First Comcast (NASDAQ: CMCSA) tried to cut off customers using peer-to-peer file sharing services. They ate up too much bandwidth and slowed down the cable company's network. At least that is what Comcast said.

The FCC did not like the Comcast approach and asked it to fix the matter. Comcast still says it has congestion problems and wants to handle them using a new method. According to Bloomberg, the cable guys "plans to slow service to its heaviest Internet users during periods of congestion after regulators ordered the company to devise a new method for managing its Web traffic."

If the traffic load in one area of the network becomes too great, big users could see their service dialed back to slower speeds for as long as 20 minutes.

Consumers will get bent out of shape because they reason that everyone should have unlimited access to the Internet, especially if they are paying $30 a month for broadband. But, that avoids an acknowledgment of the practical parts of the system. Internet "pipes" are only so big. If they become clogged, none of the users win.

The Comcast plan is fair and reasonable. If people want super-fast speeds all the time, they should pay for it. That is the only way for the cable company to undertake the work of upgrading its network without hurting its shareholders.

Douglas A. McIntyre is an editor at 247wallst.com.

Back in August, I labeled Comcast Corp. (NASDAQ: CMCSA) as a 'slacker stock,' "which like its human equivalent spends his days sitting on the coach playing video games in his underwear and whining about his lot in life." Now, the world's largest cable company, which has dropped more than 30% this year, has finally grown up.

The Philadelphia-based company reported that net income soared 54% to $602 million, or 20 cents per share, beating the 17 cent consensus estimate of analysts surveyed by Bloomberg News. Sales surged 14% to $8.01 billion, also beating analysts' expectations. As if that wasn't enough, Comcast also announced a $6.9 billion stock buyback and said it would begin paying its first dividend in almost 10 years. The company's guidance also was strong. Particularly noteworthy was the expected decline of capital expenditures as a percentage of revenue to 18%. Revenue and operating cash flow is expected to grow 8% to 10% with free cash flow jumping 20% to $2.3 billion.

Comcast seems to be listening to the complaints of shareholders who are concerned about the company's poor stock performance. Whether this will make Chieftain Capital Management, which last month called for the ouster of CEO Brian Roberts, remains to be seen. One quarter is not a trend.

My wife and I are not sure whether we am sticking with the company's triple play deal that expires at the end of the month or switch to Verizon Communications Inc. (NYSE: VZ)'s FiOS. I bet I am not alone. It will be interesting to see if the company's churn rate starts to increase in the coming months.

In markets where 3G connections are widely available to allow user to have high-speed connections to the internet, video ads on cell phones are becoming a big business. The New York Times writes that Japanese think-tank Dentsu Communication Institute Inc. sees revenue for this form of advertising tripling in that country to $1 billion by 2011.

If the market for TV-type ads on phones is indeed growing that fast, it could have considerable benefit for U.S. carriers AT&T Wireless (NYSE: T), Verizon Wireless (NYSE: VZ), and Sprint (NYSE: S). Wireless revenue is the engine driving growth at these companies, especially as they lose landline service to VoIP products from the cable companies.

A look at Verizon's 10-Q shows that wireline revenue fell slightly to $12.6 billion. Operating income for the segment was also off a bit to $1.1 billion. But , wireless revenue was up from $9.2 billion to $10.8 billion and operating income moved from just over $2.3 billion in the June quarter of last year to $3 billion.

That revenue growth rate cannot keep the same pace without new ways to get money out of the wireless business. While Verizon Wireless has about 62 million customers, AT&T has about as many and Sprint has over 50 million. In a country with slightly over 300 million people, many of them not old enough to use a phone, the number of subscribers to wireless programs must slow.

An advertising model could help offset that. Marketers are hungry for new ways to reach customers, especially as they move away from TV. Even if Verizon could pick up several hundred million a year in ad dollars, most of that would be profit. The costs of delivering video ads is small.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Wall Street was less than enamored with Comcast's (NASDAQ:CMCSA) earnings. Basic cable subscribers dropped slightly, by 95,000. But, selling basic cable is not the main event at the firm.

Comcast's shares dropped about 5% this morning, but the company said net profit rose to $588 million, or $0.19 a share, in the second quarter, up from $460 million, or $0.15 a share, in the same quarter a year ago. Revenue rose 31% to $7.712 billion with strong increases in digital television and phone subscribers.

According to MarketWatch: "Digital-cable customers grew by 823,000 to 14 million, as video-on-demand, digital-video recorder technology and high-definition programming helped fuel the increase."

That digital cable number and new sign-ups for VoIP services are the future of the company. Comcast added 671,000 digital-telephone subscribers during the second quarter, driving revenue 98% higher to $420 million. Comcast ended the three months with more than 3 million phone customers.

That is hard news for Verizon (NYSE: VZ) and AT&T (NYSE: T) who are trying to hold on to their landline customers and build video-to-the-home platforms using fiber. Comcast may be the largest cable company, but its peers are also signing VoIP customers at a rapid pace and adding broadband and digital TV subscribers.

Comcast's shares may be down today, but the telephone company shares will be the ones to watch over the next year or two.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Verizon Communications Inc. (NYSE: VZ) is the Rodney Dangerfield of telecommunications stocks: it doesn't get any respect.

The company's shares have risen less than 2 percent this, year underperforming other major telecom providers including AT&T Inc. (NYSE: T), Sprint Nextel Corp. (NYSE:S) and Qwest Communications International Inc. (NYSE: Q).

Perhaps, investors are turned off by the company's FiOS upgrades, which as the company's better-than-expected first quarter results indicates, are starting to pay off. This progress doesn't appear to be reflected in the stock price, which barely budged following the earnings report.

Verizon Wireless added 1.7 million customers in the first quarter, beating AT&T, according to Bloomberg News. The company also had a lower churn rate than AT&T and added more fiber customers than its rival.

Even Wall Street thinks Verizon's strategy is better.

"AT&T is looking to keep everything. For the near term, AT&T is seeing the benefits," Standard & Poors analyst Todd Rosenbluth told the Wall Street Journal (subscription required) "A year or two out, we think that what Verizon is doing, while not cost effective, is a better approach towards fighting cable competition."

Meanwhile, Verizon's valuation is pretty attractive.

Its trading at a forward price-to-earnings ration of 14.7, in-line with the 14.6 multiple for AT&T and cheaper than the 24.6 ratio for Sprint and 27.8 for Qwest.

The discount seems out of whack with reality.

Comcast Corp. (NASDAQ:CMCSA) said its fourth quarter profit tripled thanks to the acquisition of Adelphia Communications Corp. and the continued popularity of its triple-play bundle of services.

The shares fell, though, since the results missed Wall Street's expectations. Plus, the company's guidance of 11 percent revenue growth this year, was less than the18 percent analysts had forecasted, according to Thomson Financial.

Net income was $390 million, or 18 cents a share, compared with $133 million, or 6 cents, a year earlier. Revenue gained 30 percent to $7.03 billion. The Philadelphia-based company also announced a 3-for-2 stock split. Excluding one-time items, profit was 21 cents. On that basis, analysts had forecasted earnings of 24 cents on revenue of $7.13 billion.

Chief Executive Brian Roberts said in the earnings release that 2006 "simply our best year ever." The company added 1.9 million new digital cable subscribers, 1.9 million new high-speed Internet customers and 1.5 million digital voice customers. The additions were higher than what analysts had expected.

This year is going to be an expensive one. Comcast is forecasting cable capital expenditures of $5.7 billion and $250 million in costs associated with the relocation of its corporate headquarters.

Also check out some other earnings reports that we're following, and let us know what you're expecting.