Google+ is definitely a revolution, a step toward social networking as many believe it should have been all along. Because it avoids most of the privacy problems that seem inherent to Facebook’s simple model of “friends,” it could potentially be used more effectively without putting its members at risk. Because it’s built around communication, it would establish Google not only as a social network leader but also as a player in the web-based communications space that will eventually displace the old PSTN we’ve come to know. And behind it all looms the old Google/Microsoft face-off, this time regarding the Microsoft acquisition of Skype.

Make no mistake, Google wanted to counter the Skype deal probably as much or more as it wanted to be a social networking player.  Skype, in Microsoft’s hands, could become a powerful force to integrate Microsoft cloud software into people’s lives.  Skype could also be the foundation for social communities, of course, and having Microsoft in a position to exploit Skype at its leisure wouldn’t serve Google’s interests.

The fact that Facebook went running to Skype for a deal is interesting too.  They can’t now expect to buy the company after all, and they’ve admitted that they have either never thought of the communication-based social network (unlikely) or that they can’t toss money and time at creating one to counter Google’s move. Facebook’s weakness, as I’ve pointed out, is its off-market trading and correspondingly high valuation.  They can’t afford to keep going to the well for more capital and they can’t be perceived as losing ground—though they are.

All of this comes at a time when the Street is newly aware of the eroding credibility of carrier capital budget planning.  To quote Credit Suisse, “We expect the ongoing disconnect between revenue growth and bandwidth economics to drive an ongoing shift in carrier capex to specific projects focused on revenue generation or cost savings”.

Network spending focused on cost is an open invitation to Huawei, and spending on revenue generation is clearly not going to focus on creating more of the low-value bits that have put carriers in the disconnect to begin with. This is the issue that raised our concerns about Alcatel-Lucent’s FP3 chip announcement. The world doesn’t need a way to push more bits until we can figure out how to make bits pay, and right now everything happening in the industry is disintermediating the operator more. Alcatel-Lucent, we’d note, continues to champion IMS as the basis for mobile broadband “services” when the Google/Facebook brouhaha makes it clear that it’s going to be tough to make even IMS voice work effectively against OTT P2P competition.

With bit-pushing going out of fashion, Cisco seems unable to break out of the bit-and-box marketing mold and is instead looking to cut costs by cutting headcount. The company’s reported early-out package expired in late June and there’s no official word of how many people took advantage of it, but we did hear that there were still as many as three thousand more jobs on review for elimination.  That could push the total cuts above the 4,000 that were rumored. Cisco’s intransigence with respect to the service layer is creating an opportunity for its competitors, who could not only gain market share on Cisco’s fall from grace but also gain an early lead in the service layer. So far, though, nobody is stepping up with a good story, and we’d not be surprised to see any improved positioning saved for early September, timed to the carrier strategic technology planning cycle that will end around November first.

Truth be told, all marketing these days is deceit, and our surveys show clearly that people don’t understand what xG means anyway.  This reinforces a point the FCC’s broadband inquiries have made: We need some objective way to measure broadband and compare offerings. Verizon’s early comments on 4G services suggest it would launch at a lower speed than AT&T’s HSPA+ (now the rumor is that Verizon will up its 4G speed before launch), and that would mean that “old” wireless could be faster than “the latest.”

Whatever the name we give to higher-speed wireless broadband, it’s clear that it’s going to change how we use broadband services. I’ve been analyzing how people’s behavior and their communications tools interact, and it’s a kind of feedback process rather than a simple linear progression. Tools have always guided human processes. You don’t connect boards the same way once the hammer and nails have been invented. But human processes drive the development of tools because their adoption can’t be too much of a behavioral leap of faith. The big opportunity for the network of the future is the exploitation of this feedback process, the development of an ecosystem that can support the evolution of social behavior and ubiquitous broadband as they feed on each other to establish a new norm.

That’s what’s missing, in my view, in the announcements by vendors in the space—in this week and in weeks past.  Collaboration or wireless or content or 4G or any other technology or approach is relevant not for what it can do at this instant, or what it might be able to do in some indefinite future, but in how it navigates the path between those points.

Facebooks’ Zuckerberg, who I don’t think is possessed by any dazzling set of insights in most of his interviews, did say recently that Facebook’s value was to build businesses around the social graph, the chart that maps behavioral links. I think he’s half right. Business practices and social behavior will transform our tools and be transformed in return.  If Facebook could be the incubator for the evolution, it has a great future.  But it’s hard for things to make money in the present and prepare for the future because the people in the company are always blinded by the next paycheck or quarterly report.

The world has a lot of potholes to fall into, and if you never take your eyes off your feet, it’s going to be hard to avoid them as you move into the future.

First, to understand targeting, you have to understand motivation. The goal here is not to get the right ad in front of the right person, it’s to get ads in front of fewer wrong people. The ad industry knows that things like TV commercials blast ads to the point where it’s unlikely that there’s any possible consumer who doesn’t see them. Thus, a well-targeted ad isn’t any more likely to be seen by the prospective buyer than one that’s simply broadcast. What is likely is that a well-targeted ad will be seen by a lot fewer people who aren’t likely prospects. Even if you pay more for such ads, you spend less with “overspray.”

This advertiser goal sweeps into a consumer market with an appetite for free stuff. Nobody wants to pay for anything if they don’t have to — nobody really wants to pay for content, or Internet services, or online applications, or whatever. They’re therefore likely to surrender a certain amount of privacy to secure what they want, believing that the cost to them is less than the benefit. Since one could argue that the goal of regulation is to protect the public interest, it would seem illogical to regulate consumers out of the benefits for which they’ve elected to trade.

But that presupposes they’ll actually get what they want, which is the big fallacy of targeting. As I noted, all you need to do is run the numbers for online ads versus TV commercials to see that what’s happening isn’t a flight to quality in terms of consumer targets, but rather a flight away from the non-engaged. That flight is motivated by cost, not additional revenue, which makes it by necessity a less-than-zero-sum game. That means that success in targeting funds not more experiences, but less. Consumers are giving away their secrets to lose, rather than gain, and that’s something regulators should be addressing.

Regulators need to think more about the future of the industries they regulate; the financial crisis proves that point. Those in the industry need to think a bit, too, because the real lasting opportunities are created by the long-term money flows. Cost conservation never leads to anything but commoditization, no matter what part of the network food chain you’re in.

There’s always people on social networks that measure themselves by the number of “friends” they have.  On business-based LinkedIn, for example, there are whole groups of users who do nothing but race to establish tens of thousands of contacts.  The problem with this approach is that it tosses out the whole notion of a relationship in a social sense.  Studies show that people don’t have that many real “friends” or “contacts.”  About 80% of the average person’s social interactions take place in a group of less than 100 people.  In real life as in cyberspace, we have to balance how many such relationships we create against the difficulty of sustaining them.

Social communication has to reflect the value we place on each individual, but social networks have to build community mass.  We can’t use the latter principle to establish frameworks to support the former; social communication has to be personal.  Will you ask your whole community of Facebook friends for advice on a car?  Perhaps you’d ask the question, but you know that: a) most wouldn’t respond; and b) you wouldn’t weigh their responses equally.

How we watch television, buy cars or plan projects may all involve social interactions and therefore appear to map to social networks, but it’s not a simple direct matter of building a flat community that centers on each of us.  Groups “friend” other groups; they have fuzzy boundaries; they interact through filters.  In short, they’re not Facebook groups, even now, and we’re entering a time when the difference between real social groups and online groups will matter a lot to us.

Wireline social networks are free and relatively controllable, but that’s not true for mobile.  Constant tweets or status updates are a lot more distracting because I’m living when I’m mobile, and I’m sitting when I’m on wireline broadband.  Mobile broadband is going to change our notion of groups and friends from our current Facebook simply because it’s going to force us to decide between living our own lives and paying with airtime and distractions for how others want us to think they’re living theirs.  If you want to look for a truth that Microsoft could exploit to get into the mobile market, look there.