that most pay-TV operators in the U.S. and Europe are more comfortable with the security and propagation capabilities of wires. To that end, many within the International Telecommunications Union have been working to develop a new standard that would succeed today’s coax, powerline and phoneline home backbone technologies: G.hn, a new triple-wire specification that ABI Research believes holds significant potential.

Michael Wolf is a research director focused on the digital home for ABI Research.

It should come as no surprise: Incumbents are beginning to act like incumbents. But while the cable companies are the first ones to jump on the tiered broadband bandwagon, they won’t be the last. Their argument for limiting bandwidth and data transfers based on price sounds like a good idea, especially as a way to get bargain hunters to buy. In the long run, however, tiered broadband is a terrible idea that will bring the innovation inspired by flat-rate broadband to a screeching halt.

Flat-rate broadband – however cheap or expensive (depending on your point of view) it might be – inspired the formation of Skype, YouTube, Facebook, Apple’s iTunes and MySpace, amongst others. It allowed us to freely experiment, to embrace both the applications and the ideas they represented, such as VoIP, online video, digital downloads and social networking.

The emergence of these applications has, in turn, spurred demand for broadband in the U.S., much like the illegal version of Napster jump-started the demand for cable and DSL broadband in the late 1990s. And they’ve helped lift the number of broadband subscriptions to U.S. cable and DSL companies to 69 million by the end of 2007, subscriptions that have brought in enough cash to pay for the cable companies’ foray into voice and to help with their digital transition. Yet now these guys want to slaughter the golden goose. Why?

NO MORE THEIR VIDEO ON DEMAND

The answer is in my living room. Thanks to a fast connection from Covad, I now get my video fix over the broadband pipe. Apple’s iTunes, Jaman, MLB.com, Hulu.com, CBS and scores of other services make it possible from me to watch shows either on my laptop screen or, in some cases, on my big-screen TV via Apple TV.

I used to pay Comcast about $150 a month, but now I pay them zilch, instead forking over a mere $30 a month to Covad. Oops! In the future, the emergence of much higher-speed DOCSIS 3.0 and fiber-based broadband will make it even easier to download or stream videos, which scares the bejesus out of the phone companies. And that is one of the reasons they are introducing tiered broadband.

But consider the bandwidth caps. I asked some of my telecom sources to help me put into perspective the new tiered-pricing structure with which Time Warner Cable is experimenting. TWC’s lowest price tier – 768 kbps at $29.95 a month for 5 Gbytes and $1 per GB – may seem reasonable, but it isn’t.

If you assume that we’re pulling down data at a steady 20 kilobits per second for every second of the month, the total monthly transfer comes to about 6.8 gigabytes. At a higher speed of 768 kbps, that jumps to over 250 gigabytes, and at 1 megabits per second, the monthly download will hit 324 gigabytes. At first blush, those look like awfully generous numbers. After all, who uses their connections consistently?

WHY METERED ISN’T ENOUGH

However, if you take into account our average behavior online, data transfers start to add up really fast. Stacey crunched the numbers yesterday and came up with an interesting conclusion: If you bought the monthly 15 mbps/40 GB transfer option for about $56 a month, you’d get about 40 hours of standard definition video along with enough bandwidth for your normal browsing and surfing habits. That’s just over 75 minutes of SD Internet video every day - two or three shows at best - which means you might need to continue buying the “video connection” in order to watch more television. Sure you can slice and dice the data transfers with other online activities, but this is all about video.

From that perspective, you would think that Comcast’s proposal for 250 GB a month is pretty reasonable. Actually it’s not, especially if you factor in how quickly we’re moving towards HD downloads. With HD, each roughly 2-hour long movie is going to consume about 8 GB, while live sports events, etc., when watched in higher quality can take up some 13 GB. Remember we share our Internet connections with multiple people in a household. So Before you know it, that 250 GB isn’t enough.

Cable companies are trying to convince Wall Street that they need to upgrade their networks to DOCSIS 3.0 in order to compete with telecom operators, especially those with fiber connections. The idea of metered broadband makes the big spending on these networks more palatable for Wall Street.

As for consumers, the cable companies have evoked the P2P bogeyman. I spoke with Time Warner spokesperson Alex Dudley, who claimed that some 5 percent of its user base abuses its network through the use of P2P, causing problems for the remaining subscribers. “Video is the most bandwidth-intensive use right now, and it is not people that go to iTunes but instead it is P2P which sucks bandwidth in the system,” he said. There are some questions about that claim.

My biggest fear is that as these companies try and protect their video revenues, they are
doing more harm than good, and putting roadblocks in the way of interesting services
that make broadband worth having. When I asked Dudley if his company was putting innovation at risk by limiting flat-rate broadband — if they might be throwing the baby out with the bathwater — he noted that many of these startups and services are built on their infrastructure.

“You need to understand that the networks are going to be managed and we need to make profit,” he said. “We are trying to find a balance here, and it is too soon to say that we are throwing baby out of the bathwater.”

Dudley was, however, quick to point out that TWC’s experiment in Texas was just that – a test. If consumers don’t want it, the company is going to back away from it. “I think this is a trial and we are going to learn from this trial,” he said. If the results of our poll are any indication, they would be wise to back away from it — and soon.

Not a day goes by without someone bemoaning the evils of peer-to-peer networking, painting visions of a network apocalypse brought on by pimply-faced file stealers. And to make their case, naysayers typically present some hard-to-argue-with stats. This week, however, we came across a set of numbers that show more traditional video sources (streaming and flash video, for example) are now an increasing component of bandwidth on consumer-focused broadband networks.

As part of the research I’m doing for another piece, I had a long conversation with Danny McPherson, CTO of Arbor Networks, which makes all sorts of network-management and traffic-shaping tools. Arbor is used by dozens of ISPs around the planet and, as a result, McPherson is privy to details about traffic flows and usage patterns across many broadband networks.

McPherson shared with me some interesting stats and facts about broadband usage and peer-to-peer networking usage patterns. Given that Arbor makes a living selling its technology and products to carriers, it is prudent to maintain a degree of skepticism about the numbers. That said, they are nevertheless interesting enough to share.

On fixed and mobile broadband networks where consumer services are provided (i.e., NOT interprovider or typical dedicated Internet access for commercial enterprises):

• 10 percent of subscribers consume 80 percent of bandwidth.
• 0.5 percent of subscribers consume about 40 percent of total bandwidth
• 80 percent of subscribers use less than 10 percent of bandwidth

This supports the arguments made by some of the larger ISPs, including Comcast. In a recent interview, Comcast Cable CTO Tony Werner told me his company would try and deal with the tiny number of subscribers who use most of the bandwidth by slowing down their connections during peak times. (Personally, I find that to be a distasteful solution, and I believe that folks should learn from newer ISPs like Free.fr and better architect their networks so they can provide more bandwidth for all — without imposing any penalties.)

The P2P stats are the ones that came as a complete surprise. Like you, I have read many reports that suggest P2P applications account for the majority of the traffic on high-speed networks. But McPherson???s data suggests otherwise:

• 20 percent of traffic is P2P applications
• During peak-load times, 70 percent of subscribers use http while 20 percent are using P2P
• Http still makes up the majority of the total traffic, of which 45 percent is traditional web content that includes text and images. Streaming video and audio content from services like YouTube accounts for nearly 50 percent of the http traffic. It shouldn???t come as a surprise to anyone — streaming TV shows from Hulu and videos from YouTube have been on a major upswing, as noted by our colleagues over on NewTeeVee.

So, what do you make of these numbers?

Comcast recently announced a deal with BitTorrent that left me dazed and confused. It was basically a roundabout way for the cable company to backtrack from its P2P traffic-blocking gaffe. In describing the deal, Comcast tried to shift the focus away from their so-called “network management” — and by extension, the limitations of their network that prompted them to resort to traffic manipulation in the first place.

On Friday, I caught up with Tony Werner, chief technology officer of Comcast Cable, to get the real skinny. When asked to explain the so-called announcement in language a simpleton like me could understand, Werner said: “Historically we had looked at a basket of P2P protocols during peak load times and would slow them down. In the new approach, we don’t do this any more.” In short, no P2P blocking!

Werner said that between one half and two percent of Comcast’s customers can be described as “bandwidth hogs” — users that consume so much bandwidth that it can cause network quality degradation. According to Werner, the company is currently experimenting with software (including that from Sandvine) that would allow them to fractionally de-prioritize the traffic from these bandwidth hogs during peak load times, while at other times, leaving them alone.

Comcast will not discriminate against any protocol, but bandwidth baddies are going to be the ones to suffer. Or at least that’s what I took away from our conversation.

Problem is who’s to say they’re not going to manage everyone’s traffic? Although a company spokesperson assured us Comcast will be clear and transparent with anything related to traffic management, my skepticism stems for Comcast’s past actions. When it comes to traffic management, the Philadelphia-based operator has a checkered past.

Comcast assured the FCC during the Network Neutrality deliberations in 2005 that it would not degrade traffic; it repeated the assurance again in 2006. Yet the company started “traffic managing” that very same year. And now they’re cleaning up their act?

I asked Werner, why manage traffic to begin with? Why not just add more capacity? “You can’t quadruple the size of the streets and take away all the traffic rules,” Werner said.

He said Comcast is not alone in traffic management, that even in places like Japan, fiber operators that sell 100-megabits-per-second connections are managing traffic, too. “A vast majority of ISPs do perform traffic management, including NTT, and the reason we do it is because we want to have balanced traffic performance at peak times,” Werner said. (See here for “Why Shaping Traffic Isn’t Just A Comcast Issue.“)

Of course, my views on broadband align with those of French broadband maverick Xavier Niel, who believes giving people more bandwidth — not getting in their way. Still, his view (and mine) are the minority in a broadband world dominated by large incumbents.

For their part, the incumbents have started to talk about taking a protocol-agnostic approach to traffic management. They have to, otherwise we’ll have more snafus like the ones experienced by the Canadian Broadcasting Corporation. Although the CBC released a torrent legitimately, downloaders had a hard time grabbing the video shows. Werner’s comments and recent throat-clearing by Verizon and AT&T reveals a thaw in ISP views on P2P.

On a larger scale, Werner said traffic management is “very tricky.” “We need to get the whole industry together and tackle this issue,” he said.

If you’re a frequent flier to New York from San Francisco or Los Angeles, or just like to jet down to Miami to get away from the bitter New York winter, then you’re one of the lucky people who will have in-flight broadband by this spring, according to Jack Blumenstein, president and CEO of Itasca, Ill.-based Aircell. The company is calling its in-flight broadband service gogo.

“For the first six months, there will more broadband-enabled flights out of San Francisco,” Blumenstein said when we met for coffee earlier today. Aircell’s first two airline customers, Virgin America (based in the Bay Area) and American Airlines, are said to be working around the clock to get their planes ready.

In the initial phase, 15 of American Airlines’ 767s will be broadband-enabled; it plans to eventually take that number to 500. Virgin, by comparison, is looking to wire up all of its planes; it wants to provide broadband access to every seat via its back-seat system. Virgin wants people without laptops to spend dollars on broadband, I guess.

Aircell is also in talks with other airlines, but Blumenstein refused to reveal their names. He did tell me what the service is going to cost: $12.95 for cross-country flights such as San Francisco to New York, and $9.95 for flights with durations of three hours or less. Airlines, with whom Aircell will share revenues, are hot and heavy about this service for two reasons: in-flight Broadband not only provides a way to boost margins, but is a great way to lure business passengers aware from other carriers.

Aircell is currently contemplating striking up corporate user agreements with companies like iPass, it also has plans to work with aggregators like T-Mobile and Boingo. And it’s developing special lower-tier plans for devices such as iPhones, as well as flat-rate plans for “frequent fliers.”

Gogo uses a ground-to-air system that allows small antennas on the planes to pick up signals being pumped out terrestrially. Aircell has 92 giant antennas spread across the country, most of which sit in the same antenna farms that are used by cellular carriers; they can pump data that can be picked up at 45,000 square feet on planes flying at 500 miles per hour in a 350-mile radius. Despite not being commercially available, the system is currently operational.

Aircell has a roughly 3 MHz slice of same spectrum that was occupied by the Airfone service, enough for the company to send signals at around 3 megabits per second. (Canada and Mexico are doing the same, which means the Gogo system will work across North America.) Using compression and on-board caching, Aircell’s Gogo customers will experience broadband speeds of 2 megabits per second, Blumenstein said. Having not seen or tested the system, I am not quite certain on how realistic a number that is.

The technology being used for radio transmissions is a customized version of Qualcomm’s EV-DO Rev A technology. Blumenstein said that they can migrate to Rev B or LTE if and when those higher-speed technologies become available. The base stations for the system come from ZTE Corp., the Chinese telecom hardware vendor that is desperately trying to make a name for itself in the U.S. market. Aircell is using technology developed by Meru Networks to ensure that the on-board systems don’t run into capacity issues and all passengers can connect with the on-board 802.11 routers.

Aircell expects to deploy about 500 antennas, enough to cover the entire country and support as many as 250,000 broadband users. “We think we have a cost advantage over satellite-based systems as we are using proven technologies that are already in deployment,” said Blumenstein.

Now let’s see if customers want to show up for this service.

Qualcomm’s Gobi wireless platform, which is comprised of firmware and chips, aims to make it easy for manufacturers to put a 3G network card inside a laptop without going through multiple carrier certification programs. If widely adopted, it would give Qualcomm a foothold inside the fast-growing laptop market, and a way to move beyond its intellectual property monopoly on the aging CDMA standard.

Mike Concannon, vice president of strategic products for Qualcomm’s CDMA technologies division, said the firm will license the Gobi platform to card makers, and won’t be getting back into manufacturing. Already H-P has said it will use Gobi cards in its 2008 line of laptops. The Gobi platform will be available in March and end users could see it by June.

The Gobi modules consists of firmware, a GPS chip and a software-defined radio that is both CDMA and HSPA compliant. It can be configured to run on any compliant network with a 5-second software update, or (depending on the business arrangement struck between laptop OEMs and carriers) could be limited to certain carrier networks. One way or another, laptop makers would love to have a single, multicarrier network card from which to choose.

Built-in wireless broadband would be sweet for those of us who hate inserting and keeping track of external network cards. If laptop makers give 3G valuable space inside the laptop, it would prove that 3G as a source of wireless broadband has arrived — especially if the carriers can offer competitive data plans.

But Qualcomm’s ambitions don’t stop at 3G. “We see Gobi embedded in laptops as kind of a landing point,” says Concannon. “If Gobi is the first step in overlapping or uniting networks just as we’ve united a CDMA and HSPA network, and as we talk about HSPA Plus and LTE, then this idea of having a multifunction radio that allows the device to receive the least common denominator is kind of an important concept.”

And because wireless technology is kind of pain to embed on a laptop thanks to all the noise generated by the PC motherboard, owning the pre-optimized wireless real estate inside the laptop is an enviable position to be in. Concannon doesn’t see Qualcomm stopping with carrier technology, and mentioned digital television transmission and ultra-mobile broadband as future networking technologies that might find a home on Gobi. Perhaps WiMax too?

Of course, other players could come along with their own firmware and go through the pre-certification process with all of the major carriers, but Qualcomm has a pretty tight relationship with many of the carriers, making such an endeavor a hard slog. It also controls the CDMA intellectual property, meaning any efforts to compete would still enrich Qualcomm on some level.

But given the rancor Qualcomm has stirred in the mobile chipset and handset community, laptop OEMs might want to take a long hard look at what Gobi could mean for them down the road. Qualcomm royalties aren’t cheap.