Craig Moffett sees this as I do: “If LTE networks are going to be usage-capped, then the last pretense that LTE can be positioned as a substitute for terrestrial broadband would seem to be gone.” The heart of the U.S. broadband plan is to release more spectrum—enough for 10-20 networks like Verizon’s LTE now building—and pray that will be enough competition in five to seven years to check price increases.

In Indonesia, India, Pakistan and most of Africa, the scarcity of landlines mean “wireless broadband” will be dominant. “Wireless broadband”—especially LTE—could become a player in developed countries if priced right. Rob Pegoraro (Washington Post) finds that Clearwire WiMax could be serious competition to broadband sold by incumbent phone and cable companies. He’s getting a consistent connection of about 5 meg down, 500K up, on the current, lightly loaded network. He sometimes has to look to see which wireless network his computer is connected to, Clearwire or his 15/5 FiOS.

Large uploads are painful because of Clearwire’s slow upstream, but 4G will do better in time. However, wireless speeds are likely to fall if many people watched quality video over the net.

How much wireless could compete with landlines, especially as all cable connections are moving to 50 meg, was a crucial question for the broadband plan. The consensus of several good engineers is that 4G competes fine with DSL if not many people expect video or other high-bandwidth apps. Wireless certainly can’t keep up if many people want to watch their TV over the net, so it’s only a partial substitute.

Making wireless an important substitute for DSL requires raising bandwidth caps from today’s typical 5-10 gigabytes to several times as high as LTE makes the cost reasonable. If Verizon follows AT&T with an abusively low cap of 2-5 gigabytes and Sprint etc. don’t clobber them, the whole broadband plan falls apart because that’s not enough for competition in the future.

I doubt Julius understands this, because he would be doing everything in his power to avoid low caps. It’s just one more strike against “affordable” broadband, like the recent Comcast and Verizon price increases. People need to laugh out loud when Genachowski says “affordable” while tolerating continuous price increases.