Tom Huseby says he’s finally able to go home and not worry about seeing his family’s savings stuffed under his mattress. “The panic is over,” he says. “All of a sudden, things are getting a lot better. It doesn’t feel much better now, but it is.”

Huseby, a noted Seattle-based venture capitalist with SeaPoint Ventures, Oak Investment Partners, Hunt Ventures, and Voyager Capital (and the Godfather of what we’ve been calling the “Qpass mafia”), was giving his 30,000-foot view of the economic landscape and VC market at today’s Mobile Northwest 2009 conference in Seattle. He also drilled down into some of the most pressing challenges in the mobile space, as well as what the startup opportunities are. Just a few highlights here:

“Unemployment is going to slow growth across any consumer business. If you’re in mobile, I hate to tell you, but you’re in the consumer business. I do think there will be liquidity in mobile startups,” Huseby says. “Most startups are going to have to earn it the old-fashioned way, they’ll have to grow over a long time. You’re going to have to survive during a roller coaster ride. Every single company will have to go rushing to the bottom, and then do the slow, clanking ride to the top.”

In terms of startup opportunities, it helps to think in terms of what wireless carriers need. Huseby calls himself “fairly carrier-centric.” As he puts it, they are big customers that are predictable (once you understand them) and they generate huge amounts of cash. He laid out the top three challenges for carriers today—absolutely critical to understand if you’re an entrepreneur trying to get their attention with a new product.

—Bandwidth. There’s “tremendous pressure on carriers” to provide more bandwidth to support people’s exploding need for data connectivity wherever they go, Huseby says.

—Costs of bandwidth. “Oh my God, how are you going to pay for it?” he asks. With such a competitive market, Huseby thinks costs for consumers will actually go down. “I think they’re not going to get the money from us, they’re going to have to get it from advertising. Advertising revenue will absolutely help pay for the bandwidth.” (The problem is that mobile advertising revenue is still relatively small and doesn’t usually go to carriers.)

—Holding onto consumers. “If they’re going to pay for it with advertising, they need to get a much firmer grip on their customers,” Huseby says. He sees this as a crucial issue for the coming decade. “The next viral social network has to work hard to make [ad revenues] accrue to them. Carriers have to be very conscious of the demographics of their customers. They have to get their customers anchored in.”

After his talk, I had a chance to ask Huseby about some other areas of interest, like mobile search. He says he’s generally staying out of that space, but is looking at location-based services from the perspective of retail stores and local advertising.

We’ll have more from the conference soon, so watch this space.

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Healthcare deals are going one way, tech deals another. That’s my read from the past week in the Northwest, where we’ve seen some of the biggest biotech deals around, even as a prominent Seattle tech venture firm (and software financings in general) head south.

—Bothell, WA-based Alder Biopharmaceuticals scored one of the biggest biotech partnerships of the year, as Luke reported today. The company has formed a collaboration with Bristol-Myers Squibb (NYSE: BMY) to develop Alder’s experimental rheumatoid arthritis drug, ALD518, and the deal could be worth more than $1 billion. In exchange for granting Bristol a worldwide exclusive license to develop ALD518 for all uses except cancer, Alder will get $85 million upfront, as much as $764 million in development and regulatory milestone payments, sales-related milestone payments that could exceed $200 million, and royalties on product sales.

—I took a look at the venture and debt financings for Washington companies last month (and the previous two months), and concluded that large investments in software startups aren’t coming back anytime soon. The data, courtesy of New York-based ChubbyBrain, shows most of the money is in healthcare and life sciences.

—Kirkland, WA-based Clearwire has secured an additional investment of $1.5 billion from Sprint, Comcast, Time Warner Cable, and Intel, as first reported by the Wall Street Journal. Google, a previous investor, is not participating in the round. The money will support Clearwire’s (NASDAQ: CLWR) deployment of its WiMax broadband network.

—Verathon, a Bothell, WA-based maker of ultrasound technology, has been acquired by Sarasota, FL-based Roper Industries (NYSE: ROP) as part of a pair of transactions worth a combined $356 million, as Luke reported. The price of Verathon’s sale by itself was not announced. The company develops a 3-D diagnostic imaging tool that helps doctors diagnose bladder disorders.

—One of Seattle’s most prominent tech VC firms will not be raising another fund or making new investments. Len Jordan of Frazier Technology Ventures confirmed the news as he announced he’s moving to Madrona Venture Group at the beginning of next year.

—Bellevue, WA-based Light Sciences Oncology has lined up $35 million in follow-up financing to develop its drug-device treatment for cancer, as Luke reported. The investors weren’t disclosed, but the deal gives Light Sciences the right to access a $23.3 million line of credit, and $11.8 million more if investors choose to exercise warrants. The company raised $40 million from undisclosed VCs last year.

—Seattle startup Movaya Wireless has been acquired by Digby, a mobile commerce firm based in Austin, TX, for an undisclosed price. Movaya was founded in 2006 by Phil Yerkes and Stanley Wang, and focuses on making digital goods storefront applications for the iPhone, Android, and mobile Web platforms. The company’s development team in China will serve as the basis for Digby’s operations in Asia.

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Kirkland, WA-based Clearwire (NASDAQ: CLWR) is about to receive an investment of at least $1.5 billion led by Sprint Nextel, according to the Wall Street Journal. Sprint will invest $1 billion, and its partners, including Comcast, Intel, Time Warner Cable, and Bright House Networks, will chip in an additional $500 million, for continuing support of Clearwire’s WiMax broadband network. Google, which has invested previously in Clearwire, is not participating in the current financing round. The official announcement could come as early as this week, the WSJ reports.

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I can’t do justice to a comprehensive review of yesterday’s FiReGlobal (West Coast) conference at the Four Seasons Hotel in Seattle. Instead, I’ll just give a few of my key takeaways. The all-day event, organized by Strategic News Service, focused on how to solve some of the most pressing problems in technology, business, and society—in areas as diverse as broadband access, entrepreneurship, education, sustainability and the environment, political discourse, human health, and mobile devices.

The sweeping conference had the tagline, “Global technology driving local solutions.” Interesting, as that’s sort of the reverse of Xconomy’s mantra, which is reporting about local stories with global impact. But I think they’re two sides of the same innovation coin.

So, in “ESPN plays of the day” style, here’s my top 10 list from the conference (if only I had the video to go with it):

10. Setting up entrepreneurial zones. A panel led by Ty Carlson of Microsoft proposed denoting special “R&D zones” from Oregon to British Columbia geared toward supporting startups in fields like renewable energy, sustainable farming, and biotech. The idea would be to offer tax credits and other incentives to create a more entrepreneurial culture in the Northwest, especially in rural areas.

9. What government should and shouldn’t do. Investor and entrepreneur Martin Tobias of Seattle-based Kashless said, “Startups and investors can’t make a 10-year bet when you have a two-year tax credit.” Those conditions freeze out small companies, especially in costly ventures like energy. So government should create open markets and set minimum market sizes for new technologies, Tobias said. But it shouldn’t pick the technology winners themselves.

8. Northwest tech startups do the Olympics. Tom Guthrie, CEO of Seattle-based Twisted Pair Solutions, said his company has helped numerous agencies on the Olympic Peninsula inter-operate their radios—a key problem in disaster response and other scenarios. Twisted Pair, which is backed by Ignition Partners and other investors, is also working on a laser system to deliver broadband signals. Meanwhile, Paul Manson, CEO of Vancouver, BC-based Sea Breeze, talked about his company’s project to build a high-voltage, direct-current undersea cable between Victoria, BC, and Port Angeles, WA. This would be a fast, controllable power transmission component of a smart grid; it should be under construction by mid-2010, he said.

7. The world according to Dell. In a chat with Mark Anderson of Strategic News Service, Michael Dell said he is excited about China and the rest of Asia as fast-growing economies. He anticipates a U.S. recovery from the recession, but says, “I don’t think you’ll see an immediate snap-back.” And he likes South America as an emerging market (Dell does sales of more than $1 billion in Brazil alone). But Europe, not so much—he sees a lot of uncertainty in the workforce there.

6. Get ready for Dell smartphones. “Mobility is absolutely the theme,” Dell said. He was talking about the relative importance of desktop computers, laptops, netbooks, and mobile devices to …Next Page »

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Kirkland, WA-based Digeo, a 10-year-old home entertainment company backed by Microsoft co-founder Paul Allen, has been sold to Arris, a broadband communications firm based in Suwanee, GA, for about $20 million in cash.

Digeo is known for its high-definition digital video recorder, called Moxi. The acquisition gives Arris expertise, intellectual property, and talent in video networking and multimedia services delivery. Arris will gain about 75 Digeo employees (mostly engineers) in Kirkland, which will raise its R&D costs by about $3 million per quarter, the company said.

“Arris delivers the market position necessary to take the Moxi vision to the next level,” said Digeo’s CEO, Greg Gudorf, in a statement. “I am extremely pleased that the Digeo team will continue to drive the evolution of the Moxi platform.”

But observers point out that the purchase price means a substantial loss on the investment for Allen. PaidContent reports Digeo’s total funding was more than $110 million. In an interview with TechFlash, Gudorf said fewer than 10 Digeo employees would lose their jobs in the acquisition, and that he will stay with Arris during the transition. The news of Digeo’s layoffs was first reported by the Seattle Times.

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Paul Allen, the Seattle-area billionaire who co-founded Microsoft, has agreed to sell 24 licenses for wireless spectrum in Washington and Oregon to AT&T, according to a report by Bloomberg News, which cites filings with the Federal Communications Commission. The price of the sale, which has not yet been approved by the FCC, is not disclosed.

A unit of AT&T called Mobility II is acquiring the licenses from Allen’s Vulcan Spectrum, based in Seattle. The spectrum covers airwaves in the 700 megahertz frequency range—the former “UHF” television band freed up for wireless use this year. According to Bloomberg, AT&T (NYSE: ATT) wants the licenses to support its introduction of “long-term evolution,” a next-generation wireless broadband service that competes with the WiMax service from Clearwire (NASDAQ: CLWR). Vulcan still owns licenses for other parts of the wireless spectrum in Seattle, Portland, and other areas.

Back in May, managing director Steve Hall of Vulcan Capital, Allen’s venture organization, told us that the investments in wireless spectrum fit into a broader focus on the mobile industry. Vulcan invested in two spectrum auctions, Hall said—one in 2003 (where the licenses in question come from) and one in 2008, deploying about $130 million in total. “We saw the scarcity of spectrum, running against what we believe demand is for appliances, devices, smartphones, iPhone,” Hall said at the time. Vulcan’s view, he added, was that infrastructure was “the best way to play.”

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It was another fairly quiet week for Northwest deals, as summer officially winds down. Activity in wireless, software, and biotech led the way.

—The Oregon Angel Fund, based in Portland, said it has closed a new $3 million fund this summer, raised from 60 individual investors and the Oregon Growth Account, a state-run fund dedicated to startups. The angel group has made three new investments with its fund, putting $500,000 into Vancouver, WA-based ClearAccess, committing to invest $500,000 in Portland-based Giftango, and investing $405,000 in Portland-based Wicked Quick.

—Kirkland, WA-based Clearwire (NASDAQ: CLWR) signed a collaborative agreement with UQ Communications of Japan and Yota of Russia to support international roaming between the three WiMax operators. Financial details weren’t given. Clearwire is rolling out WiMax, a next-generation wireless broadband service, in cities across the U.S.

—Mukilteo, WA-based CombiMatrix (NASDAQ: CBMX) received a $1.5 million contract from the U.S. Air Force Research Laboratory to develop automated tools that can detect biological, chemical, and environmental hazards, as Luke reported. CombiMatrix makes genetic analysis tools, and has developed other products for the military.

—Plum, a social media sharing and messaging service backed by Seattle’s Vulcan Capital and Levensohn Venture Partners in San Francisco, was acquired by Finnish mobile giant Nokia (NYSE: NOK). Financial details were not disclosed. Plum has about 10 employees in Boston and San Francisco.

—Seattle-based Uptake Medical raised $3.4 million out of a total equity offering worth $13.3 million, as Luke reported. The investors were not disclosed. Uptake Medical is developing a device that seals off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind.

—Redmond, WA-based Smilebox, a photo services startup, acquired Preclick, a Seattle and New Jersey-based maker of photo software for retailers like Walmart, Costco, and Walgreens, for an undisclosed price. Smilebox launched its service, which lets people create electronic greeting cards, photo albums, and slideshows, in 2006.

—Venture capitalists invested $25 million in four companies headquartered in Washington state last month, according to data from ChubbyBrain, a New York-based firm that develops tools for investors, startups, and entrepreneurs. Bellevue, WA-based Apptio led the way with its $14 million Series B financing from Madrona Venture Group, Greylock Partners, and new investors Shasta Ventures and Andreessen Horowitz Fund.

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Kirkland, WA-based Clearwire (NASDAQ: CLWR) announced today it has rolled out its WiMax wireless broadband service in 10 new cities, including Bellingham, WA, and Boise, ID. Also on the list are eight cities in Texas, including Amarillo, Corpus Christi, Lubbock, and Waco. The new markets join Las Vegas, Atlanta, Baltimore, and Portland, OR as WiMax hubs. Yesterday, Clearwire also announced two new executives who are helping with the WiMax deployments: Erik Prusch, chief financial officer, and Teresa Elder, president of strategic partnerships and wholesale.

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Kirkland, WA-based Clearwire Communications, a subsidiary of Clearwire (NASDAQ: CLWR), has rolled out an accessory to allow Wi-Fi devices to connect to broadband Internet via the company’s mobile WiMax service. The battery-powered router creates a personal, mobile Wi-Fi hotspot to provide faster connections for iPhones, BlackBerries, MP3 players, digital cameras, and other devices.

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San Diego-based home entertainment semiconductor manufacturer Entropic Communications (NASDAQ: ENTR) has cut approximately 55 employees, or 18 percent of its workforce. In a filing with the SEC today, Entropic says its board approved a restructuring plan that closes offices in Nice, France, and Kfar Saba, Israel, “to better position the Company to operate in current market and financial conditions.” Entropic says it also suspended development of network processors in Israel.

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Satellite-based Internet service targeting rural communities and motorists is starting to get up to speed. Carlsbad, CA-based ViaSat (Nasdaq: VSAT) says it  demonstrated its next-generation ViaSat-1 satellite net services at a conference today in Washington D.C. ViaSat, which specializes in satellite-based communications technologies, plans to have 2-10 Mbps download speeds available in 22 months. The company estimates its service could reach 10-15 million U.S. homes.

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San Diego-based Leap Wireless (NASDAQ: LEAP) today is launching its Cricket unlimited wireless service in the greater Philadelphia area. That’s the second major market the low-cost wireless provider has entered since January, when Cricket began service in Chicago. The company, which announced its move yesterday, is now forecasting 5.3 million subscribers this year. At the end of 2008 it had just 3.8 million subscribers in 29 states. Cricket provides unlimited, low-cost 3G wireless voice and broadband services, with monthly rates that range from $30 to $60.

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Intel and Clearwire are announcing the launch of WiMax, a next-generation wireless broadband service, today in Portland, OR. It will provide high-speed Internet access to laptops and mobile devices across Portland, which is the second U.S. city to deploy the service (after Baltimore, MD). Last month, Clearwire received a $3.2 billion investment from Comcast, Intel, Time Warner Cable, Google, and Bright House Networks.

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Acton, MA-based Tatara Systems, a mobile communications software company, said last week that it has sold its broadband mobile product line to Smith Micro Software for an undisclosed sum. The company said the sale would allow it to focus on systems that let corporate users to access voice-over-Internet telephony services on their cell phones.

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Microsoft’s chief strategic thinker, Craig Mundie, believes the United States’ situation with broadband access represents a “total policy failure.” In an interview with the Washington Post, Mundie decries the fact that, by some measures, the U.S. ranks 14th in the world when it comes to rolling out broadband Internet service. He says Internet access in Tokyo is much faster, and much cheaper, than it is in Seattle. (That fits with last month’s report from Cambridge, MA-based Akamai that said Washington state has the largest percentage of slow Internet connections in the U.S.—Eds.)

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DOE Plan Would Cut Emissions from Buildings

The U.S. Department of Energy says that, with proper building techniques and renewable energy installations, a majority of commercial buildings could reach zero emissions of greenhouse gases within 20 years. Now the DOE is kicking in $15 million to give companies access to its scientists and engineers to help achieve that goal, Ars Technica reports. The plans apply both to new buildings and to the retrofitting of existing structures.

Software Tracks Stolen Laptop but Hides Owner

Security experts are always concerned about the theft of laptop computers, which have led to both national security breaches and the theft of private financial information. There’s software available to keep track of where a laptop is, but privacy advocates worry that it can also be used to spy on the laptop’s owner. Now, Technology Review tells us, encryption specialist Tadayoshi Kohno of the University of Washington has developed software that tracks a laptop only after it’s been stolen, thanks to the use of an encryption key that only the rightful owner can unlock.

Click It Before You Tick It

Better buckle up on Election Day. A study in the Journal of the American Medical Association says traffic deaths tend to go up on Election Day, with an average of 24 more fatalities than on other Tuesdays in October and November. According to the Associated Press, the researchers cited, as possible reasons, people rushing to get to polls before and after work, driving on unfamiliar roads, and being distracted by thoughts of the choice they had to make. (The study did not examine whether despair at the prospect of the wrong guy winning played a role.)

Wind Turbines Not Bad for Birds, Study Finds

Wind turbines do not drive away birds from an area, according to a study by Newcastle University in England. The researchers measured the population density of 23 bird species at different distances from the turbines and found that the machines made no difference, Reuters reports. The one bird that is apparently affected, however, is the pheasant.

U.S. Lags in Broadband Growth

The U.S. has the largest raw number of subscribers to broadband Internet connections, but China will soon surpass it, and Europe has faster growth, according to an analysis by the research firm Point Topic. GigaOm reports that Germany and the United Kingdom have the fastest subscription growth, and about 26 percent of Belgium’s citizen have broadband connections. China, by contrast, hasn’t yet hit 6 percent of its 1.32 billion population.

Google Tells You Where to Vote

Google, which seems to have a hand in everything these days, is hoping to help get out the vote in the presidential election. As the company says on its public policy blog, its U.S. Voter Info Guide is already up and running in Ohio, which has started early voting, allowing people to type in their home address and find out where to register and where to vote. Google hopes to have the information available for all 50 states by the middle of this month.

New Flu Test Speeds Results

If a deadly new strain of flu emerges, public health officials can be right on top of it, now that a faster genetic test for flu strains has been approved by the Food and Drug Administration. The Los Angeles Times reports that the test can identify a strain of the flu within four hours, instead of the four days required by older tests. Between 20 and 30 state laboratories should be ready to perform the test by the end of the year.

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Doubts Raised About Broadband Competition

The Federal Communications Commission is in the midst of figuring out how to allocate spectrum for wireless broadband transmissions, while Google and M2Z Networks push for regulations to allow an alternative broadband service. A columnist at GigaOm argues that indecisiveness at the FCC could wind up delaying any competition, which could increase options and bring down prices, for years to come.

Structures Could Render Islands Invisible to Tidal Waves

There’s been a lot of talk about the possibility of creating an invisibility cloak by building tiny structures that guide light waves around objects and through to the other side. Now a French scientist points out that the same principle applied to larger structures could have a similar effect on ocean waves, diverting them from vulnerable islands and coastlines and preventing destruction from tsunamis. New Scientist reports that a ring of concrete posts could render islands and offshore oil rigs essentially “invisible” to the waves.

Skyscraper Farms Could Save Energy

Instead of spending all that energy to plant and plow fields and then truck the produce from the country to the city, why not grow food right in a city, in a glass tower with different floors for different crops and livestock? A Columbia University professor tells Scientific American that such “vertical farming” would bring fresh food to urban dwellers with less fuel expended on shipping, and would allow farmers to heat or cool the environment as needed to grow crops all year round.

Reach Out and Conference With Someone

Teleconferences have moved from speakerphones on desks to flat screens projecting the image of the people in other locations who are joining your meeting. Now RoboDynamics, a company in Santa Monica, CA, is promoting a more interactive meeting tool, a mobile robot that provides what it calls telepresence. As described by TechCrunch, a caller’s image is displayed on a screen that tilts and turns to face anyone that person wants to speak to, making meetings more naturally interactive.

Wi-Fi Takes the Bus

There’s no need to be off the Internet, even if you’re on a bus traveling between cities. As Salon reports, Wi-Fi services are showing up on more buses, both in the U.S. and abroad. Buses traveling routes from Boston to Washington are increasingly using Wi-Fi availability to compete with other bus companies.

Buildings Could Become Greener and Smarter

At the West Coast Green 2008 exhibit in San Jose, CA, a number of companies were showing technologies that could make buildings more environmentally friendly while also providing new services. CNET News lists some of the companies and their technologies. For instance, Element Four says it condenses moisture out of the air and turns it into drinking water for a home’s inhabitants, while Intelligent Forms makes a high-end outdoor lounge table whose surface is a set of solar panels.

Auction Sets Carbon Emissions at $3.07 per Ton

The country’s first auction of emissions permits set the price of releasing carbon dioxide into the atmosphere at $3.07 per ton. The Regional Greenhouse Gas Initiative, a consortium of 10 states in the Northeast, held the first U.S. cap-and-trade auction last week and announced the results today, the Associated Press reports. Under the program, companies buy permits to emit a certain amount of greenhouse gases, and if they reduce their emissions they can sell the permits to other companies for a profit.

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Most Countries Unready for Future Broadband Needs

A group of MBA students has developed a Broadband Quality Score for 42 countries and found that the only country with enough bandwidth capacity to meet its needs in the next three to five years is Japan. Ars Technica reports that the score includes upload and download speeds and other measures. The United States, the study found, has slightly more capacity than it needs right now, but not enough to handle future demands, which will include visual networking, high-density streaming, consumer telepresence, and large file sharing.

Comcast Explains Bandwidth Caps to Customers

Comcast has begun sending emails to its subscribers to explain its cap on bandwidth use, which is set to go into effect October 1. The company says it is trying to put its 250-gigabyte monthly cap into perspective, saying that amounts to 50 million plain text e-mails, 62,500 songs, or 125 standard-definition movies. GigaOm reprints the full text of the e-mail.

Chemists Make Common Products a Little Greener

New regulations, growing consumer demand, and a fear of future lawsuits are leading companies that make consumer products to find ways to make them less toxic and more environmentally friendly. The Los Angeles Times reports that green chemistry is emerging in a variety of areas, from plastics and pesticides to toys and nail polish. While some makers of cosmetics and household cleansers are leading the way, others are lagging behind.

Contact Lens Delivers Drugs to Eyes

Dosing eyes with drugs to fight eye diseases is difficult, as eyes are very good at washing out foreign substances. Now an engineer at Auburn University in Alabama has developed a new material to make contact lenses that can absorb greater amounts of drugs than previously possible and release them slowly into the eye. New Scientist says that he has set up a company, OcuMedic, to commercialize the idea.

Virginia Court Tosses Anti-spam Law

The Virginia Supreme Court has overturned that state’s wide-ranging anti-spam law, ruling that it violates First Amendment guarantees of free speech. The Washington Post reports that the ruling also overturned the conviction of a man described as a prolific spammer. The law had outlawed all forms of unsolicited email, not just commercial junk mail.

Airplanes Remain No-Call Zones

Airlines have started providing Internet hookups on their flights, but at least one says that passengers won’t be allowed to use voice-over-Internet-Protocol to make telephone calls over the connections. The New York Times says that service-provider Aircell and American Airlines block Skype, Vonage, and similar programs, because they worry the conversations will annoy other passengers. No airline so far plans to allow phone calls.

Researchers Beam Solar Power Across Space

Researchers have collected solar power on a mountain-top in Maui and beamed it 92 miles to the big island of Hawaii. The experiment, by former NASA executive and physicist John Mankins, demonstrates how an array of solar power collectors in Earth orbit could transmit energy to Earth, Wired reports. Mankins predicts that such an orbital system, where solar energy is undimmed by clouds and atmosphere, could be put up in 10 to 15 years.

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Wade wrote today about Cambridge, MA-based Akamai’s second quarterly “State of the Internet” report, which details such trends as broadband connections by state and country, number of Internet-connected devices, and amounts of attack traffic and malware. In terms of Internet connection speeds, South Korea is tops with 64 percent of all connections (to Akamai’s content distribution servers) having a speed of 5 megabits per second or greater. Within the U.S., which comes in sixth globally, Delaware is tops, with 66 percent of its Internet connections being 5 megabits per second or faster.

At the opposite, “narrowband” end of the spectrum, Wade wrote, “the state of Washington tops the list, with 21 percent of all Internet connections taking place at the glacial speed of 256 kilobits per second or less.” And things in Washington seem to be getting worse, not better: it was one of four states on Akamai’s “narrowband top 10″ list where the percentage of slow connections actually increased in the second quarter of 2008, compared to the first quarter. (Perhaps the Bill and Melinda Gates Foundation—which is known in part for its programs to improve Internet connectivity in U.S. libraries—can do something about its home state.)

What’s going on here? Is it that more people are coming online, but starting with slow connection speeds? Are the Internet service providers with the most market share providing a lower standard of service? Is there inherent geographical bias in the data from Akamai’s servers? It’s hard to say, because Akamai didn’t release its raw data, but the full report is available here. Of course, if you live in Washington, you may want to go grab a coffee while you download the 1.5-megabyte PDF file.

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The global network of 34,000 content distribution servers built by Cambridge, MA-based Akamai allows the company to gather massive amounts of data on Internet usage—information that it distilled and published for the first time back in May. Now the company has published its second quarterly “State of the Internet” report, detailing trends such as the number of Internet-connected devices and broadband connections in each country and providing a fascinating overall picture of the Internet and its growing pains. While the number of people and organizations using the global information network continued to increase, for example, so did the volume of attack traffic and malware.

In addition to statistics collected by Akamai’s servers, the report brings together numerous published reports of incidents around the Internet—such as the repeated Internet outages in Vermont in May and June as equipment failures, fires, and bridge construction damaged a fiber ring owned by Level 3 Communications, and the bizarre story of the Epilepsy Foundation website, which was hacked by attackers who posted hundreds of flashing images designed to induce seizures in visitors with photosensitive epilepsy.

But the most valuable part of Akamai’s report is the data from its own network—information that can’t be found anywhere else. While China was the largest source of attack traffic in the first quarter of 2008, for example, Akamai found that Japan leaped into first place in the second quarter; some 30 percent of all worms, viruses, and denial-of-service attacks originated from Internet addresses there. (China fell to third place, while the United States hung on to its second-place status, generating 22 percent of attack traffic.)

The number of unique Internet Protocol addresses detected by Akamai’s network—each address representing a separate Internet-connected device—grew 5 percent in the second quarter, to some 346 million worldwide. Nearly 30 percent of those addresses were in the United States, and about 10 percent were in China, with Japan, Germany, France, the United Kingdom, South Korea, Canada, Spain, and Italy next in line. But when IP addresses are measured per capita, the Scandinavian countries continued to lead: Sweden leads the world with 0.42 unique IP addresses per citizen, followed by Norway, Iceland, and Finland. The United States is in seventh place with 0.34 IP addresses per person.

Akamai also tracks the speed at which the citizens of various countries can access the Internet. South Korea held on to its lead in this area, with 64 percent of all Internet connections boasting a speed of 5 megabits per second or more. The United States places sixth globally in broadband penetration, with only 26 percent of all connections beating 5 megabits per second, though the number of broadband connections here is increasing fast (the 26 percent figure is a 29 percent improvement on the first quarter).

Within the United States, two of the smallest states, Delaware and Rhode Island, continued to have the largest proportion of citizens enjoying broadband: 66 percent of all Internet connections in Delaware exceed 5 megabits per second, and 43 percent in Rhode Island. New York, Connecticut, Oklahoma, Nevada, New Hampshire, Massachusetts, Pennsylvania, and the District of Columbia round out Akamai’s “Top 10″ list of U.S. states with the largest percentage of broadband connections. At the opposite, “narrowband” end of the spectrum, the state of Washington tops the list once again, with 21 percent of all Internet connections taking place at the glacial speed of 256 kilobits per second or less. (Greg has more to say about that over at Xconomy Seattle.)

Akamai’s full report is available here. How quickly you can download the 1.5-megabyte PDF file will depend, of course, on where you live.

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