Hokay, the iPhone 3Gness makes browsing a whole 2.4x faster than EDGE in Apple's test. (One thing that we can't explain: Why did Apple chose lonelyplanet.com for its performance benchmarks?) The 3G goodness is real: We've been conducting our own testing of AT&T's HSDPA in the New York area (including suburbs) and it really is faster and more readily available than Verizon's EV-DO 3G network. (For a quick primer on different kinds of 3G like HSDPA vs. EV-DO and other mobile terms, click here.) But the iPhone 3G is rated for 1.4Mbps, a nice clip but not the 3.6Mbps downstream that AT&T's HSDPA is capable of. (The carrier loves to brag that it'll have 7.2Mbps by the end of the year.) So why not crank up the iPhone to those better data rates? Turns out, according to AT&T people we talked to, 1.4Mbps is the capped bandwidth for all mobile smartphones on the network for a few reasons.

(UPDATE: AT&T is saying they're not capping the phone at 1.4mbps, but that's what its capable of doing now, due to factors below. There's no difference except intent, and AT&T is careful around words like "Cap" these days.)

A major one is battery life—the faster you burn, the faster your battery dies, so going full steam at 3.6Mbps would cut you well short of that nice round five hours. A second one is cell site congestion and backhaul (carrier-speak for size of the wired dataline that connects cell sites to the actual telecom infrastructure). While everyone at AT&T, from the top down, is adamant that AT&T is "comfortable" with their ability to meet the huge data draw once 3G iPhones hit the streets, it's not like the pipe is unlimited.

AT&T wasn't able to give a breakdown as to how many of their towers have fiberoptic pipes as opposed to slower copper T-1 lines. Nor could they say how quickly they could add capacity to a site that is pummeling their demand expectations, since it varies from site to site. Ones in dense urban areas are loaded up with more backhaul and can handle more users than one closer to the edge of their 3G footprint. Still, generally speaking, more users on a site means more congestion, so if you're slurping from a site that's really slammed, it will be slower. As with all radio technologies, proximity also matters. (Hint: For the absolute fastest speeds, wait until 3am and then go sit right next to your favorite cell site.)

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Supposedly the network will be ready, even if the supply won't be. I asked him four different ways if it was ready for the onslaught of millions of 3G data phones and he said "absolutely" each time, and that they've planned for it. What's unclear is how many units they've planned for the first day. He said they expected "high" demand but nobody knows what the "full demand" will be, in response to my question about meeting demand.

For people who care about the business end of things, the other way that the iPhone 3G isn't special in regards to AT&T anymore is that AT&T subsidizing it like any other phone means that the old revenue-sharing program is out. Basically, other than letting Apple sell and activate the iPhone 3G at Apple Stores, the model is the same they have with everyone else, like RIM or Sammy. More details on everything will be coming from AT&T in the next week or so.

Update: Interesting point from Apple Gazette about ending Apple ending revenue-sharing with AT&T—it means we might have to pay for future feature updates to the iPhone 3G since Apple won't be getting those monthly checks, thanks to those "accounting purposes." Obviously we don't know for sure yet. Besides, SDK might make it a moot point.

Update 2: David alerts us to this bit from Dow Jones' report: "AT&T and Apple are working on a form of penalty for users who don't activate their iPhone within 30 days of purchase." Whoa. Guess that'll cut down on unlockers, eh?

Update 3: Looks like AT&T's dropping the GoPhone plan for the iPhone 3G too. Also, it's been pointed out Apple is still counting its revenue for the phone over the course of two years despite dumping revenue-sharing with AT&T, so iPhoners can probably continue to lord free updates over iPod touchers. [AT&T]

[Apple]