AT&T’s CTO John Donovan, speaking at Goldman Sach’s Communacopia XVII Conference on Friday explained that rolling out a new technology too early or not catching up fast enough leads to a bad return on investment. Timing is critical.

"Being right and being early is comfortable technologically, but the returns aren’t promising," he told the investors.

The key is to understand customer expectations and increase network capability before demand outpaces the reliability of the network. The implication is that if a company starts too early or catches up too late, bad timing can damage the ROI. For example, "As little as three years ago video was negligible traffic on our network," he said. "Video now comprises roughly 40 percent of AT&T’s traffic overall."

Referring to the reported problems with the iPhone 3G, Mr. Donovan spoke of Apple’s responsibilities and the fact that each iPhone software update has improved the situation.

Despite the fact that their 3G network has been overwhelmed in some locations, AT&T actually predicted a factor of five growth for data communication with the iPhone 3G. The number, overall, has been more like a factor of three.

The next phase of digital wireless communication is Long Term Evolution [LTE], a fourth generation system. AT&T plans it take it slow there as well for the same reasons. "We’re going to be trialing it in 2010," Mr. Donovan said. "There’s others that are going to have to be on the bleeding edge of this one." The reason: to once again get the timing right to maximize the ROI.