Wireless data speed have been increasing at breakneck speeds over the last few years. Largely because it, along with price and coverage, is one of the differentiators the wireless service providers can use with customers. How effectively they are doing this is another matter. Ask your friends what “4G” means.

Anyway. Today an article I ran across discussed how LTE (the current newest fastest tech available currently) is already being updated to LTE-Advanced. Tests are showing speeds of over 200 Mb/s. To put that in perspective, I’ve gotten in the high 20s. I’ve heard of friends getting near 50 – but that’s a small miracle. And on the iphone 4/4s which didn’t have LTE I could never dream of getting over 7. Those phones are just a couple years old!

This is good news, because as several analysts and news outlets are pointing out- our traditional cable service providers, who offer hardline data to our homes, are not interested in increasing our speeds any time soon.

Bernstein Research analyst Craig Moffet tells Technology Review that the two biggest cable companies are posting 97% margins for their Internet services, a rate that Moffet describes as “almost comically profitable.”“If you are making that kind of margin, it’s hard to improve it,” Levin tells Technology Review. In other words, unless Google starts rolling its fiber service out nationwide, we shouldn’t expect the incumbent carriers to build fiber networks of their own.

The cable companies laid down the copper cable throughout towns years ago back for cable TV. The infrastructure is largely all paid for. So now, the costs of maintaining that network are pretty small. But, we have also tapped the full extent of its capability. To increase speeds would require switching the hardware to fiber optic cabling. Which costs large amounts of money. I’ve read numbers that it costs Verizon $4,000 per customer to lay down its FiOS network.

However, the cable companies are granted small monopolies for their towns. They were given these back in the 60s and 70s because they argued they needed to ensure they could make the money back for their investment of laying all that expensive cable down. This is why you can only get one cable company choice.

So, your options for high speed internet are also limited. And since there is no competition, there is no incentive for the cable companies to upgrade. My long-running argument is to take away the cable companies’ monopolies, and force them to lease out their networks – like we did with AT&T/MaBell back in the 70s/80s. This lead to more smaller competitors and lower prices for phone calls.

But, I digress.

So, a new alternative in wireless only providers seems increasingly plausible with these increasing speed capabilities. However, there are two big, big hurdles. Data caps and Net Neutrality.

First, Data Caps. My home DSL service taps out at about 9mbps. Like I said, I regularly get into the 20s on LTE on AT&T. I would switch in a heartbeat. However, AT&T to protect their network from being overwhelmed, puts limits on how much data a customer can use. A 2, 3, 5 or heck even 50mb limit is just too small for the average home user. Think about how many youtube videos you watch, online xbox games, and skyping one does and you could blow through those limits in a day.

But, thats an issue easily solved with more capacity. Its a technology issue. I think the larger problem is a policy problem, which makes it much harder to solve. Net Neutrality is a kind of fuzzy, nebulous concept. But, in mind it basically is the idea that you don’t treat some data different from any other data coming over your internet connection. So, if I go to Facebook, it should be preferred over YouTube. One should not come faster.

That might sound silly, but it is more important when you realize many cable companies have ties to content companies. So, perhaps Hulu gets sent to you at a higher rate than Netflix, to encourage you to use Hulu. Its a dark road.

The FCC put forth guidelines regulating Net Neutrality, and while they are still being fought over, one point is clear. The wireless companies don’t have to follow them.

The U.S. Federal Communications Commission, in a historic vote Tuesday, approved network neutrality rules prohibiting broadband providers from blocking customer access to legal Web content, but many consumer groups decried the new regulations as weak and full of loopholes.

The new rules provide fewer protections for mobile broadband subscribers and may lead to a fractured Internet, critics said. The new rules, a compromise championed by FCC Chairman Julius Genachowski, would bar wireline-based broadband providers—but not mobile broadband providers—from “unreasonable discrimination” against Web traffic, prompting some consumer groups to call the rules “fake” net neutrality.

Therefore, if one did switch to a completely wireless solution, you would always have to worry that when you tried to load YouTube, you would get a vastly slower connection than if you went to V-Cast. Or, you wouldn’t be permitted to access Amazon to rent a video, but if you rent on ATT’s video store, it would be ok.

Until this problem is solved, we are going to be stuck with pathetically slow home connections. Slowing productivity and handicapping innovations and developments that newer, faster tech can allow.

Twitter has been attacked by industry analysts lately because of new policy decisions. For one, Twitter is cracking down on third party apps. They are limiting the number of users a (non official twitter) third party app (like Tweetbot on the iPhone or Seesmic on the desktop) can have. Many people use these apps to interact with twitter, preferring them over the web or official apps. Second, they are limiting the usefulness of their own apps.

We can see the rational for this. They want to start making money on their product. The obvious way to do this is by interjecting ads and partnerships (like if someone tweets about a sports team, a special ESPN card about the team is inserted in a tweet), and the only way to ensure this is by forcing people to use the official methods of interacting with Twitter. It is easily seen how a third party app could market itself as the “ad-free” version of twitter.

Who else can we look at to see example of this. Facebook. There are very few third party facebook apps. Most people use the official mobile app, and interact with the service through the web interface. So, why less ire toward Zuckerberg than Ev?

I think back to the classic political strategists like Machiavelli. One of his principles is “It is better to be stingy than generous”. Explored more, it is far better to be seen as stingy and not giving when you start. Then as you soften with time you can relax and give more. This creates feelings of good will and appreciation toward you. Going the opposite way is supremely more difficult and often leads to revolt. Ask any parent who suddenly changes their mind and doesn’t let their kid do something they used to. “But you promised!” Or, try taking away an entitlement program from an interest group. Even when it is arguably necessary for your survival, you will come off as greedy and going against your word.

Facebook started off as a closed system. You needed a .edu college email to join. You famously can’t take data out of Facebook as easily as you can pull it in. (See how Facebook won’t allow Google to scan it’s data for searching) But, this is just how Facebook is. You know what you are getting into when you sign on. When they do open up, like making a deal with Apple to let you import contact data into your iPhone, or export your account, it is seen as a big positive step. Thanks, Facebook for your benevolence!

Twitter on the other hand is famously open. You can see tweets without even having an account. Twitter accounts are by default “public”. And, now they are making moves to set up some fences to protect their product, and everyone is on the attack. Some have even gone so far as to set up “open” competitors.

The lesson is obvious. Starting closed and slowly opening up as needed to appease complaints is far easier than starting open and trying to dam that flow.